SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-1040-15T4

KAREN DEMARTINI and ANDREW

HAVEN,

Plaintiffs-Appellants,

v.

ROBERT BERLIN, individually and 

t/a T.F.J. FITNESS LLC, EDWARD

LEVIN, FERNANDO BARRESE, JILL

BERLIN, individually and T.F.J.

FITNESS LLC,

Defendants,

and

RETROFITNESS, LLC, 

Defendant-Respondent.

Argued April 5, 2017 – Decided May 8, 2017

Before Judges Alvarez, Manahan, and Lisa.

On appeal from the Superior Court of New 

Jersey, Law Division, Monmouth County, Docket 

No. L-3888-10.

Craig Hilliard argued the cause for appellants 

(Stark & Stark, attorneys; Mr. Hilliard and 

Gene Markin, of counsel and on the briefs).

NOT FOR PUBLICATION WITHOUT THE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.
2 A-1040-15T4

Justin M. Klein argued the cause for 

respondent (Marks & Klein, LLP, attorneys; Mr. 

Klein, on the brief).

PER CURIAM

Plaintiffs Karen DeMartini and Andrew Haven appeal from the 

Law Division's October 24, 2014 grant of summary judgment to 

defendant Retrofitness, LLC (Retro), dismissing their third 

amended complaint.1 For the reasons stated by Judge Dennis O'Brien 

in his thoughtful and cogent decision, we affirm.

Plaintiffs initially contacted Retro, a gym franchisor, in 

2007 regarding their interest in opening a franchise at their

athletic facility premises. Retro's corporate office sent Berlin,

who owned a franchise in Wallington and served as a salesman for 

the company, to meet with them regarding the process. Because 

acquisition of a franchise would have called for retrofitting the 

building DeMartini had just renovated, plaintiffs did not pursue 

the matter further.

In December 2008, after selling the building they previously 

owned, plaintiffs again contacted Retro regarding a franchise and 

met with Berlin, who delivered a franchise application. In midJanuary 2009, DeMartini gave Berlin $49,220 in cash to deliver to 

 

1 A footnote in plaintiffs' brief states that the matter was later 

tried against defendant Robert Berlin. Plaintiffs obtained a 

judgment totaling $496,771.48, based on claims of fraud, breach 

of contract, and breach of fiduciary duty.
3 A-1040-15T4

Retro for the franchise purchase, and she later signed the

agreement at Retro headquarters.

Some weeks after that, Berlin contacted plaintiffs regarding 

another business proposition. He visited their home, and told

them that Retro wanted to expand its East Coast presence into 

Margate, Florida, and that for a $500,000 initial investment in 

the project, they could acquire a twenty-five percent interest. 

Berlin mischaracterized Retro's awareness of plaintiffs' 

involvement in the Margate project. He also incorrectly assured 

them that they could indefinitely delay developing the New Jersey 

franchise they had already purchased. Plaintiffs believed, 

mistakenly, that Berlin was selling them a share in a successful 

enterprise in which he had a financial stake.

Plaintiffs gave Berlin a total of $240,000 as the down payment 

for their interest in the Margate project by September 23, 2009. 

The balance of $260,000 was to be paid into the business from 

their twenty-five percent share of the profits. 

In May 2010, Berlin obtained an additional $50,000 from 

plaintiffs as a short-term loan, on the pretense that the money 

was urgently needed by one of Berlin's partners. He gave them 

post-dated checks to pay the money back, which did not clear. By

August 2010, the checks had failed to clear and plaintiffs learned 
4 A-1040-15T4

that they had no interest whatsoever in the Margate venture, which

had collapsed. 

When Berlin was engaged by Retro to act as their salesman, 

the company was apparently unaware that his life insurance license 

had been revoked for questionable practices by New Jersey's

Department of Banking and Insurance. Berlin's responsibility as 

a Retro salesperson was limited to providing prospective

franchisees with purchase documents and explaining the process, 

as he did with plaintiffs regarding their New Jersey venture. He 

did not evaluate applicants, and had no review or approval role 

with the company as to franchise applications. Berlin's status 

was as an independent contractor, not an employee. 

DeMartini acknowledged in deposition that Retro became aware 

of plaintiffs' involvement in the Margate project only months

after she had paid Berlin the $240,000 towards the investment. 

