TWIN CITIES MANAGEMENT, LLC, VS. ABID IGBAL (L-4316-15, CAMDEN 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NOT FOR PUBLICATION WITHOUT THE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-5821-17T1
TWIN CITIES MANAGEMENT,
LLC,
Plaintiff-Appellant/
Cross-Respondent,
v.
ABID IGBAL and IGGY
MANAGEMENT, LLC,
Defendants-Respondents/
Cross-Appellants.
____________________________
Argued March 2, 2020 – Decided April 23, 2020
Before Judges Fasciale and Rothstadt.
On appeal from the Superior Court of New Jersey,
Law Division, Camden County, Docket No. L-4316-
15.
William C. Mac Millan argued the cause for
appellant/cross-respondent (Law Offices of Igor
Sturm, attorneys; William C. Mac Millan, on the
briefs).
Michael James Confusione argued the cause for
respondents/cross-appellants (Hegge & Confusione,
LLC, attorneys; Michael James Confusione, of
counsel and on the brief).
PER CURIAM
Plaintiff Twin Cities Management, LLC (Twin Cities), appeals from a
March 27, 2018 judgment entered after a jury found in favor of defendant Abid
Iqbal (Iqbal); and two orders dated July 20, 2018, denying plaintiff's motions
for a new trial and reimbursement of counsel fees under Rule 4:5-1(b)(2), for
Iqbal's and defendant's Iggy Management, LLC (Iggy), failure to disclose a
related litigation in New York. Defendants cross-appeal from that part of the
judgment stating that defendants had no ownership interest in Twin Cities. We
affirm but remand on the fee issue.
Brothers Ashish and Amish Parikh (collectively the Parikhs) and Iqbal dispute
ownership of Twin Cities. The Parikhs formed Twin Cities to acquire and
operate Popeyes franchise restaurants in Minnesota. The parties' Memorandum
of Understanding (MOU) addressed circumstances under which Iqbal could
obtain an ownership interest in Twin Cities. After a breakdown in the parties'
relationship, plaintiff sought a declaratory judgment that defendants had no
ownership interest in Twin Cities or monies owed to them. Defendants filed
counterclaims asserting an ownership interest in Twin Cities and claims for
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monies owed as profit-sharing and wages. The jury found that: (1) Iqbal had
no ownership interest in Twin Cities; and (2) plaintiff owed Iqbal $421,197, the
amount Iqbal paid for an ownership interest in the company, plus $10,000 in
unpaid salary.
On appeal, plaintiff argues the verdict was against the weight of the evidence,
the judge erred by denying its motion for a new trial, and the judge misapplied
Rule 4:5-1(b)(2). On cross-appeal, defendants argue the judge erroneously
charged the jury by stating Iqbal had the burden of proving oral modifications
to the MOU by clear and convincing evidence, and that the judge committed
plain error by not sua sponte awarding them pre-judgment interest.
I.
The Parikhs have been in business together since 2006, owning and
operating Popeyes franchise restaurants. They started their business using
money loaned to them by their father, who had operated Dunkin Donuts
franchises. As of 2011, they operated between eighty-five and ninety restaurants
nationwide.
Popeyes approved the Parikhs' franchise application after they satisfied its
criteria for financial liquidity and operational experience. After obtaining
approval, the Parikhs agreed to operate the restaurants in accordance with
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3
Popeyes' standards, understanding that Popeyes would perform periodic audits
to ensure compliance and that failing an audit could result in loss of franchise.
Iqbal worked for the Parikh's father, who previously employed him as a Dunkin
Donuts manager. Iqbal met with the Parikhs and discussed opportunities for
working together.
In 2011, Popeyes planned to redevelop some Kentucky Fried Chicken
restaurants in Minnesota, and it solicited proposals from top franchisees for this
opportunity⸻referred to as the "Viking Project." The Parikhs submitted a
business plan for the Viking Project, and on December 6, 2012, they created
Twin Cities, through which they proposed to own and operate the Minnesota
restaurants. Each of the restaurants would be its own separate company⸻owned
by Twin Cities⸻of which the Parikhs were each fifty-percent owners. The
Parikhs discussed the Viking Project with Iqbal and Iqbal's friend, Iftikhar Ali
(referred to as Gilani), who also worked for the Parikhs' father. The Parikhs
offered Iqbal and Gilani the opportunity to jointly operate the Minnesota
franchises and become fifteen-percent owners of Twin Cities.
On January 15, 2013, the Parikhs and Iqbal entered into the MOU, which
described the conditions under which Iqbal could obtain the fifteen-percent
ownership interest and be responsible for the day-to-day operations of the twelve
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franchised Popeyes locations in Minnesota.1 The same day, the Parikhs and
Gilani entered into the MOU with the same terms. The MOU explains the
Parikhs' relationship with Popeyes and the costs that the Parikhs incurred on the
Viking Project.
[The Parikh's] are approved franchisees of
[Popeyes]. Popeyes is the owner of twelve (12)
locations in the state of Minnesota, which are
proposed to become "Franchised Restaurant
Locations" . . . . Popeyes has offered to [the Parikhs]
the privilege of becoming the operators of the
Franchised Restaurant Locations under a lease and/or
sublease for each location under certain terms and
conditions which have been accepted by the Parikhs.
The Parikhs have paid to [Popeyes] the sum of
$750,000[], representing a $12,500[] development fee
for each Franchised Restaurant Location, for a total of
$150,000[] and a $50,000[] conversion deposit for
each Franchised Restaurant Location which totals
$600,000[] . . . . Thereafter, prior to the opening of
each Franchised Restaurant Location, a remaining
$125,000[] conversion fee and a $30,000[] franchise
fee will be due and payable.
[The Parikhs], for the purpose of this transaction
. . . formed [Twin Cities] in which [the Parikhs] each
hold a fifty percent (50%) membership interest. For
each of the twelve (12) Franchised Restaurant
Locations . . . the Parikhs and/or [Twin Cities] shall
form Minnesota limited liability companies each to
operate their [Popeyes restaurants] under a lease or
sublease agreement with [Popeyes]. Each of the
1
Initially there were twelve restaurants in Minnesota. However, the number
grew to fourteen.
