SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION DOCKET NO. A-0690- 21 BRUCE KAYE, individually and as trustee of THE BRUCE KAYE REVOCABLE TRUST and THE BRUCE KAYE DYNASTY TRUST, JASON KAYE, FLAGSHIP RESORT DEVELOPMENT CORPORATION, FIRST RESORTS MANAGEMENT COMPANY, INC., ATLANTIC PALACE DEVELOPMENT, LLC, and LA SAMMANA VENTURES, LLC, Plaintiffs-Respondents,

v. ALAN P. ROSEFIELDE, PLUMROSE COMPANY, INC., ROSE ASSOCIATES, INC. OF MIAMI, LA SAMMANA MANAGEMENT, LLC, and BA MANAGEMENT, LLC, Defendants/Third-Party Plaintiffs-Appellants,

v. DEBORAH KAYE, 2000 BRUCE KAYE DYNASTY TRUST, HOWARD ALTER, SUSAN NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court.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 parti es in the case and its use in other cases is limite d. R. 1:36- 3.2 A- 0690

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TUNNEY, MICHAEL VALENTI, RONNIE STRANSKY, KENNETH WOLFE, and DENNIS RICHARD, Third-Party Defendants.

______________________________

Argued November 28, 2023

– Decided January 29, 2024 Before Judges Whipple, Mayer and Enright. On appeal from the Superior Court of New Jersey , Chancery Division, Atlantic County, C- 000017

- 05. Andrew W. Rubin argued the cause for appellants. Jordan L. Barbone argued the cause for respondents (Jacobs & Barb one , PA, attorneys; Jordan L. Barbone, on the brief).
PER CURIAM The case returns to us for the third time, after h aving been remanded to the trial court, by this court and the Supreme Cour t, for further consideration of certain issues. We affirm the September 23, 2023 judgment in its enti rety. This litigation commenced in 2005. The facts of t his case were wellchronicled in our prior opinions , Kaye v. Rosefielde (Kaye I), 432 N.J. Super. 421, 435-59 (App. Div. 2013), and Kaye v. Rosefield e (Kaye III) , No. A- 149 -17 (App. Div. Oct. 7, 2019), and in the Supreme Court' s opinion in Kaye v. Rosefielde (Kaye II), 223 N.J. 218, 222-27 (2015), and need not be fully3 A- 0690

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repeated to understand the orders currently under r eview. The case stems from a failed business relationship between plaintiff Br uce Kaye and defendant Alan Rosefielde and their affiliated entities. Kaye emp loyed Rosefielde for a period of two years, between January 2003 and January 2005 , paying him $500,000 per year to run three timeshare businesses in Atlantic City and Brigantine, New Jersey, that Kaye principally owned or controlled. Kaye alleged that during those two years, Rosefielde "was an unfaithful serv ant who plundered his companies, caused his companies to suffer considera ble losses as the result of his nonfeasance and misfeasance, and fraudulently a cquired ownership and income interest in three of the companies ." The case was tried before the court over several m onths in 2007. On July 9, 2007, the court issued an oral ruling from the b ench. On November 1, 2007, the court entered a final judgment and issued a wri tten post-trial opinion, as well as a separate opinion on counsel fees and punitive damages. The court largely found in favor of plaintiffs on their causes of act ion. The court awarded equitable remedies that rescinded t ransactions through which Rosefielde had acquired financial interests i n the plaintiff entities, awarded plaintiffs' requests for counsel fees and c osts on the legal malpractice and fraud claims in the amount of $803,189.99, awar ded $250,000 punitive4 A- 0690

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damages on the fraud claims, and awarded $4,000 in compensatory damages. However, the court denied plaintiffs' request for d isgorgement on the unfaithful servant claim because it believed, as a legal matte r, that it could not award disgorgement in the absence of a quantifiable loss; otherwise, the court would have required disgorgement. The court awarded defe ndants $86,514.23 in counsel fees and costs. Ultimately, net of the awa rd to defendants, the court awarded $966,675.76 to plaintiffs. Both parties appealed. In November 2012, before we issued our first opinion, the parties entered into a settlement agreement but did not notify the court about the settlement. The settlement agreeme nt referenced the then pending ap peal from the trial court's award of $966,675.76 pl us interest to plaintiffs by its docket number (A-1120-07) and lab eled it the "New Jersey Action." The settlement agreement also referenced actions in Florida and New York, wherein plaintiffs were seeking enforcement a nd recovery on the judgment, as well as an additional litigation and a n arbitration in Florida. The parties expressed their desire to "resolve all disputes among the parties, finally dismiss the Actions with prejudice , and release each other from potential claims, known or unknown, including those raised or that could have been raised in the Actions, except as expressly pro vided in this Agreement."5 A- 0690

