RDPD, LLC VS. DAVID MERMELSTEIN (C-000027-18, ATLANTIC 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NOT FOR PUBLICATION WITHOUT THE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-2655-18T2
RDPD, LLC,
Plaintiff-Appellant,
and
PAUL DZIALO,
Plaintiff,
v.
DAVID MERMELSTEIN,
BEACHVIEW BUILDING
CORPORATION t/a OLD
WATERWAY INN, NEW
WATERWAY BAR AND
GRILL, LLC, WILLIAMS
REAL ESTATE VENTURES,
LLC, SOLOMON MERMELSTEIN,
and ACTIVE REALTY COMPANY
PROFIT SHARING PLAN,
Defendants-Respondents,
and
SEYMORE RUBIN, KNIGHTS
ABSTRACT, INC., TRIDENT LAND
TRANSFER COMPANY (NJ) LLC,
and SIMPLIFILE, LLC,
Defendants.
Argued telephonically May 12, 2020 –
Decided June 30, 2020
Before Judges Hoffman, Currier and Firko.
On appeal from the Superior Court of New Jersey,
Chancery Division, Atlantic County, Docket No. C-
000027-18.
Jennifer B. Barr argued the cause for appellant (Cooper
Levenson, PA, attorneys; Mark G. Schwartz and
Jennifer B. Barr, on the briefs).
Adam E. Gersh argued the cause for respondents David
Mermelstein, Beachview Building Corporation t/a Old
Waterway Inn, New Waterway Bar and Grill, LLC,
Solomon Mermelstein, and Active Realty Company
Profit Sharing Plan (Flaster/Greenberg PC, attorneys;
Adam E. Gersh and Jeremy S. Cole, on the brief).
Stephen McNally argued the cause for respondent
Williams Real Estate Ventures, LLC (Chiumento
McNally, LLC, attorneys; Stephen McNally and Paige
M. Bellino, on the brief).
PER CURIAM
A-2655-18T2
2
In 2018, the Chancery court granted plaintiff's 1 counsel's motion to be
relieved of counsel. As an LLC, plaintiff was required to be represented by
counsel. R. 1:21-1(c). When plaintiff failed to retain new counsel, the Chancery
court granted defendants' motions for a dismissal of the complaint with
prejudice. Plaintiff appeals from those orders. Because we conclude the court
erred in dismissing the complaint with prejudice, we reverse.
This dispute concerns the ownership of property in Atlantic City. In
March 2018, plaintiff filed a verified complaint and order to show cause ,
essentially asserting a fraudulent conveyance of the property and seeking a
declaratory judgment to establish ownership. Plaintiff also filed a lis pendens.
Defendant Williams Real Estate Ventures, LLC (WREV) moved to
dismiss the complaint for failure to state a claim under Rule 4:6-2 and to strike
the lis pendens. In July 2018, the court denied the dismissal motion but granted
the motion to strike the lis pendens. A case management order established a
timeline for discovery, a date for filing dispositive motions and a trial date in
March 2019.
1
We refer to RDPD, LLC as plaintiff. Plaintiff's members were Richard Donato
and Paul Dzialo. Dzialo passed away shortly after the entry of the challenged
orders. Dzialo has not appealed from the entry of the order dismissing his
individual claims. We refer to him by name.
A-2655-18T2
3
In September 2018, plaintiff's counsel moved to be relieved. Counsel
described the work he had completed but stated plaintiff's representatives were
uncooperative and continued representation would be a financial burden. The
court granted the motion on October 12, 2018 and ordered plaintiff to retain new
counsel within fourteen days.
In a November 1, 2018 letter, Donato requested the court grant plaintiff
additional time to retain counsel. On November 8, 2018, the court entered a
case management order with the following provisions: plaintiff must retain
counsel by December 5, 2018; if plaintiff did not have new counsel by that date,
defendants could move to dismiss the complaint; an in-person case management
conference was scheduled for December 18, 2018; and all discovery deadlines
provided in the July 20, 2018 order were stayed.
On December 10, 2018, WREV filed a motion to dismiss the complaint
against plaintiff with prejudice for its failure to retain counsel and against
Dzialo, asserting he lacked standing to assert any individual claims. On
December 14, the Mermelstein defendants 2 filed a motion to dismiss, asserting
the same arguments.
2
This group of defendants includes David Mermelstein, Beachview Building
Corporation t/a Old Waterway Inn, New Waterway Bar and Grill, LLC, Solomon
Mermelstein and Active Realty Company Profit Sharing Plan.
A-2655-18T2
4
Donato and Dzialo did not appear at the December 18, 2018 case
management conference. On December 21, 2018, the court entered a third case
management order with the following provisions: the motions to dismiss were
scheduled for January 11, 2019; the stay of discovery and discovery deadlines
was lifted; and defendant Seymour Rubin was permitted to join the filed motions
to dismiss or file a motion on short notice also returnable on January 11, 2019.