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twelve (12) specific entities shall be a franchisee for
that location under a franchise agreement with
[Popeyes]. [Twin Cities] shall be the sole member of
each specifically formed limited liability company for
a Franchised Restaurant Location.
Thereafter, the MOU set forth Iqbal's relationship with the Parikhs and the
Viking Project.
Iqbal has requested of the Parikhs the
opportunity to become co-owner and co-operator of
the Popeyes restaurant at each of the Franchised
Restaurant Locations. The Parikhs and [Twin Cities]
recognize the need for trusted and efficient
management for each of the Popeyes locations in the
State of Minnesota. The parties recognize that . . .
Iqbal is not currently an approved franchisee of
[Popeyes]. It is the joint desire by the Parikhs and by
Iqbal to seek the approval of Iqbal as a franchisee of
[Popeyes] for the benefit of the Franchised Restaurant
Locations. By reason of Iqbal's experience and
business know how, the Parikhs have agreed to admit
Iqbal as a member in [Twin Cities] provided only if
Iqbal is approved as a franchisee, with his admission
only taking place after being approved by the
franchisor.
Iqbal has requested of the Parikhs the
opportunity to acquire a fifteen[-]percent (15%)
membership interest in [Twin Cities] and to be
admitted as a member, and further has agreed to be the
day to day co-operator of the contemplated Popeyes
restaurants at the Franchised Restaurant Locations,
and [the] Parikhs have agreed to accept the offer of
Iqbal, under the specific terms and conditions
contained in this MOU.
A-5821-17T1
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The MOU expressed that all of the recitals under "Background" were the
MOU's conditions and provisions. And the MOU set forth Iqbal's financial
obligations, and the consequences of him becoming, or not becoming, an
approved franchisee.
2. Iqbal shall tender to [Twin Cities] the sum of
$112,500[] representing fifteen percent (15%) of the
amount heretofore paid to [Popeyes] under the above
scenario.
3. At a time prior to the opening of each
Franchised Restaurant Location, Iqbal shall tender to
[Twin Cities] the sum of $27,000[] representing
fifteen percent (15%) of the expenditure for the
$125,000[] conversion fee, the $30,000[] franchise
fee, and a $25,000[] anticipated expenditure for a
SICOM Register System required for each Franchised
Restaurant Location.
4. The tenders by Iqbal shall be retained by [Twin
Cities] in escrow until Iqbal is approved by [Popeyes]
as a franchisee for each or all of the Franchise
Restaurant Locations. Should Iqbal not be approved
as a franchisee by [Popeyes], then in that event, the
tenders made by Iqbal shall be refunded to Iqbal
without interest, and the understanding between them
shall terminate and shall become of no legal effect.
5. Upon approval of Iqbal as a franchisee of
[Popeyes] the Operating Agreement of [Twin Cities]
shall be amended to reflect the interests of the
admitted member.
....
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7. The Parikhs and Iqbal specifically agree that if
[Popeyes] does not approve Iqbal as a franchisee prior
to the opening for business of the first Franchised
Restaurant Location, then, in that event the Parikhs or
Iqbal shall have the right to terminate this MOU, or in
the alternative, continue with the understanding set
forth herein until such time as Iqbal is approved as a
franchisee. However, Iqbal shall not receive any
ownership interest in [Twin Cities] until such time as
he is approved as a franchisee by [Popeyes].
In the event the franchisor [Popeyes] declines to
approve Iqbal as a franchisee, then upon such
declination the sums tendered by Iqbal shall be
refunded to Iqbal, without interest, and this
Understanding shall terminate, and become null and
void and of no further legal effect.
8. The parties to this Agreement recognize that the
agreement to admit Iqbal as a member is for the
purpose of being a hands-on operating member
together with Gilani . . . of the twelve (12) Franchised
Restaurant Location. Iqbal covenants and agrees that
as a member of [Twin Cities] he will devote his full
time as to the operation of each of the Franchised
Restaurant Locations for the benefit of [Twin Cities]
o[n] a day to day basis. Iqbal further recognizes the
importance of [Twin Cities] to be and to remain in
good standing with the franchisor [Popeyes], without
the privileges granted to [Twin Cities] interrupted,
jeopardized or terminated, and he shall fulfill his
operational duties conscientiously and in good faith.
[9.] This [MOU] shall be interpreted and enforced
under the laws of the State of New Jersey and may
only be amended or modified in writing and signed by
all the parties.
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Thus, under the MOUs' terms, Iqbal and Gilani would operate the
Minnesota restaurants and become fifteen-percent owners of the franchises, and
they would need to pay the Parikhs: $112,500 plus $27,000 per restaurant
($324,000 for twelve restaurants), totaling $436,500.
Three days after executing the MOUs, on January 18, 2013, the Parikhs
signed a franchise agreement with Popeyes for a Minnesota restaurant. Pertinent
to the present case, the agreement required the franchisor's consent for any
transfer of ownership by the franchisee, and it stated that the agreement would
be terminated if any transfer occurred without the franchisor's consent. The
following month, in February 2013, the Parikhs entered into another agreement
with Popeyes, setting forth the Parikhs' financial obligations as to each of the
twelve Minnesota restaurants, with the Parikhs' costs corresponding to the
percentage costs charged to Iqbal and Gilani under their MOUs.
At trial, Iqbal testified that his agreement with the Parikhs differed from
the terms of the written MOU. For example, he testified that his understanding
was that he became a part owner of Twin Cities when he executed the MOU.
He stated that he was treated as an owner in terms of signing paperwork on
behalf of the business and receiving distributions of profits⸻ which he used to
pay the amounts owed under the MOU on a schedule that was different than the
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MOU's schedule. Also, he was issued K-1 tax forms, which indicated that he
was an owner. Iqbal further testified that, notwithstanding the MOU's language,
he did not need to become an approved Popeyes franchisee to be a part owner
of Twin Cities. He also said that the Parikhs prevented him from becoming an
approved franchisee because they refused to submit the necessary paperwork
until he paid the entire capital contribution.
