SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-3065-18

SQUARE TWO, LLC, MIDNIGHT

ENTERPRISES, LLC, and

MIDNIGHT PROPERTIES, LLC,

Plaintiffs,

v.

JJJ SOLUTIONS, LLC, JOHN C.

GILLESPIE, and JJJ LIQUID

SOLUTIONS, LLC,

Defendants.

______________________________

JOHN C. GILLESPIE, JJJ 

SOLUTIONS, LLC, a New Jersey 

limited liability company, and JJJ 

LIQUID SOLUTIONS, LLC, a New

Jersey limited liability company,

Plaintiffs-Appellants/

Cross-Respondents,

v.

LAURA L. SQUILLACE, and 

RONALD J. SQUILLACE,

NOT FOR PUBLICATION WITHOUT THE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-3065-18

Defendants-Respondents/

Cross-Appellants,

and

MIDNIGHT ENTERPRISES, LLC, 

A New Jersey limited liability 

company, and SQUARE TWO, 

LLC, a New Jersey limited 

liability company,

Defendants.

______________________________

Argued January 19, 2021 – Decided March 8, 2021

Before Judges Rothstadt and Susswein.

On appeal from the Superior Court of New Jersey, Law 

Division, Bergen County, Docket Nos. L-3637-16 and

L-6995-16.

Joyce M. Smith argued the cause for appellants/crossrespondents.

William I. Strasser argued the cause for 

respondents/cross-appellants (Strasser & Associates, 

PC, attorneys; William I. Strasser, on the briefs).

PER CURIAM

In this dispute over the sale of a restaurant, the parties to the transaction

appeal from the Law Division's January 22, 2019 final order for judgment that 

was entered after the judge conducted a two-day bench trial. The purchasers' 

complaint sought rescission of the sales contract and monetary relief. The 
3

A-3065-18

judgment awarded the purchasers the amount paid under the sales contract,

based on the trial judge's finding that the sellers fraudulently induced plaintiffs 

into purchasing the restaurant. The judgment made no award of punitive 

damages or attorneys' fees as the judge determined the purchasers were not 

entitled to either. The judgment also dismissed all of the sellers' claims, which

were based upon the purchasers' alleged breach of contract. 

Plaintiffs also appeal from a December 15, 2017 order that denied their 

motion for relief based upon defendants alleged spoliation of evidence, and from 

the trial judge's March 1, 2019 order denying reconsideration. 

On appeal, the purchasers, plaintiff John C. Gillespie, and his related 

businesses, plaintiffs JJJ Solutions and JJJ Liquid Solutions LLC, (collectively 

Gillespie) argue that the trial judge erred by failing to address Gillespie's

spoliation claim, and by denying their claim for punitive damages and counsel 

fees. In their cross-appeal, the sellers, defendants, Laura L. Squillace and 

Ronald J. Squillace, and their related businesses, defendants Midnight 

Enterprises, LLC and Square Two, LLC, (collectively Squillaces) assert that the 

trial judge incorrectly determined there was clear and convincing evidence to 

support his finding that the Squillaces fraudulently induced Gillespie into 
4

A-3065-18

purchasing the restaurant, and they additionally argue that they were entitled to 

judgment as a matter of law.

We have considered the parties' contentions in light of the record and the 

applicable principles of law. We affirm the judgment except as to its denial of 

punitive damages. We remand the latter issue for reconsideration.

I.

In January 2014, the Squillaces retained Ronald Vanelli to broker the sale 

of their restaurant Castalia 997 (Castalia) that they had owned and operated for 

about ten years. Vanelli sent an email to the Squillaces to confirm the details of 

the listing, which included that the business had a "Gross Sales Average [of] 

$12,000 per week." Vanelli requested in his email that the Squillaces call him

to correct any inaccuracies in the listing's details. The Squillaces did not 

respond to the email or otherwise correct any detail. And, despite Vanelli's 

repeated requests, they also did not complete and return to Vanelli a standard 

Profit & Loss statement form that he asked them to complete.

Although he never received the Profit & Loss form, Vanelli proceeded to 

advertise Castalia for sale on various platforms. The listing indicated the 

business realized an average of $12,000 in weekly revenue. Vanelli's listing 
5

A-3065-18

expired in September 2014, whereupon it was agreed that Vanelli would 

continue his efforts to sell the business but do so on a non-exclusive basis. 