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In August 2013, not having been advised of the sett lement, we issued a written opinion. Kaye I, 432 N.J. Super. 421 (App. Div. 2013).
We affirmed the equitable relief of rescission awarde d to plaintiffs, by which the trial court rescinded Rosefielde's owners hip interests in La Sammana, La Sammana Management, and BA Management; we also affirmed the award of compensatory damages on these rescinded transaction s. Id. at 433, 494-95. We also affirmed the findings that Rosefielde committed legal malpractice and civil fraud. Id. at 433, 495. We vacated the award of counsel fees to plaintiffs base d upon those claims, however, because plaintiffs "wer e unable to prove that Rosefielde's legal malpractice and fraudulent condu ct proximately caused any compensable damages to them." Id. at 434 ; see also id. at 495 . The court remanded "for the trial court to reconsider and, if necessary, recalculate the amount of counsel fees, if any, that plaintiffs are entitled to receive under the circumstances presented." I bi d.
We vacated an award of punitive damages and remanded for reconsideration of whether the award of punitive damages was "sustainable based only on the compensatory damages correctly aw arded for Rosefielde's improper use of corporate funds to pay for his pers onal trip to Las Vegas." I bid.6 A- 0690

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Finally, on plaintiffs' cross-appeal, we affirmed the trial court's denial of the remedies of disgorgement and forfeiture. Id. a t 434, 494- 95. Plaintiffs filed a petition for certification, and defendants moved to dismiss the petition based upon the settlement. By order da ted March 11, 2014, the Supreme Court denied the motion without explana tion, but the Court granted the petition, in May 2014, limited to the issue of whether we erred by affirming the trial court's holding that economic damage is a necessary prerequisite for disgorgement of the employee's salary. Meanwhile, in 2013, Rosefielde had filed an action in Florida to enforce the settlement agreement and obtain payments pursua nt to the agreement, arguing that he had prevailed in the New Jersey app ellate proceedings. In response, in March 2014, Kaye moved for summary jud gment, arguing that Rosefielde's claims were premature because the New Jersey proceedings were

not yet concluded. The court granted Kaye's motion, ag reeing with his interpretation of the settlement agreement: that i t requir ed the conclusion of all proceedings in the "New Jersey Action" in order to determine whether payments might be due under the settlement agreement. In September 2015, the Supreme Court issued its opi nion on the merits, without mentioning the settlement. Kaye II , 223 N.J. 218 (2015). The Court7 A- 0690

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reversed this court, in part, ruling that the trial court could order equitable disgorgement as a remedy, even though plaintiffs ha d not sustained economic loss as a consequence of Rosefielde's breach of his duty of loyalty. Id . at 221- 22, 236-37. The Court "remand[ed] to the trial cou rt to determine whether the remedy of disgorgement should be imposed in this ca se." Id. at 222. On remand to the Chancery Division, Rosefielde mov ed to enforce the settlement and dismiss the case as moot. By opinio n and order dated August 9, 2017, the court granted the motion, finding that pl aintiffs had released the right to pursue or obtain any further recovery from defen dants in the New Jersey litigation, including disgorgement. Plaintiffs appealed, after which we temporarily remanded to the trial court to address defendants' motion for indemnification o f all legal fees incurred since the settlement agreement was signed. By opinion an d order dated March 29, 2018, the Chancery Division ruled defendants were e ntitled to indemnification, but only for the fees incurred in litigating the mo tion to dismiss made after the Supreme Court remand, which amounted to $32,445. Once again, the matter returned to this court and, by opinion dated October 7, 2019, we concluded we were "constrained to reverse both ord ers and remand for proceedings consistent with" the Supreme Court' s ruling, that is, for a8 A- 0690

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determination as to whether plaintiffs should recei ve disgorgement of Rosefielde's compensation, because "[n]otwithstandi ng the argument that the settlement agreement foreclosed further litigation, " in issuing its opinion, the Supreme Court had not specified "whether it conside red the case a live controversy or whether it was deciding the case und er the public interest exception to the mootness doctrine." Kaye III , slip op. at 9. On November 5, 2019, Rosefielde filed a petition f or certification, which the Supreme Court denied. That tortured procedural saga leads us to the present appeal of the latest remand to the Chancery Divisio n. In July 2020, defendants moved to amend their answer t o plead additional affirmative defenses premised on the settlement agr eement, including accord and satisfaction, and a counterclaim seeking specif ic performance of the settlement agreement. The Chancery Division denied the motion on October 14,
2020. The court conducted a heari ng over four days in March and April 2021, and considered the parties' extensive written submi ssions, in which they drew the court's attention to portions of the trial court' s evidentiary record and rulings and argued the legal issues.9 A- 0690