At trial, plaintiff took the position that the parties' relationship was
governed by the MOU's terms. As to profit-sharing, the Parikhs admitted that,
from the beginning, they paid Iqbal fifteen percent of the Minnesota restaurants'
profits as a measure of good faith and in recognition of his moving from New
York to Minnesota. Moreover, they admitted that Iqbal was permitted to use the
profits for his required capital contributions because he did not have sufficient
funds to pay the amounts set forth in the MOU at the times the MOU mandated.
However, the Parikhs maintained that they shared profits with numerous
employees, either as an incentive for good work or in recognition for good
performance, and that they gave K-1s to everyone with whom they shared
profits. At his deposition, Ashish Parikh acknowledged that Iqbal should not
have received a K-1.
A-5821-17T1
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As to becoming an approved franchisee, plaintiff maintained that it was
Iqbal's responsibility to become an approved Popeyes franchisee, as set forth in
the MOU. The Parikhs claimed they reached out to Popeyes to advise the
company that Iqbal and Gilani wanted to become franchisees, and Popeyes
advised Iqbal and Gilani that they needed to complete applications. However,
the Parikhs had no involvement in the applications, and Iqbal never became an
approved franchisee. By contrast, Gilani became an approved franchisee in July
2013, after which he became a fifteen-percent owner of Twin Cities, because he
additionally paid his share of capital contributions.
After the MOUs' executions, Iqbal and Gilani were trained in Popeyes
restaurant operations, as were Iqbal's sons and the Parikhs' relative, Sahill
Parikh. Thereafter, these individuals moved to Minnesota and worked to open
and manage the Minnesota restaurants. Over time, the Parikhs came to believe
Iqbal was not doing a good job managing the restaurants. The restaurants had
increasing costs, decreasing revenue, and missing deposits. Iqbal expressed
dissatisfaction with the Popeyes brand, and the Parikhs believed Iqbal was
spending most of his time in New York and leaving the restaurants' management
to others. Popeyes also expressed concern about the Minnesota operations due
to failed audits, and it threatened to close one of the restaurants.
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One of the audits revealed underreporting of sales, which resulted in an
underpayment of royalties, and as a result, the Parikhs had to pay Popeyes
$49,297. In addition, in 2013, the Parikhs learned that the Minnesota
Department of Labor was addressing complaints by restaurant employees. In
2014, they received notice of a class action lawsuit filed with respect to alleged
labor law violations at one of the Minnesota restaurants, which resulted in costly
legal fees and settlement funds. Iqbal denied the restaurants' poor management.
He testified that he worked long hours, and he denied responsibility for the
declining profits, failed audits, and labor litigation, and instead blamed
others⸻including Gilani, Sahill Parikh, Popeyes' suppliers, and Popeyes—for
problems with the restaurant renovations and the Parikhs' accounting errors.
In July 2015, the Parikhs met with Iqbal and discussed his leaving the
business amicably, with a payout of any monies owed to him. Iqbal also wanted
out of the business at that time. However, he was unsatisfied with the Parikhs'
accounting of what he was owed, and he threatened a lawsuit. The Parikhs
claimed they terminated the business relationship with Iqbal on the date of that
meeting. But Iqbal asserted he continued to work in the restaurants until mid-
February 2016. At trial, the parties agreed that Iqbal was entitled to payment of
a certain amount of money⸻but they disagreed about the amount.
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Iqbal claimed entitlement to a greater amount of profit distributions from
plaintiff than he had been allocated, although the amount he claimed he was
owed is difficult to discern from his testimony. 2 As to this issue, he maintained
that the Parikhs inappropriately reduced the Minnesota restaurants' reported
profits by wrongly charging for certain expenses, such as capital improvements,
management fees, and back-office services. He also claimed his profit-sharing
was understated because he was charged for money paid to another individual. 3
Iqbal also claimed entitlement to unpaid wages. However, the amount is
unclear from his testimony. 4 It was undisputed that Iqbal received a salary in
2013. But Iqbal pointed to a period between December 11, 2012 and mid-March
2013, when he was in training but not paid. He also claimed he had been
promised a salary of $80,000 or $100,000⸻it was undisputed that he was paid
$60,000 per year. Iqbal also claimed he was not paid a salary between 2014 and
2
Defense counsel discussed calculations in his summation, claiming that out
of $678,683 in profits, $84,793 was kept, leaving $593,890 paid over to the
Parikhs.
3
On plaintiff's motion for judgment at trial, the judge limited the damages on
defendants' breach of contract claim to profits earned through December 31,
2015.
4
In summation, defense counsel interpreted Iqbal's testimony and provided
the jury with calculations of back wages allegedly owed to Iqbal, based upon
an $80,000 salary and a $100,000 salary.
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mid-February 2016⸻the time he stopped working at the Minnesota restaurants,
but this was disputed.
Specifically, by email dated December 29, 2013, Iqbal told the Parikhs to
stop paying salaries to him and Gilani, and the Parikhs complied. Iqbal asserted
that he was induced to stop taking a salary because he started working with the
Parikhs on another project, involving Dunkin Donuts franchises, as to which he
was assured a thirty-percent ownership interest. By contrast, the Parikhs
suggested that Iqbal stopped taking a salary so he could receive compensation
in other ways, with fewer taxes owed.
First, the Parikhs noted that the non-payment of salaries to Iqbal and
Gilani had the effect of increasing the businesses' profits, of which Iqbal
received a percentage share without any W-2 deductions. Second, it was
undisputed that, starting in 2014, notwithstanding his declining salary, Iqbal
began receiving periodic payments from the businesses. The Parikhs
characterized these payments as advances on future profit distributions.
However, Iqbal characterized these payments as non-recourse loans in lieu of a
salary, although he never reported these payments as income. Finally, testimony
showed that Iqbal received non-salary through his business, defendant Iggy
Management, LLC, which Iqbal formed on December 30, 2013. Thereafter,
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Iqbal reduced the taxes he owed on these payments to Iggy Management, LLC,
by taking deductions for business-related expenses and profit-sharing with his
sons.
