S. JAY MIRMANESH VS. STEVEN BRASSLET (C-000005-12, CAPE MAY COUNTY AND STATEWIDE) ( 2021 )

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the
internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-1627-19
S. JAY MIRMANESH AND
LISA ANN MIRMANESH,
individually and derivatively
for WATERVIEW ESTATES
CONDOMINIUM
ASSOCIATION, INC.,
Plaintiffs-Appellants,
v.
STEVEN and DAWN BRASSLETT,
RALPH and CHERYL CALIRI,
MARION MACKINNON, and
WILLIAM AND LOIS MAGUIRE,
Defendants-Respondents,
_____________________________
Argued February 23, 2021 – Decided March 16, 2021
Before Judges Yannotti and Natali.
On appeal from the Superior Court of New Jersey,
Chancery Division, Cape May County, Docket No. C-
000005-12.
Steven E. Angstreich argued the cause for appellants
(Weir & Partners LLP, attorneys; Steven E. Angstreich
and Peter Nakonechni, on the briefs).
Kathleen Barnett Einhorn argued the cause for
respondents (Genova Burns LLC, attorneys; Angelo J.
Genova and Kathleen Barnett Einhorn, of counsel and
on the brief; Michael C. McQueeny on the brief).
PER CURIAM
This appeal returns to us following a remand ordered by our previous
opinion, Mirmanesh v. Brasslett, No. A-5680-16 (App. Div. May 9, 2019),
where we directed the trial court to make additional findings as to whether
plaintiffs were entitled to recover the attorneys' fees incurred by the law firm of
Greenbaum, Rowe, Smith & Davis (Greenbaum). Having reviewed and
considered the trial court's December 3, 2019 opinion, we affirm.
I.
We incorporate by reference the factual and procedural history as set forth
in our prior opinion. By way of brief overview, the Watervi ew Estates
Condominium Association (Association) is a non-profit corporation which
operates a five-unit condominium complex in Ocean City. On January 18, 2012,
plaintiffs filed a complaint against defendants, all unit owners, and members of
the Association, seeking to enforce a May 15, 2006 settlement agreement.
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Following a bench trial, the court issued a November 6, 2013 oral decision
finding both parties violated provisions of the settlement agreement. The judge
also denied both parties' requests for counsel fees and indemnification because
"each side . . . contributed to the conflagration of the issues," and there was "a
little bit of bad faith on each side." The court memorialized its decision in a
January 6, 2014 order (Final Judgment) which also appointed Michael A. Fusco
(Receiver) as receiver for the Association. Plaintiffs filed an appeal after their
motion for reconsideration was denied.
On August 18, 2014, while plaintiffs' appeal was pending, the trial court
entered an order in response to the Receiver's motion which granted him
authority to amend the Master Deed and By-Laws. Plaintiffs amended their
notice of appeal to include the August 18, 2014 order. On June 23, 2015, we
vacated the August 18, 2014 order and remanded the matter for further
proceedings after we determined the court erred in refusing to enforce certain
provisions of the settlement agreement.
Plaintiffs filed a motion for attorneys' fees and costs incurred during their
appeal. We granted plaintiffs' application and awarded $72,557.22 in counsel
fees to be paid by the Association.
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On remand, plaintiffs moved to terminate the Receiver's appointment
claiming he had a "predisposition to advance the interests of the defendants at
the expense of the plaintiffs." Plaintiffs also sought an order directing the
Association to adopt and record an amended Master Deed and By-Laws that
plaintiffs alleged comported with our June 23, 2015 decision. Plaintiffs further
requested relief from certain provisions of the January 6, 2014 and August 18,
2014 orders.
On December 28, 2015, the Receiver submitted a report for the "[c]ourt's
consideration [regarding] the pending motions" which detailed his interactions
with the parties. In that letter, the Receiver stated, "it was obvious . . . that Dr.
Mirmanesh1 would continue to legally challenge virtually any proposed new
document not to his liking irrespective of what the majority of the owners would
elect." The Receiver further noted that in dealing with Dr. Mirmanesh he
learned that "unless what is proposed is agreeable to Dr. Mirmanesh, he will
either ignore the proposal or legally challenge the same" and that compromise
"is not a word Dr. Mirmanesh embraces."