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The court issued its decision on May 28, 2021, appl ying the factors specified by the Supreme Court, and concluded that disgorgement was an appropriate remedy for Rosefielde's disloyalty. Th e court considered: Rosefielde's degree of responsibility and level of compensation; the degree to which Kaye relied upon Rosefielde for both legal an d management matters; the number of acts of disloyalty and the extent of Rose fielde's schemes; the extent to which Rosefielde's acts exposed Kaye and his bus inesses to potential civil and criminal liability; and Rosefielde's careful pl anning of his complex schemes. The court also gave significant weight to the trial judge's statement that he would have awarded disgorgement damages if he felt he cou ld lawfully do so, and the trial court's finding that Rosefielde's misconduct occurred through his entire

tenure. Pertinent to the present appeal, the court expressl y accepted plaintiffs' timeline of Rosefielde's disloyalty, stating: "Att ached as Exhibit B to plaintiff[ s' ] submissions is a timeline of Rosefielde's disloya l schemes which the [c]ourt accepts as fact." The court also detailed the timing of Rosefielde's acts of disloyalty, with the various instances of miscon duct extending from January 2003 to December 2004. And the court expressly rej ected defendants' "attempts to isolate" specific pay periods when the disloyalt y occurred, stating: "This10 A- 0690

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[c]ourt finds that Mr. Rosefielde entered his relat ionship with the intentional scheme to pilfer from Mr. Kaye and his holdings. I t is not reasonable or equitable to attempt to isolate these incidents as requested by the [d]efendant." The court expressly found that Rosefielde's disloya lty "lasted the entire two[- ] year duration of his employ," which is what the tri al judge previously found. The court also rejected Rosefielde's argument that disgorgement was inappropriate because he was not an employee of the corporate entities. As to this issue, the court noted: the trial judge's fin ding that Rosefielde had been an "unfaithful servant"

— which was unchallenged on appeal

— and the Supreme Court's finding that Rosefielde was an employee and not an independent

contractor. Finally, the court rejected Rosefielde's argument t hat any disgorgement must be exclusively from Plumrose Company, Inc. and Rose Associates of Miami because "no payments were made to Alan Rosefi elde." As to this issue, the court noted the plain language of the order ent ered by the trial judge, pursuant to which judgment was granted in favor of plaintiffs and against all defendants, including Rosefielde individually. Thus, as a remedy for Rosefielde's being an unfaith ful servant, breaching his fiduciary responsibilities, and committing frau d, the court awarded plaintiffs11 A- 0690

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$1,000,000 in disgorgement damages, which amounted to the entirety of Rosefielde's compensation during his two years of e mployment. Turning to the question of punitive damages, the co urt first noted that we had reversed the trial court's award of $250,000 in punitive damages and remanded for reconsideration "based upon the propor tionality of the modest $4,000 compensatory damage award" (for a Las Vegas trip). We also had commented, however, that disgorgement of Rosefielde 's salary could form a basis for punitive damages, while noting that disgo rgement was unavailable as a legal matter. Reconsidering the question of punitive damages unde r these directives, and under the Punitive Damages Act, N.J.S.A. 2A: 15 -5.9, the court found by clear and convincing evidence that plaintiffs were entitled to punitive damages with respect to: Rosefielde's fraudulent acquisiti on of an ownership interest in BA Management

— actuated by actual malice or wanton and willful dis regarding of Kaye's interests

— and Rosefielde's use of corporate funds to pay for a personal trip to Las Vegas, which constituted theft and was done with willful and wanton disregard for his corporate fiduciary ob ligation and the harm that would occur to the corporation.12 A- 0690

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Considering the statutory factors and the evidentia ry record, and in light of the $1 million disgorgement award and the substantial co unsel fee award, the court found the appropriate amount of punitive dama ges was $350,000, which represented an upward adjustment of $100,000 from t he original award of $250,000. Regarding counsel fees, the court considered our holding that the counsel fee award was disproportionate to the $4,000 compen satory damage award and instructions on remand. The court found our rationale regarding the trial judge's methodology no longer applicable