The Parikhs presented an accounting of monies allegedly paid to Iqbal and
monies paid by him towards a potential ownership interest in Twin Cities. Based
upon this accounting, they determined that plaintiff owed Iqbal $181,846. More
specifically, the Parikhs claimed Iqbal had been paid or was entitled to $411,197
in profit-sharing, which was applied to his capital contributions, including the
initial $112,500 payment owed under the MOU. 5 From that amount, the Parikhs
deducted $229,351 in distributions made to Iqbal in 2014 and 2015 and monies
taken from sales, and reached an amount due of $181,846. Addressing the
Parikhs' calculations, Iqbal agreed that $411,197 was applied to his capital
contribution to plaintiff, but said it was money he had never received. He further
claimed that he paid at least $700,000 toward the Twin Cities deal. 6
5
Under the MOU, Iqbal needed to pay $112,500, plus $27,000 per restaurant
($324,000 for twelve restaurants), totaling $436,500.
6
In summation, defense counsel claimed Iqbal was entitled to $593,890 in
profit-sharing paid over to the Parikhs, plus $42,853 in wages, totaling
$782,943.
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II.
We begin by addressing plaintiff's argument that the jury's damages
verdict was inconsistent, illogical, and against the weight of the evidence.
Plaintiff contends that the jury miscalculated the amount of the damages it
awarded to Iqbal. We conclude there is nothing inconsistent, illogical, or
irreconcilable about the jury's calculations.
A jury's verdict "is entitled to very considerable respect." Baxter v.
Fairmont Food Co., 74 N.J. 588, 597 (1977). In considering whether a jury
verdict, including a damages award, is against the weight of the evidence, we
should not reverse unless we are clearly convinced, giving due regard to the
jury's opportunity to assess the credibility of all evidence, that there has been a
miscarriage of justice under the law. R. 2:10-1; Cuevas v. Wentworth Grp., 226
N.J. 480, 501 (2016); Risko v. Thompson Muller Auto. Grp., Inc., 206 N.J. 506,
521-22 (2011); Baxter, 74 N.J. at 597-98; Dolson v. Anastasia, 55 N.J. 2, 6-7
(1969). The court should carefully weigh the evidence, but it should not
substitute its judgment for that of the jury. Dolson, 55 N.J. at 6. The object of
a reversal would be "to correct clear error or mistake by the jury." Ibid.
The jury answered several questions related to defendants' damages. As
to Question One on the verdict sheet, the jury answered "yes" on whether Iqbal
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paid the initial required payment of $112,500. Answering Question Two, the
jury found that defendant paid $298,697 towards the additional required
$324,000 payment of $27,000 for each of the twelve franchise restaurants.
Answering Question Fourteen, the jury added these numerical responses and
found that plaintiff owed Iqbal $411,197 pursuant to the MOU. As to Question
Three, the jury concluded that the MOU had been orally modified to permit
defendants to pay any remaining money out of his share of profits. Thereafter,
answering Question Nine, the jury found that Iqbal was entitled to receive
$334,889 in profit-sharing. Answering Question Eleven, the jury found that
$234,282 of the profit-sharing was applied as a credit owed under the MOU.
And answering Question Ten, the jury found that $100,607 of the profit-sharing
was not applied as a credit owed under the MOU. On Questions Twelve and
Thirteen, the jury found that Iqbal never received any withdrawals or advances
against profit-sharing, nor did he receive any loans from plaintiff. Finally,
answering Question Eighteen, the jury concluded that defendants had not been
paid the $10,000 in salary that was owed.
Thus, when the jury awarded defendants $411,197 in damages pursuant to
the MOU, it reached that amount by adding the $112,500 initial payment Iqbal
made (Question One), plus $298,697 Iqbal paid toward the $27,000 per
A-5821-17T1
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restaurant that he was obligated to pay (Question Two). The $411,197 damage
award also corresponds to a figure set forth on one of plaintiff's trial exhibits, in
which plaintiff calculated the amount it allegedly owed to defendants.
Specifically, the jury added: (1) Contributions made and 2013 profit
distributions ($258,522), plus (2) share of profit entitlement for 2014
($122,260), plus (3) share of profit entitlement for the period of January 1, 2015
through July 13, 2015 ($30,415), totaling $411,197. Finally, this damages
award also corresponded to the testimonies of Ashish Parikh and Iqbal, with
both men agreeing that Iqbal contributed at least this amount toward his
financial obligation under the MOU.
In denying plaintiff's motion for a new trial, the judge found that the
verdict "fell within a reasonable range which a jury could have reached based
upon the evidence by both sides in this case," and it did not shock the conscience.
The judge found the $411,197 damages award consistent with the total amount
the jury found that Iqbal contributed towards an ownership interest in Twin
Cities ($112,500 plus $298,697). As for the award of $10,000 in wages, the
judge found that it most likely related to the period in early 2013, when Iqbal
testified that he was not being paid. Finally, as for the other jury calculations
on the verdict sheet, the judge noted that the evidence as to payments made or
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withheld from Iqbal was hotly contested relating to amount and purpose (e.g.,
profit-sharing, wages, or non-recourse loans), and neither side presented strong
evidence on that issue. Thus, the jury made its own calculations, both accepting
and rejecting testimony presented by each side, which it was entitled to do.
The evidence supports the jury's calculation of damages. At trial, the
parties agreed that Iqbal made at least $411,197 in capital contributions.
Plaintiff argued that this amount should be reduced to account for monies Iqbal
owed, while Iqbal argued he was entitled to more, based upon plaintiff's alleged
failure to properly account for profits and losses, and thus its failure to pay him
his fair share of profits and all wages owed. However, the jury was entitled to
reject the parties' calculations and resolve the damages amount based upon the
amount the parties agreed upon for capital contributions and to reach its own
calculation of lost wages. See, e.g., State v. Muhammad, 182 N.J. 551, 577
(2005) (stating that the jury is not bound to believe testimony of any witness).
The jury also reasonably found that plaintiff owed Iqbal $10,000 in back pay.
The parties agreed that Iqbal was not paid until March 2013, although Iqbal
claimed entitlement to wages back to December 2012. The parties also disputed
whether Iqbal was compensated for his work in 2014 and thereafter. As the
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judge found, the $10,000 figure corresponds closely with what Iqbal alleged
plaintiff owed him for his work in 2013.
III.