1
The Receiver referred to plaintiff S. Jay Mirmanesh by his professional
designation and we do the same for purposes of clarity.
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On August 31, 2016, the trial court granted plaintiffs' motion, terminated
the Receiver's appointment, and entered an order approving the amended Master
Deed and By-Laws. On November 30, 2016, plaintiffs submitted an amended
supplemental complaint against the Receiver and a motion for $303,066.79 in
attorneys' fees and costs. Plaintiffs' request included $152,777.79 in fees
incurred by the firm of Perskie, Mairone, Brog & Baylinson (Perskie), wh ich
represented plaintiffs during the trial proceedings from January 2012 to January
2014, and $150,289 in fees incurred by Greenbaum, which was retained in May
2014 and represented plaintiffs in the post-trial matters until January 2017.
On May 19, 2017, the court denied plaintiffs' request for attorneys' fees.
In support of its decision, the court relied upon the previous judge's
determination that both parties acted in bad faith. The court also concluded that
an award of attorneys' fees would effectively overturn the previous judge's
factual and legal conclusions. The court further noted that plaintiffs failed to
appeal the portion of the Final Judgment denying the award of attorneys' fees
and therefore waived any challenge to the court's decision on that issue. In
addition, the judge determined that plaintiffs' claims were barred by res judicata.
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Plaintiffs appealed, and in our May 9, 2019 unpublished decision, we
affirmed in part and reversed in part the court's denial of attorneys' fees. Id. at
7-8. We first addressed the Perskie fees and concluded that:
The [trial] court did not abuse its discretion in denying
plaintiffs' motion, as the court's January 6, 2014
decision denying those fees was amply supported by the
record, and plaintiffs waived any request for those fees
as a result of their failure to raise that issue when it
appealed the court's January 6, 2014 order.
[Id. at 6.]
With respect to the Greenbaum fees, however, we concluded that we were
"unable to make a substantive determination as to whether plaintiffs may recover
the Greenbaum fees, as the trial court failed to make the necessary factual
findings with respect to that portion of plaintiffs' application." Id. at 7. We
stated that:
[T]he [trial] court's May 19, 2017 decision detailed
three bases for denying plaintiffs' fee request: 1) the
trial court found that the parties acted in bad faith; 2)
plaintiffs failed to challenge the denial of the attorney's
fees in its appeal from the January 6, 2014 order; and
3) the doctrine of res judicata barred plaintiffs' claims
for attorney's fees.
With respect to the first basis, the trial court's bad faith
finding related only to the parties' conduct leading to
the January 6, 2014 final judgment. The fees incurred
by Greenbaum, however, are unrelated to those
proceedings. Further, plaintiffs did not waive the right
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to seek recovery of the post-remand Greenbaum fees,
as they were not yet incurred and could not be subject
of the January 6, 2014 order. For similar reasons,
neither res judicata, nor the law of the case doctrine
barred those fees.
[Id. at 7-8.]
We also concluded that "because none of the court's factual and legal
conclusions supporting its denial of the Perskie fees apply to the Greenbaum
fees, we are unable to conclude, on this record, if there is a legal and factual
basis to award plaintiffs these fees, and if they are reasonable." Id. at 8.
Accordingly, we remanded the matter for the trial court to make factual findings,
consistent with Rule 1:7-4. Ibid.
On remand, plaintiffs argued that they were entitled to the Greenbaum
fees under the New Jersey Nonprofit Corporations Act, N.J.S.A. 15A:3-4 and
under section 9.02 of the Association By-Laws, which provides:
Indemnification. Each Trustee, officer or committee
member of the Association, shall be indemnified by the
Association against the actual amount of net loss
including counsel fees, reasonably incurred or imposed
upon him in connection with any action, suit or
proceeding to which he may be a party by reason of his
being or having been a Trustee, officer, or committee
member of the association, except as to matters for
which he shall be ultimately found in such action to be
liable for gross negligence or willful misconduct.
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On December 3, 2019, Judge Michael J. Blee issued an order and a written
decision denying plaintiffs' application for the Greenbaum fees, concluding that
plaintiffs were not entitled to those expenses because they acted in bad faith. In
support of his finding, Judge Blee "consider[ed] the entirety of the litigation and
[did] not simply consider a small segment of the litigation in which it could be
argued plaintiffs were a prevailing party."