— because the Supreme Court had determined plaintiff ha d a valid claim for disgorgement damages

— and awarded $1 million in disgorgement damages. The court also found evid ence in the record to value the businesses as to which the trial judge had orde red rescission. Accordingly, the court reinstated the original coun sel fee award to plaintiffs ($716,675.76) and held that plaintiffs w ere entitled to additional counsel fees to be determined in subsequent motion practice. Finally, the court rejected defendants' equitable a rguments, holding in particular that: it could not consider the effect of the parties' settlement agreement or whether there had been an accord and s atisfaction, given the limited scope of the prior remands; and "once the p roportionality of the13 A- 0690

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compensatory award shifted significantly, this [c]o urt had the right to adjust upward the punitive award and grant counsel fees." And the court vacated the indemnification fee award to Rosefielde of $32,445, concl uding "that defendant Rosefielde is not entitled to indemnification of co unsel fees as the result of his previously successful motion that was reversed by t he Appellate Division." After issuing this opinion, the court considered ad ditional submissions relating to plaintiffs' application for counsel fee s and costs and held a hearing on the application on August 19, 2021. On Septembe r 23, 2021, the court awarded $289,628.06 in counsel fees to plaintiffs, in addition to the previous award of $716,675.76. On November 19, 2021, the co urt issued a corrected judgment in order to correct a mathematical error. This appeal followed. Defendants contend the remand court erred in denying their motion for leave to amend their answer to assert affirmative d efenses based upon the settlement agreement and to assert a counterclaim to enforce the settlement agreement. They argue: the proposed amendment was not prohibited by the remand orders and was permitted under Rule 4:9 -1; the entire controversy doctrine required the court to grant the motion bot h as to the proposed affirmative defenses and the proposed counterclaim; New J ersey's strong public14 A- 0690

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policy favoring the enforcement of settlements requ ired the court to permit the amendment; and plaintiffs were estopped from object ing to the amendment. Alternatively, defendants contend the remand court erred by not dismissing the case after finding disgorgement because, under the settlement agreement, plaintiffs had waived any right to receive further payments from defendants. We find no merit to these arguments. Based on our rev iew, we conclude the court did not abuse its discretion in denying the motion for leave to amend because the proposed amendments were barred by the remand o rders. The Supreme Court's remand to the trial court was e xpressly limited "to determine whether the remedy of disgorgement should be imposed in this case." Kaye II , 223 N.J. at 222. Our first remand to the trial c ourt was limited to : (1) "reconsider and, if necessary, recalculate the amou nt of counsel fees, if any, that plaintiffs are entitled to receive consistent with this opinion"; and (2) "reconsider whether an award of punitive damages is sustainable consistent with this opinion." Kaye I , 432 N.J. Super. at 495. And in Kaye III, we reversed an order dismissing the case based upon the settlement agreement (as well as an order for indemnification of Rosefielde for legal f ees incurred on the motion to dismiss) and held that, notwithstanding t he settlement, the remand court must consider the remand issues, consistent with the pri or remand orders. Kaye III ,15 A- 0690

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(slip op. at 9-10). Based on our review, we conclu de the proposed amendments were barred by the remand orders.
We also reject the argument that a New Jersey court m ust resolve the parties' conflicting interpretations of the settlem ent agreement. In the settlement agreement, the parties acknowledged that they had l itigated their disputes in multiple states, including New Jersey and Florida. The settlement agreement expressly anticipated that the piecemeal litigation would continue, that is: the New Jersey Action would proceed through the appella te process, and any disputes relating to the settlement agreement would be litigated in a Florida court, applying Florida law. Settlement agreements , like any contracts, are to be enforced as clearly written. Serico v. Rothberg , 234 N.J. 168, 178 (2018); Nolan v. Lee Ho, 120 N.J. 465, 472 (1990); Pascarel la v. Bruck, 190 N.J. Super. 118, 124-25 (App. Div. 1983). The terms of the settlement agreement appear to preclu de plaintiffs from recovering on any post-settlement judgment entered in the New Jersey Action, stating: "Kaye and the Kaye Entities agree to acce pt . . . the Settlement Payment in full and complete satisfaction of the Judgment a nd warrant that they will not seek any further payment from Rosefielde and/or the Rosefielde Entities . . . ." (E mphasis added). The settlement agreement also includ es a release of "claims,16 A- 0690