Plaintiff argues that a new trial on damages is warranted because
defendants' counsel made improper remarks throughout the trial. 7 Plaintiff did
not object to all of the comments raised on appeal, particularly those comments
that defendants' counsel made in summation. We see no error that warrants the
judgment's reversal.
Plaintiff complains that on cross-examination, defense counsel referred to
Ashish Parikh as a "very wealthy man." Its counsel immediately objected to this
comment, and the judge sustained the objection and advised the jury to
"disregard the comments of counsel." We have no reason to believe that the jury
did not follow that instruction.
Plaintiff complains that, in a move orchestrated by defense counsel, Iqbal
falsely testified that the Parikhs had criminal records. Its counsel immediately
objected to this testimony and moved for a mistrial. The judge denied the motion
7
We address the comments about which plaintiff complains in its initial
appellate brief. It raised additional comments in its reply brief, however, it is
inappropriate to raise new issues in a reply brief. Borough of Berlin v.
Remington & Vernick Eng'rs, 337 N.J. Super. 590, 596 (App. Div. 2001).
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but sustained the objection and issued a cautionary instruction to the jury,
stating: "[T]here is absolutely no evidence in this case that any of the witnesses
or parties have any criminal record[s]. And you are to disregard any testimony
to the contrary in this case." The jury followed that instruction.
The judge rejected plaintiff's contention that the comments, including
those made by defendants' counsel in summation to which there was no
objection, did not warrant a new trial. The judge stated:
Defense counsel here did on at least a couple of
occasions go beyond the permissible bounds of
argument, impermissibly expressing his personal
belief. No objection was raised at the time this
occurred, which would have allowed the [c]ourt to
give an appropriate cautionary instruction at that time.
The comments, which were relatively brief and
fleeting, the [c]ourt notes, were extremely unlikely to
have any prejudicial impact on the jury.
More importantly, to ensure that there was no
prejudicial effect, the [c]ourt emphasized in the jury
charge the caution that the statements and comments
of counsel were not evidence.
It's the [c]ourt's belief that this eliminated any
potential prejudice as a result of the comments by
defense counsel.
The [c]ourt also notes that there's nothing here
about the verdict in this case which shocks the
conscience.
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Rather, the verdict fell within a reasonable range
which a jury could have reached based upon the
evidence by both sides in this case.
Counsel are expected to zealously advocate for their clients. At the same time,
they may not misrepresent the evidence, and "it is improper for an attorney to
make derisive statements about parties, their counsel, or their witnesses."
Szczecina v. PV Holding Corp., 414 N.J. Super. 173, 178 (App. Div. 2010);
accord RPC 3.4(e); Risko, 206 N.J. at 522-23; Geler v. Akawie, 358 N.J. Super.
437, 463-64, 467 (App. Div. 2003); Rodd v. Raritan Radiologic Assocs., P.A.,
373 N.J. Super. 154, 171 (App. Div. 2004).
Here, the remarks that plaintiff complains of on appeal were either struck
from the record upon plaintiff's counsel's objections or were not objected to by
plaintiff's counsel at trial, indicating that counsel did not deem them prejudicial.
Risko, 206 N.J. at 523. As to the comments in summation, the judge instructed
the jurors that counsel's arguments were not evidence, and they must rely upon
their own review of the record in reaching their verdict. The jury is presumed
to have followed the judge's instructions. State v. Santamaria, 236 N.J. 390,
412-13 (2019).
A-5821-17T1
22
IV.
Plaintiff argues that the judge erred by denying its post-trial motion for
counsel fees and costs based upon Iqbal's failure to disclose related litigation in
New York, as required under Rule 4:5-1(b)(2). Defendants' appellate counsel
concedes that trial counsel should have reported the New York litigation, but
argues that the judge did not abuse his discretion in declining to award counsel
fees. On this issue, we reverse and remand for further proceedings consistent
with this opinion.
In the New York litigation, Iqbal sought the same relief he seeks in the
present litigation, based upon the same set of facts. The named defendants in
the New York litigation were Ashish Parikh, Amish Parikh, and Prabodh Parikh
(the Parikhs' father), individually and as owners of the Parikh Network. Plaintiff
filed this complaint in November 2015, more than two years before Iqbal filed
the New York litigation. Additionally, this case was tried in March 2018, three
months after Iqbal filed the New York litigation.
The judge found that in the New York action, Iqbal sought the same relief
in the present action, based upon the same set of facts. Defense counsel clearly
violated Rule 4:5-1(b)(2) by failing to disclose the New York litigation. In
denying the motion, the judge stated:
A-5821-17T1
23
It's crystal clear to the [c]ourt that . . . defendant
violated the provisions of Rule 4:5-1(b)(2), failing to
notify the [c]ourt or the opposing party, in . . . this
action, the pendency of the New York suit.
....
With respect to the second portion of the relief
sought by [p]laintiff, the [c]ourt concludes that it does
not have jurisdiction to enter a decision with respect to
an action pending in New York.
The [c]ourt happens to agree that had the same
action been filed in this [c]ourt, both the entire
controversy and the doctrine of collateral estoppel
would bar the New York suit in its entirety.
The problem is that New Jersey doesn't have the
power to order such a finding by the New York courts,
and that's an application that must be addressed in the
New York courts.
Rule 4:5-1(b)(2) does provide that the [c]ourt
may impose an appropriate sanction, including
dismissal of the successive action. Obviously . . . the
sanction of dismissal of the successive action is not
something this [c]ourt can address since this [c]ourt
doesn't have jurisdiction over that action.
The conduct of counsel for defendant here is the
type of practice condemned by the Appellate Division
in [Simmermon v. Dryvit Systems, Inc., 196 N.J. 316,
334 (2008)].
The Appellate Division there, however,
recognized that in dealing with cases pending in
different jurisdictions, here the other jurisdiction, New
A-5821-17T1
24
York, must make the decisions and not a New Jersey
court.
The improper conduct here appears to have been
a tactical decision seeking to gain an unfair advantage.
Nevertheless, it does not appear to have resulted in
any additional costs being incurred in the New Jersey
action.
Rather, the additional costs being incurred by
[p]laintiff, or the principals thereof, are being incurred
. . . in the New York action and not in the New Jersey
action.