Retro's chief financial officer certified that the company had no 

knowledge of the problems at the failed Margate gym until September 

2010, approximately one year after plaintiffs' investment in the 

business. Nor was Retro aware of Berlin's involvement with the 

site, as he was neither a franchisee nor an owner. In his 

deposition, Berlin stated he was "sure" that he had "told somebody 

at Retrofitness Corp. that [plaintiffs] were going to be [] 

partner[s] in Margate . . . . I think I mentioned it to somebody." 
5 A-1040-15T4

Judge O'Brien held that plaintiffs could not establish an 

agency relationship between Retro and Berlin, actual or apparent, 

nor could they demonstrate negligent hiring. He carefully 

considered each and every cause of action alleged, concluding that 

even viewing the facts in the light most favorable to plaintiffs, 

they had no legal basis for imposing legal liability upon Retro. 

The franchisor/franchisee relationship alone was not sufficient. 

The franchise agreement, with which plaintiffs were familiar, as 

they had signed one with regard to their New Jersey project, 

explicitly made franchisees independent contractors and 

"completely separate entities . . ." from Retro. The agreement 

further stated that neither party was the agent of the other "in 

any sense."

DeMartini acknowledged that when she invested in the Florida 

gym, she understood that the business was a franchise, an entity

distinct and separate from Retro. She also understood that when

Berlin approached plaintiffs, he was acting on behalf of the 

Florida franchise and not on behalf of Retro. As a result, Judge 

O'Brien held "[t]hese uncontested facts demonstrate there was not 

enough control exerted by [Retro] over the Margate location or 

[the entity that operated the gym] to constitute a 

principal[-]agency relationship." Plaintiffs could not 

demonstrate actual authority on these facts.
6 A-1040-15T4

Since Retro had not acted with regard to the Margate site 

after the franchise was purchased, and Berlin did not represent 

that he was acting as Retro's agent with regard to it, he did not

have apparent authority which would bind the company. His 

statement that Retro wanted to expand its East Coast presence did 

not vest him with apparent authority to act in the company's 

behalf.

The judge reached a similar conclusion with regard to the 

negligent hiring claim. The financial losses suffered by 

plaintiffs as a result of their interaction with Berlin did not 

arise "from Berlin's actions [as] an independent contractor 

salesman for Retro." The harm they suffered flowed from his 

representation of the Margate venture, which plaintiffs knew was 

a franchise of Retro, and therefore a separate entity. Retro in 

turn was unaware of plaintiffs' investments in the Florida gym

made at Berlin's urging. Plaintiffs did not consult the company 

regarding their decision. Accordingly, the judge found the claim 

of negligent hiring was not supported by the facts. He also

discussed and dismissed plaintiffs' remaining causes of action 

against Retro, which dismissals are not being appealed.

Plaintiffs reiterate that there were sufficient issues of 

material fact regarding agency and negligent hiring that summary 

judgment should not have been granted. They take the position 
7 A-1040-15T4

that, as a matter of law, they have demonstrated sufficient 

circumstances supporting their theories of recovery against Retro 

to warrant reversal.

I.

We review the grant of summary judgment employing the same 

standard as the motion judge. Bhagat v. Bhagat, 217 N.J. 22, 38 

(2014). We consider "the competent evidential materials submitted 

by the parties to identify whether there are genuine issues of 

material fact and, if not, whether the moving party is entitled 

to summary judgment as a matter of law." Ibid.; R. 4:46-2(c). 

The facts are viewed in the light most favorable to the nonmoving party, Robinson v. Vivirito, 217 N.J. 199, 203 (2014), 

keeping in mind that an issue is "genuine only if, considering the 

burden of persuasion at trial, the evidence submitted by the 

parties on the motion, together with all legitimate inferences 

therefrom favoring the non-moving party, would require submission 

of the issue to the trier of fact." R. 4:46-2(c). More is 

necessary than bare conclusions lacking factual support, Petersen 

v. Twp. of Raritan, 418 N.J. Super. 125, 132 (App. Div. 2011), 

self-serving statements, Heyert v. Taddese, 431 N.J. Super. 388, 

413-14 (App. Div. 2013), or disputed facts "of an insubstantial 

nature." Pressler & Verniero, Current N.J. Court Rules, comment 

2.1 on R. 4:46-2 (2016). 
8 A-1040-15T4

When the evidence is so one-sided that the moving party must 

prevail as a matter of law, summary judgment should be granted. 

Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995). 

II.

Plaintiffs claim that an agency relationship existed, and 

that Berlin's interactions as a Retro salesman established the 

franchisor's legal liability despite the franchisor/franchisee 

relationship. The standard form franchise agreement, however,

between Retro and plaintiffs regarding their New Jersey 

investment, clearly stated that the franchisor and franchisee are

separate entities, not responsible for the actions of the other. 

Thus despite Berlin's status as a salesman for Retro when 

plaintiffs were purchasing their New Jersey franchise, they had 

no basis to believe he was acting in that capacity with regard to 

the Margate site, an already established franchise. Plaintiffs 

do not suggest any action taken by Berlin regarding the Margate 

project which demonstrated actual authority. The grant of summary 

judgment was proper on this theory of recovery as it is not 

supported by facts.

With regard to apparent authority, we agree with the trial 

judge that to bind the principal, the principal must have acted 

in such a way as to mislead a third party into believing an agency

relationship existed. See Mercer v. Weyerhaeuser Co., 324 N.J. 
9 A-1040-15T4

Super. 290, 317 (App. Div. 1999). The doctrine focuses on the 

reasonable expectations of innocent third parties. In making the 

determination, the totality of the circumstances are taken into 

consideration. N.J. Lawyer's Fund for Client Prot. v. Stewart 

Title Guar. Co., 203 N.J. 208, 220 (2010). The determination 

requires scrutiny of "the actions of the principal, not the alleged 

agent." Lobiondo v. O'Callaghan, 357 N.J. Super. 488, 497 (App. 

Div.), certif. denied, 177 N.J. 224 (2003). 

After full discovery, plaintiffs cannot refute Retro's 

position that it was not aware of Berlin's involvement with 

Margate, as he was neither a franchisee nor an owner. Nor was 

Retro aware of plaintiffs' involvement with the project until 

months after they had made their investment. Plaintiffs cannot

identify any conduct by Retro that would have caused them to 

believe that Retro authorized Berlin to engage in the transaction. 

As DeMartini admitted at deposition, Berlin did not say he 

was acting on Retro's behalf. Retro played no role in the decision 

to invest in Margate. See Sears Mortg. Corp. v. Rose, 134 N.J.

326, 345 (1993).

III.

Plaintiffs' claim for negligent hiring also fails. Whether

Retro was aware of Berlin's past history is not relevant because 

when he convinced plaintiffs to invest in Margate, he was not 
10 A-1040-15T4

acting in his capacity either as a salesman or a franchise holder 

for Retro. His communications with plaintiffs in that capacity 

were limited to the New Jersey transaction, about which plaintiffs 

do not complain. Even in his capacity as salesman, Berlin's role 

was limited to an initial meeting with potential franchisees and 

the delivery of documents. He did not review applicants or process 

their applications. 

Berlin's contacts with plaintiffs with regard to the Margate 

investment were different from his conduct when they purchased a 

franchise in New Jersey. He did not present documents for their 

signature. Berlin actively pursued their investment, and made no

mention of Retro other than his initial statement that the company 

wanted to begin marketing outside of New Jersey. Berlin was not 

an employee, but an independent contractor. His discussions with 

plaintiffs regarding the Margate property were unrelated to 

plaintiffs' purchase of a franchise. DeMartini acknowledged that 

Berlin's representations were solely on behalf of the Margate gym, 

not Retro. Retro was entitled to summary judgment on this cause 

of action as well.

IV.

In the absence of any proof that Retro solicited, condoned, 

or had knowledge that Berlin procured plaintiffs' investment in 

Margate, summary judgment was properly granted. Looking at the 
11 A-1040-15T4

facts in the light most favorable to the non-moving party, they 

are simply insufficient to establish actual authority, apparent 

authority, or negligent hiring. We agree with Judge O'Brien that 

there are no genuine issues of material facts. No reasonable jury 

could decide the issue in plaintiffs' favor, and Retro was entitled 

to judgment as a matter of law. Brill, supra, 142 N.J. at 540.

Affirmed.