Judge Blee found that a majority of the work associated with the
Greenbaum fees dealt with "issues" pertaining to the Receiver. The judge
adopted the Receiver's observations in his December 28, 2015 letter and
specifically referenced the Receiver's statement that "compromise is not a word
that Dr. Mirmanesh 'embraces'" and that he would "legally challenge virtually
any proposed new document not to his liking, irrespective of what the majority
of owners would elect."
Judge Blee specifically rejected plaintiffs' argument that the Greenbaum
fees were recoverable under Section 9.02 of the Association Bylaws. In support
of that determination, Judge Blee referenced ten findings from the Final
Judgment where the court determined that plaintiffs acted "wrongfully and
willfully." These findings included multiple violations of the condominium
documents.
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The judge also concluded that indemnification under Section 9.02 would
be contrary to public policy. Relying on Cohen v. Southbridge Park, Inc., 369
N.J. Super. 156, 160-61 (App. Div. 2004), the judge explained that
indemnification provisions are intended:
[T]o promote the desirable end that corporate officials
will resist what they consider unjustified suits and
claims, secure in the knowledge that the reasonable
expenses will be borne by the corporation they have
served if they are vindicated . . . to encourage capable
men to serve as corporate directors, secure in the
knowledge that expenses incurred by them in upholding
their honesty and integrity as directors will be borne by
the corporation they serve.
Judge Blee determined that plaintiffs' application of Section 9.02 did not
serve the "purpose underlying indemnification." The judge also found that
plaintiffs, in part, brought the action in their individual capacity rather than in
the capacity of a "trustee, office, or member of the Association" which was
contrary to the provisions of Section 9.02.
The judge further emphasized plaintiffs' bad faith conduct during the time
they were represented by Greenbaum. The judge again relied on the Receiver's
comment that:
What the Receiver has learned in the two years of
Receivership is Dr. Mirmanesh believes in majority
rule or compliance with the Receiver's instructions and
decisions, so long as he agrees with them. If he does
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not and they do not fit his agenda, they do not apply to
him. So, he either ignores them or claims he is 'bullied'
by their existence.
Finally, the judge found that Section 9.02 was supposed to be used as "a
shield for unit owners from costs attendant to their mandatory duties as members
of the Board of Trustees and not a sword with which one unit owner can use to
threaten or coerce another." In light of his decision that plaintiffs were not
entitled to fees because they acted in bad faith, the court did not address whether
plaintiffs were a prevailing party or whether the Greenbaum fees were
reasonable. This appeal followed.
On appeal, plaintiffs contend in their first point that the trial court erred
by considering the findings in the Final Judgment and the Receiver's comments
regarding the plaintiffs' bad faith as they did not address the period covered by
the Greenbaum fees. Plaintiffs also maintain that Judge Blee was prohibited
from considering the Receiver's comments pursuant to N.J.S.A. 15A:3-4(h).
Plaintiffs argue in their second point that the trial court erred by finding
that granting plaintiffs' request for indemnification under Section 9.02 would be
contrary to public policy. Specifically, plaintiffs assert that both Section 9.02
and Section 16 of the Association's Master Deed entitled them to
indemnification.
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In plaintiffs third point, they claim that the trial court erred in failing to
consider whether plaintiffs were a prevailing party and that the Greenbaum fees
were reasonable. We disagree with all of these arguments and affirm
substantially for the reasons expressed by Judge Blee in his December 3, 2019
written decision.
II.
"Although New Jersey generally disfavors the shifting of attorneys' fees,
a prevailing party can recover those fees if they are expressly provided for by
statute, court rule, or contract." Packard-Bamberger & Co. v. Collier, 167 N.J.
427, 440 (2001). Rule 4:42-9 allows awards of attorneys' fees in specific
situations, including "[i]n all cases where attorney's fees are permitted by
statute." R. 4:42-9(a)(8); see also Pressler & Verniero, Current N.J. Court Rules,
cmt. 2.10 on R. 4:42-9 (noting that "[a]ttorney's fees may be allowed where the
parties have agreed thereto in advance by . . . agreement or contract").