The [c]ourt also notes that while the Parikhs . . .
were principals and testified here, of Twin Cities, they
were not parties here. Any compensation for expenses
being incurred by those individuals it seems to the
[c]ourt must be addressed by the New Jersey courts.
Accordingly, because the successive action is
not pending in New Jersey, the [c]ourt will deny the
motion.
We review the judge's ruling for an abuse of discretion. Karpovich v. Barbarula,
150 N.J. 473, 483 (1997) (holding that violation of Rule 4:5-1(b)(2) does not
mandate dismissal of second litigation; "[r]ather, a court must exercise its
discretion and consider the purposes of the entire controversy doctrine before
barring a subsequent action").
Rule 4:5-1(b)(2) requires disclosure of related actions. It provides, in
pertinent part:
A-5821-17T1
25
Each party shall include with the first pleading a
certification as to whether the matter in controversy is
the subject of any other action pending in any court
. . . or whether any other action . . . is contemplated;
and, if so, the certification shall identify such actions
and all parties thereto. Further, each party shall
disclose in the certification the names of any non-
party who should be joined in the action . . . or who is
subject to joinder . . . because of potential liability to
any party on the basis of the same transactional facts.
Moreover, the Rule's disclosure obligation is a continuing one: "Each
party shall have a continuing obligation during the course of the litigation to file
and serve on all other parties and with the court an amended certification if there
is a change in the facts stated in the original certification[.]" R. 4:5-1(b)(2).
In terms of sanctions for failing to make the required disclosure, the Rule
provides:
If a party fails to comply with its obligations under
this rule, the court may impose an appropriate
sanction including dismissal of a successive action
against a party whose existence was not disclosed or
the imposition on the noncomplying party of litigation
expenses that could have been avoided by compliance
with this rule. A successive action shall not, however,
be dismissed for failure of compliance with this rule
unless the failure of compliance was inexcusable and
the right of the undisclosed party to defend the
successive action has been substantially prejudiced by
not having been identified in the prior action.
[Ibid. (emphasis added).]
A-5821-17T1
26
The courts are charged with enforcing this Rule, the goal of which is to
avoid "piecemeal litigation." Kent Motor Cars, Inc. v. Reynolds & Reynolds,
Co., 207 N.J. 428, 444-45 (2011); see also Gelber v. Zito P'ship, 147 N.J. 561,
567-68 (1997). "Although the Rule specifies dismissal and imposition of
litigation costs as two enforcement mechanisms, they are not the only sanctions
available to the court. Rather, the clear language also broadly authorizes the
court to 'impose an appropriate sanction.'" Kent Motor Cars, 207 N.J. at 445
(quoting R. 4:5-1(b)(2)).
For example, in Simmermon, 196 N.J. at 334-35, the Court found that the
defendant made a tactical decision to violate Rule 4:5-1(b)(2) by not notifying
the court of a class action litigation pending in Tennessee until the opt-out
deadline expired and the settlement was approved, thereby precluding the
plaintiff's New Jersey litigation. The Court held that the defendant's violation
of Rule 4:5-1(b)(2) did not warrant a refusal to give full faith and credit to the
judgment in the class action suit. Id. at 336. Instead, the Court found that the
plaintiff should seek relief from the judgment in Tennessee. Id. at 336-38.
On the other hand, the Court found that it was "only fair that [the
defendant] be held responsible for those litigation expenses, including attorneys'
A-5821-17T1
27
fees, that would not have been incurred by [the] plaintiff had [the defendant]
filed a timely certification." Id. at 335. More specifically, the Court stated:
[The defendant] will be responsible for all litigation
expenses, including attorneys' fees, incurred by [the]
plaintiff in seeking relief from the Tennessee
judgment. If [the] plaintiff applies for relief in
Tennessee and is not excluded as a class member from
the settlement and the Tennessee judgment remains in
effect, then the Law Division in this state must give
preclusive effect to that judgment. In such case, [the
defendant] will also be responsible for all litigation
expenses, including attorneys' fees, incurred by [the]
plaintiff from the time it breached Rule 4:5-
1(b)(2)⸻March 15, 2002, the date that [the defendant]
filed an answer without the required certification.
If Tennessee excludes [the] plaintiff from the
class action settlement, he then may proceed with his
remaining New Jersey claims. In such case, because
the appeals to the Appellate Division and this Court
clearly could have been avoided had [the defendant]
filed the required Rule 4:5-1(b)(2) certification, the
trial [judge] is directed to impose the litigation
expenses, including attorneys' fees, incurred by [the]
plaintiff in those appeals. The trial [judge] will also
determine all other such litigation expenses incurred
by [the] plaintiff at the pretrial stage that are
attributable to the violation of the [Rule]. Under that
scenario, [the defendant] would not be liable for
litigation expenses for pretrial work, such as
depositions and motions, related to the substantive
claims advanced by [the] plaintiff.
[Id. at 338-39.]
A-5821-17T1
28
See also Potomac Ins. Co. of Ill. ex rel. OneBeacon Ins. Co. v. Pa. Mfrs. Ass'n
Ins. Co., 425 N.J. Super. 305, 326-28 (App. Div. 2012) (affirming verdict in
second litigation, for defense costs in underlying action, because in the
underlying action "the parties and their attorneys entered into an intentionally
ambiguous agreement and both sides failed to comply with [Rule 4:5-1(b)(2)]").
Here, in denying sanctions, the judge seemed to be under the
misapprehension that the only sanction available was dismissal of the New York
action, which it did not have jurisdiction to grant. However, that clearly was
not the case. Rule 4:5-1(b)(2) permits the judge to determine an appropriate
sanction depending upon the circumstances. In this case, for example, the judge
could have awarded plaintiff the counsel fees and costs associated with the
motion for sanctions. Moreover, consistent with Simmermon, the judge could
have ruled that, if plaintiff moved to dismiss the New York litigation on res
judicata and entire controversy grounds, and the New York court denied the
motion, then the judge would consider the New York court's decision and
defendant would potentially be held responsible for plaintiff's litigation costs in
New Jersey from the date of defendant's violation of the Rule⸻at the very least,
the date the complaint was filed in New York. We therefore reverse and remand
for the judge to reconsider the sanction question.