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liabilities, expenses, causes of action[,] and other proceedings whatsoever . . . ." As previously discussed, the settlement agreement p ermits continuation of the New Jersey Action, but only to determine whether pl aintiffs must pay a clawback amount to defendants. Defendants argue "the remand court committed revers ible error because it failed to follow the directions of the Supreme Cour t to determine whether disgorgement was justified for each pay period and further erred because it failed to apply the right standards to determine di sloyalty." We disagree. On remand, the trial court performed the analysis required by the Supreme Court and considered and applied each of the factor s specified, concluding that disgorgement was an appropriate remedy for Rosefiel de's disloyalty. Furthermore, the court: accepted the trial court's finding that Rosefielde's misconduct occurred through his entire tenure; acce pted plaintiffs' timeline of Rosefielde's disloyalty; detailed the timing of Ros efielde's acts of disloyalty, with the various instances of misconduct extending from January 2003 to December 2004; and found that Rosefielde's disloyal ty "lasted the entire two[-] year duration of his employ ." The remand court's findings are well-supported by t he record, including the trial court's opinions, as well as by our opinion in Kaye I and the Supreme17 A- 0690

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Court 's opinion in Kaye II , each of which detailed the extent of Rosefielde's misconduct and the timing of his misdeeds, which sp anned the entirety of his

two -year employment. Contrary to defendants' argument , there was no error in the remand court's finding that disgorgement was ap propriate for the entire two years of Rosefielde's tenure. We reject defendants' assertion the grant of addit ional punitive damages was beyond the scope of the remands and not support ed by the evidence. On the post-trial appeal, we rejected most of defendants' arguments as to why t he punitive damage s award was unwarranted but remanded on their argument that "there is no factual support in the record for puni tive damages." Kaye I, 432 N.J. Super. at 487-88. We agreed punitive damages were appropriate on counts three and five, but expressed concern that the puni tive damages award was disproportionate to the actual damages plaintiffs s uffered as a result of certain actions. Id. at 490- 92 ; see also N.J.S.A. 2A:15-5.14. We anticipated a reduction of the punitive damages award on remand. However, our analysis was premised upon the disproportionately large punitive damage a ward in relation to the small compensatory damages awarded on counts three and fi ve, with disgorgement damages not permitted.18 A- 0690

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That proportionality concern was substantially alte red by the Supreme Court's reversal of our disgorgement ruling and the remand court's finding that a $1 million disgorgement award was appropriate, al ong with an increase in the award of counsel fees and costs. The substantial i ncrease in the actual damages

aw arded permitted the remand court to order a proport ionate increase in the punitive damage award. For similar reasons, we reject defendants' conten tion the counsel fee award was beyond the scope of the remands and not a dequately supported

. The remand court found that, under this new set of circ umstances, plaintiffs had obtained a substantial amount of compensable damage s

— thereby justifying the original fee award, as well as an additional award for the efforts on remand necessary to obtain the disgorgement. After consid ering the parties' submissions and arguments, the court reiterated its authority t o make an additional award of fees and costs based upon the terms of the remands from the Ap pellate Division and the Supreme Court, and it awarded additional co unsel fees and costs of $289,628.06 for the remand proceedings. The remand court's reinstatement of the prior award of counsel fees and costs, as well as its award of additional fees and costs, were consistent with the remand instructions that the fee award be proportio nal to the actual damages.19 A- 0690

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Tom ai no v. Burman, 364 N.J. Super. 224, 232 (App. Div. 2003). Since the actual damages awarded increased on remand, the rea sonable fee award also increased. This record presents no basis for finding a clear abuse of discretion. "Because the trial court was in the best position t o weigh the equities and arguments of the parties in this lengthy and conten tious case, " we will not disturb its award. Packard-Bamberger & Co. v. Coll ier, 167 N.J. 427 , 447 (2001). Plaintiffs achieved complete success in th e remand proceedings, ultimately fending off defendants' motion to dismis s and obtaining full disgorgement of Rosefielde's $1,000,000 salary, as well as a $100,000 increase in punitive damages. Any question of whether plaintiffs are entitled to rec over the post-remand fee award is a matter to be resolved by a Florida c ourt interpreting the parties' settlement agreement. Plaintiffs may not collect o n the post-remand judgment unless otherwise ordered by a Florida court in its interpretation of the agreement, applying Florida law. Indeed, the Florida court ha s already ruled as such , finding that the New Jersey proceedings must be com plete "in order to determine whether payments might be due under the settlement agreeme nt ."20 A- 0690

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Any remaining arguments raised are without sufficie nt merit to warrant discussion in a written opinion. R. 2:11 -3(e)(1)(E). Affirmed.