Opposition to the motions was due by January 4, 2019.
On January 9, 2019, Donato again wrote to the court, explaining why new
counsel had not been retained, requesting more time to retain counsel, and
requesting the court adjourn the pending motions. Donato stated his prior
counsel had never turned over plaintiff's file or any materials produced by
defendants during discovery. He advised he had met with or spoken to sixteen
attorneys without success because the attorneys or firms had conflicts with
defendants' lawyers or defendants themselves. Donato stated he now realized
he would have to seek counsel outside of the Atlantic County area and intended
to contact attorneys in Cherry Hill. He also cited to health issues and the
holidays as contributing to the delay in obtaining counsel.
After receiving Donato's letter, the court scheduled oral argument on the
dismissal motions for January 11, 2019. On that date, Donato, Dzialo, and
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counsel for defendants appeared for argument. The judge advised he would
permit Donato and Dzialo to speak on behalf of RDPD. Donato reiterated the
difficulties he had experienced in procuring an attorney, listed a number of
attorneys he had contacted, and requested an additional sixty days to obtain
counsel. Defendants objected to any adjournment of the motions and requested
the court dismiss the complaint with prejudice.
The court denied the adjournment request, finding defendants would be
"extremely prejudiced" if their motions were further delayed. In considering the
motions to dismiss, the judge stated he had granted plaintiff more than three
months to obtain new counsel. He did not find it likely that plaintiff would be
able to retain counsel. He also determined plaintiff had not shown good cause
for any further extension of time "or any legitimate reason for not retaining
counsel . . . ." Therefore, the court granted the motions and dismissed the
complaint with prejudice.
During the oral ruling, the court made findings of fact regarding
substantive issues in the case. He determined ownership of the property and
resolved disputed facts regarding its transfer.
On appeal, represented by counsel, plaintiff contends the Chancery court
erred in denying its request for further time to obtain counsel and in dismissing
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the complaint with prejudice. If remanded, plaintiff requests the matter be
assigned to a different judge because of the Chancery court's findings of fact on
substantive issues. 3
"The granting of an adjournment is discretionary with the trial court; [we]
may reverse a denial . . . only if the judicial action was 'clearly unreasonable in
the light of the accompanying and surrounding circumstances' and 'resulted
prejudicially to the rights of the party complaining.'" Stott v. Greengos, 95 N.J.
Super. 96, 100 (App. Div. 1967) (quoting Smith v. Smith, 17 N.J. Super. 128,
129, 133 (App. Div. 1951)).
We discern no error in the court's determination to deny an adjournment
of the motions to dismiss or the ruling to dismiss the complaint. As of October
2018, Donato and Dzialo were aware of the need to obtain counsel for the LLC.
The judge allowed ample time – over three months – for plaintiff to retain an
attorney. When plaintiff failed to comply with the court's final deadline, a
dismissal was the appropriate remedy.
However, we disagree with the order dismissing the complaint with
prejudice. As our Court has stated, "[b]ecause of the severity of the sanction,"
3
Plaintiff also refiled a lis pendens against the property in March 2019, pending
the disposition of the appeal.
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dismissing a complaint with prejudice "should be used only sparingly."
Zaccardi v. Becker, 88 N.J. 245, 253 (1982); see Robertet Flavors, Inc. v. Tri-
Form Constr., Inc., 203 N.J. 252, 274 (2010) (citations omitted).
Here, the court concluded that plaintiff would never retain counsel.
However, Donato and Dzialo both described their efforts in obtaining
representation, listed attorneys and firms they had contacted, and explained the
difficulties in great part due to the number of attorneys and firms involved in
the litigation on behalf of defendants. Moreover, plaintiff retained counsel for
the appeal.
We therefore vacate the January 11 and January 15, 2019 orders as to
plaintiff and remand to the trial court for orders dismissing the complaint
without prejudice. We also instruct the court to add the following language:
"Plaintiff must file a substitution of attorney within forty-five days of the date
of this order. If plaintiff fails to do so, the order shall convert to a dismissal of
the complaint with prejudice."
Because the Chancery judge made findings of material disputed facts, on
remand, the matter should be assigned to a different judge, in order to "preserve
the appearance of a fair and unprejudiced hearing." Pressler & Verniero, Current
N.J. Court Rules, cmt. 4 on R. 1:12-1 (2020); see In re Baby M, 109 N.J. 396,
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463 n.19 (1988) (citations omitted) (holding that the trial judge's weighing of
the evidence and potential commitment to findings required re-assignment on
remand to another judge). Any applications concerning the lis pendens should
be made before the trial court.
Reversed, vacated, and remanded for the entry of an order consistent with
this opinion. We do not retain jurisdiction.
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