A-5821-17T1
29
V.
In their cross-appeal, defendants contend the judge erred by instructing
the jury that oral modifications to a contract must be proven by clear and
convincing evidence. They argue, therefore, that a new trial should be ordered
on Iqbal's claim of a fifteen-percent ownership interest in Twin Cities. We
conclude the judge erred, but this error does not warrant the judgment's reversal
because the jury determined that Iqbal had not made the required financial
contributions to become a fifteen-percent owner of Twin Cities. Therefore, his
claim to an ownership interest in Twin Cities fails, regardless of the error.
Plaintiff's counsel argued that a clear and convincing standard applied to
modifications of a written contract, where the written contract provides only for
written modifications, not oral modifications. Defense counsel objected, stating
that the case law plaintiff cited to only talked about "clear conduct," and "[n]ot
necessarily clear and convincing evidence." However, defense counsel also
stated: "[I]f that's what the law is, then I have to live with it. But I don't have
to just say okay because they say so." The judge agreed with plaintiff's argument
and gave the clear and convincing evidence charge as requested.
The judge charged the jury, in pertinent part, as follows:
With regard to the claimed oral modification of
the written contract, which is the [MOU], it is the
A-5821-17T1
30
obligation of the party claiming a modification to
prove those allegations by clear and convincing
evidence. Clear and convincing evidence is evidence
that produces in your minds a firm belief or conviction
that the allegations sought to be proved by the
evidence are true. It is evidence so clear, direct,
weighty in terms of quality, and convincing as to
cause you to come to a clear conviction of the truth of
the precise facts in issue. The clear and convincing
standard of proof requires that the result shall not be
reached by a mere balancing or doubts or
probabilities, but rather by clear evidence which
causes you to be convinced that the allegations sought
to be proved are true.
Thereafter, the judge repeated the clear and convincing evidence standard when
reciting the elements of defendant's cause of action for breach of an oral
modification of the contract, and as to defendant's specific allegation of an oral
modification.
In Question Three on the verdict sheet, the jury found that Iqbal proved
one oral modification of his contract with plaintiff, that is, for him to make his
required payments through profit distributions. Plaintiff conceded this
modification at trial. But the jury also found, as reflected on the verdict sheet:
4. Under the terms of the [MOU], was [Iqbal]
required to be approved as a franchisee by [Popeyes]
before he was permitted to receive a [fifteen-percent]
ownership interest in [Twin Cities]?
YES X No _____ (7-1)
A-5821-17T1
31
5. Was [Iqbal] ever approved as a franchisee of
[Popeye's]?
YES No X (8-0)
6. Did the conduct of [Twin Cities] prevent [Iqbal]
from becoming an approved franchisee of [Popeye's]?
YES No X (7-1)
....
8. Did [Iqbal] comply with all conditions required for
him to receive [fifteen-percent] ownership interest in
[Twin Cities] in accordance with the terms of the
[MOU] and any agreed upon modifications to that
agreement?
YES No X (8-0)
....
15. Did [Twin Cities] breach the [MOU] to provide
[Iqbal] with a [fifteen-percent] ownership in [Twin
Cities]?
YES No X (7-1)
"[I]t is fundamental that the jury charge should set forth in clear
understandable language the law that applies to the issues in the case." Toto v.
Ensuar, 196 N.J. 134, 144 (2008); accord Estate of Kotsovska ex rel. Kotsovska
v. Liebman, 221 N.J. 568, 591 (2015); Mogull v. CB Commercial Real Estate
Grp., 162 N.J. 449, 464 (2000). In considering a trial judge's jury charge, a
A-5821-17T1
32
reviewing court must read the charge as a whole to determine if it was correct.
Toto, 196 N.J. at 144; Sons of Thunder, Inc. v. Borden, Inc., 148 N.J. 396, 418
(1997). We do not reverse "where the charge adequately conveys the law and
does not confuse or mislead the jury." Sons of Thunder, 148 N.J. at 418.
However, even erroneous jury instructions do not require reversal where the
instructions were incapable of producing an unjust result or prejudicing
substantial rights. Ibid.; accord Toto, 196 N.J. at 144.
In general, a contract is formed where there is an offer and acceptance
between the parties. Morton v. 4 Orchard Land Tr., 180 N.J. 118, 129-30 (2004).
After formation, the contracting parties "may, by mutual assent, modify it."
County of Morris v. Fauver, 153 N.J. 80, 99 (1998). "A contract modification
is 'a change in one or more respects which introduces new elements into the
details of a contract and cancels others but leaves the general purpose and effect
undisturbed.'" Wells Reit II-80 Park Plaza, LLC v. Dir., Div. of Taxation, 414
N.J. Super. 453, 466 (App. Div. 2010) (quoting Int'l Bus. Lists, Inc. v. Am. Tel.
& Tel. Co., 147 F.3d 636, 641 (7th Cir. 1998)).
Generally, modifications to a written contract are not required to be made
in writing. To the contrary, a "modification can be proved by an explicit
agreement to modify, or . . . by the actions and conduct of the parties, so long as
A-5821-17T1
33
the intention to modify is mutual and clear." County of Morris, 153 N.J. at 99;
accord Wells Reit, 414 N.J. Super. at 466; DeAngelis v. Rose, 320 N.J. Super.
263, 280 (App. Div. 1999). However, an agreement to modify a contract "must
be based upon new or additional consideration." County of Morris, 153 N.J. at
100. The consideration need not be significant; whatever consideration the
parties agree to is sufficient. Oscar v. Simeonidis, 352 N.J. Super. 476, 485
(App. Div. 2002).
The model jury charge on contract modifications does not set forth a clear
and convincing standard of proof. Model Jury Charges (Civil), 4.10I "Bilateral
Contracts – Modification" (approved May 1998). However, the clear and
convincing standard of proof applies to a limited number of contract claims,
including where a statute requires a contract for the transfer of real property be
in writing. See, e.g., N.J.S.A. 25:1-12; N.J.S.A. 25:1-13; Morton, 180 N.J. at
125-26; Tiedemann v. Cozine, 297 N.J. Super. 579, 582 (App. Div. 1997); Aiello
v. Knoll Golf Club, 64 N.J. Super. 156, 160-61 (App. Div. 1960). See also
N.J.S.A. 2A:81-2 (requiring proof by clear and convincing evidence to establish
agreement with individual who is mentally incapacitated).