In awarding attorneys' fees, a court should properly consider "[b]ad faith
and assertion of an unreasonable position." Diehl v. Diehl, 389 N.J. Super. 443,
455 (App. Div. 2006). Our review of an award of attorneys' fees award is
deferential, Packard-Bamberger & Co., 167 N.J. at 444, and "fee determinations
by trial courts will be disturbed only on the rarest occasions, and then only
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because of a clear abuse of discretion." Rendine v. Pantzer, 141 N.J. 292, 317
(1995).
Here, Judge Blee conducted an extensive review of the proceedings before
the trial court and determined that plaintiffs acted in bad faith throughout the
litigation, including the period when they were represented by Greenbaum.
Judge Blee was permitted, after undertaking a thorough and independent review
of the record, to rely upon the comments by the Receiver which indicated
plaintiffs were unwilling to compromise and refused to negotiate in good faith ,
and we reject plaintiffs' contention that N.J.S.A. 15A:3-4(h)2 prohibited the
judge from relying on the Receiver's report. Nothing in that statute supports
plaintiffs' contention that Judge Blee was precluded from relying on the record
from the earlier phases of litigation in concluding that plaintiffs acted in bad
2
N.J.S.A. 15A:3-4(h) provides that "[t]he indemnification and advancement of
expenses provided by or granted pursuant to the other subsections of this section
shall not exclude any other rights to which a corporate agent may be entitled
under a certificate of incorporation, bylaw, agreement, or otherwise; provided
that no indemnification shall be made to or on behalf of a corpor ate agent if a
judgment or other final adjudication adverse to the corporate agent establishes
that his acts or omissions (1) were in breach of his duty of loyalty to the
corporation or its members, (2) were not in good faith or involved a knowing
violation of law, or (3) resulted in receipt by the corporate agent of an improper
personal benefit."
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faith to inform his consideration of plaintiffs' actions during the period they were
represented by Greenbaum.
Second, contrary to plaintiffs' assertion, the Receiver's comments discuss
the period covered by the Greenbaum fees. Plaintiffs retained Greenbaum for
the post-trial matters in May 2014. Notably, the Receiver was appointed in the
January 6, 2014 Final Judgment and the comments relied upon by Judge Blee
regarded interactions stemming from July 2014. Accordingly, plaintiffs'
conduct that the Receiver describes in his December 28, 2015 correspondence
occurred during the time they were represented by Greenbaum. 3
Third, Judge Blee properly determined Section 9.02 did not indemnify
plaintiffs for their bad faith conduct. The judge found that Section 9.02 was
meant to be used as a shield instead of a sword "with which one unit owner can
use to threat or coerce another." Judge Blee also noted that the Final Judgment
included ten instances of wrongful and willful conduct which precluded
plaintiffs from indemnification under the terms of Section 9.02. Moreover, the
court noted that plaintiffs did not bring this action entirely in their capacity as
3
We note that the Receiver's letter was not available for this court to review
when we awarded plaintiffs $72,557.22 in attorneys' fees on July 27, 2015.
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"trustee, officer, or committee member of the Association." We conclude that
there is sufficient credible evidence in the record to support this finding.
Plaintiffs also assert that Section 16 of the Association Master Deed
entitles them to indemnification. Similar to Section 9.02, this provision permits
indemnification of a board member unless they are "adjudged guilty of willful
misfeasance or malfeasance and/or gross negligence." After a review of that
provision against the record before us, we conclude, like Section 9.02, Section
16 does not indemnify plaintiffs for their bad faith and wrongful and willful
conduct. Finally, because the judge concluded plaintiffs were not entitled to
attorneys' fees, we need not address if plaintiffs were a prevailing party or if the
Greenbaum fees were reasonable.
Accordingly, we discern no abuse of discretion in the judge's denial of
plaintiffs' request for attorneys' fees and costs as the court's finding that
plaintiffs acted in bad faith and contrary to the terms of the By-Laws and Master
Deed, was supported by substantial credible evidence in the record . Packard-
Bamberger & Co., 167 N.J. at 444; Diehl, 389 N.J. Super. at 455. To the extent
not addressed, plaintiffs' remaining arguments lack sufficient merit to warrant
discussion in a written opinion. R. 2:11-3(e)(1)(E).
Affirmed.
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