On appeal, as it did before the judge, plaintiff relies on these land
transfer/statute of fraud cases. Plaintiff also relies on Home Owners
A-5821-17T1
34
Construction Co. v. Borough of Glen Rock, 34 N.J. 305, 316-17 (1961), a public
construction contract case, in which the Court required clear and convincing
proof for oral modifications of the contracted work. However, that case did not
purport to establish a general rule requiring clear and convincing proof for all
alleged oral modifications of written contracts.
"As a general rule, the preponderance of the evidence standard applies in
civil actions." Liberty Mut. Ins. Co. v. Land, 186 N.J. 163, 169 (2006). The
clear and convincing evidence standard is more stringent than the preponderance
of the evidence standard. It "establishes a standard of proof falling somewhere
between the ordinary civil and criminal standards" of preponderance of the
evidence and beyond a reasonable doubt. Aiello, 64 N.J. Super. at 162; accord
Land, 186 N.J. at 169-70. Evidence is clear and convincing when it "produce[s]
in the mind of the trier of fact a firm belief or conviction as to the truth of the
allegations sought to be established." Aiello, 64 N.J. Super. at 162.
Here, there was no statutory requirement that the parties' contract be in
writing, nor was there any statutory requirement imposing a clear and
convincing evidence standard for oral contract formation or modification.
Therefore, the judge erred by charging the jury that the MOU's oral
modifications must be proven by clear and convincing evidence. Absent a clear
A-5821-17T1
35
and convincing evidence standard, the jury might have found in defendants'
favor on the oral modification claim. Typically, that would require the
judgment's reversal and a new trial.
On the record presented, however, we conclude the error was harmless in
light of the jury's finding that Iqbal had not fulfilled the conditions necessary to
become a fifteen-percent owner of Twin Cities. It was undisputed that one of
those conditions was making the necessary financial contributions, and the jury
concluded that Iqbal had contributed less than the required amount. Thus, even
if the jury found that the contract had been orally modified to eliminate this
requirement of becoming an approved Popeyes franchisee, Iqbal still was not
entitled to a fifteen-percent ownership interest in Twin Cities because the jury
found he had not made the required financial contributions.
Furthermore, the alleged oral modification is not supported by the
evidence at trial, even applying a preponderance of the evidence standard. Iqbal
presented no evidence that plaintiff agreed to an oral modification of the MOU,
such that he could become a part owner of Twin Cities without becoming an
approved Popeyes franchisee, nor did he present any evidence as to an exchange
of new or additional consideration for this alleged oral modification of the
MOU. Thus, he did not provide the required evidence for an oral modification
A-5821-17T1
36
of contract claim, no matter what standard of proof is applied. Plaintiff is
correct, as well, that defendants produced no evidence as to damages, that is, the
value of a fifteen-percent ownership interest in Twin Cities.
Indeed, Iqbal did not rely on the contract modification theory to obtain
relief. Iqbal testified that he was an owner from the start based upon his
understanding of the agreement and by how he was treated. In other parts of his
testimony, he seemed to admit that it was his contractual obligation to become
an approved Popeyes franchisee; however, he maintained that the Parikhs made
it impossible for him to become one because they did not submit his application.
And defense counsel did not argue the elements of a contract modification claim.
Rather, defense counsel pursued theories of detrimental reliance on the Parikhs'
promises to submit the franchise application, and excusal of a contract condition
due to the Parikhs' misconduct in not submitting the application. The verdict
sheet, however, reflects that the jury rejected defendants' claim that plaintiff
prevented Iqbal from becoming an approved franchisee.
Finally, we note that Iqbal's oral modification allegation obviously
implicates the rights of a third party⸻Popeyes. Iqbal clearly understood that
Popeyes' rights were implicated because the terms of his written agreement with
Twin Cities referenced Popeyes' ongoing interest in all of the Minnesota
A-5821-17T1
37
restaurants. However, pursuant to the Parikhs' franchise agreement with
Popeyes, the Parikhs could not transfer ownership of Twin Cities without
Popeyes' consent. Indeed, the franchise agreement provides that the agreement
would be terminated if any transfer occurred without Popeyes' consent.
At trial, Iqbal presented testimony that other individuals were part owners
of Twin Cities, without being approved franchisees. However, he presented no
evidence that Popeyes consented to the Parikhs' transferring to him a fifteen-
percent ownership interest in Twin Cities. Therefore, even if Iqbal proved a
modification of his written agreement with Twin Cities, such that he did not
have to be an approved franchisee in order to be a part owner of Twin Cities
(which he did not), he still did not prove any right to a fifteen-percent ownership
of Twin Cities because he did not show that Popeyes consented to such transfer.
VI.
In their cross-appeal, defendants contend the judge committed plain error
by not sua sponte granting them prejudgment interest on the award of damages.
Our review of an award of prejudgment interest, and the calculation of that
amount, is for an abuse of discretion. County of Essex v. First Union Nat'l Bank,
186 N.J. 46, 61 (2006); P.F.I., Inc. v. Kulis, 363 N.J. Super. 292, 301 (App. Div.
2003). We see no abuse.
A-5821-17T1
38
Prejudgment interest on contract and equitable claims is a matter of
equity. Litton Indus., Inc. v. IMO Indus., Inc., 200 N.J. 372, 390 (2009). In
such cases, prejudgment interest is meant to cover the period of time during
which the defendant had use of the amount in question, while the plaintiff was
entitled to have it. Ibid.
Here, defendants did not request prejudgment interest before the trial
judge, either in their counterclaim or in a post-trial motion. Moreover, since
prejudgment interest is a discretionary decision in this contract action, the judge
was under no obligation to order prejudgment interest sua sponte, and there was
no abuse of discretion. On remand, defendants may raise the pre-judgment issue
by filing an appropriate motion.
We affirm the judgment. We remand for further proceedings on the
sanction and pre-judgment issues. We do not retain jurisdiction.
A-5821-17T1
39