According to Gillespie, he had seen Vanelli's advertisements and 

recognized that they referred to Castalia. However, Vanelli did not introduce 

Gillespie to the Squillaces. Rather, within about a month of the listing's 

expiration, Gillespie and the Squillaces were introduced by a mutual 

acquaintance who knew the Squillaces from the restaurant and knew Gillespie 

from Gillespie's family's restaurant that was located in another county where

Gillespie had been an employee until it was sold. 

Thereafter, the parties entered negotiations that spanned the period 

between November 2014 and July 2015. According to Gillespie, during those 

negotiations, the Squillaces made multiple oral representations to him that 

Castalia regularly generated over $12,000 in weekly revenue and approximately 

$650,000 in yearly revenue. Gillespie also claimed that during numerous 

meetings, the Squillaces continually rebuffed his requests for financial records,

including Castalia's point-of-sale (POS) tickets and previous tax returns, and 

only permitted Gillespie to have a limited review of some financial documents 

during visits at Squillaces' home. 
6

A-3065-18

At one meeting in May 2015, Gillespie and his attorney1inspected a 

spreadsheet prepared by the Squillaces. According to Gillespie, the two-page 

spreadsheet, which the Squillaces did not let him copy, contained Gillespie's 

attorney's hand-written notes and gross revenue figures consistent with 

information provided by Squillace to Vanelli.

The Squillaces disputed Gillespie's description of the negotiations as they 

related to representations they made and the documents they made available to 

Gillespie. They denied that they mispresented Castalia's income and had in fact 

accurately represented the numbers to Gillespie during negotiations. According 

to the Squillaces, they allowed both Gillespie and his attorney to review the POS 

tickets and a daily worksheet referencing those POS tickets during a meeting in 

late April 2015. 

Notwithstanding their denials that they ever represented Castalia's income 

to be $650,000, Laura Squillace acknowledged that the number was given to 

Vanelli as a "starting point" in order "to draw in interest and people." However, 

1

 The attorney, who also represented Gillespie at trial and now on appeal, is also 

his life-partner and the mother of his child. Evidently, during the negations the 

attorney was considering whether to join in Gillespie's purchase, but ultimately 

decide not to participate. 
7

A-3065-18

she was unsure if that number reflected the business' income or the price for the 

building from which it operated. 

In any event, notwithstanding Gillespie's claims that the Squillaces did 

not allow him to review the POS tickets or other pertinent financial information,

and refused to permit him to make a copy of the May 2015 spreadsheet, he 

agreed to go forward with the transaction without pursuing any other due 

diligence like reviewing Castalia's tax returns or hiring an accountant to review 

the books, because "he trusted the Squillaces." He also moved forward despite 

the Squillaces rejecting Gillespie's attempt to have a clause removed that 

essentially stated he was not relying on any representations made by the 

Squillaces.

The parties executed the contract of sale on July 17, 2015. According to 

its terms, Gillespie paid approximately one-third of the $315,000 sale price up 

front and the Squillaces financed the remainder. As part of the deal, Gillespie 

also entered into a lease with the Squillaces for the business premises. 

Under Section 18 of the contract, Gillespie acknowledged that he was not 

relying upon any representations made by the Squillaces, he "inspected the 

Business to [his] satisfaction" and "independently investigated, analyzed and 

appraised the value and profitability thereof." Sections 8 and 36(e) referred to 
8

A-3065-18

attorneys' fees being awarded relative to an indemnification being given by the 

Squillaces for misrepresentations they made, and to a prevailing party in any

litigation between the Squillaces and Gillespie "concerning the rights and duties 

of either party in relation to the business or this Agreement." 

The closing of the transaction took place on September 17, 2015. Soon 

after taking possession of Castalia, Gillespie was unable to realize the revenue 

that he claims the Squillaces had represented to him. On March 7, 2016, 

Gillespie met with Ronald Squillace to discuss the problems he was 

experiencing. After the meeting, the parties exchanged emails about what they 

discussed. 

In his March 7, 2016 email, Squillace acknowledged that Gillespie was 

not realizing sufficient income to meet the business' expenses and he made 

numerous suggestions as to how Gillespie could improve the business' revenue. 

In his March 8, 2016 response, Gillespie confirmed that his "sales have been 

way off of [Squillace's] prior sales," because he was "doing between 20,000 and 

25,000 a month sales[ w]hich is nothing close to the 12,000/12,500 a week and 

50,000/55,000 a month [Squillace] said [he] did." 

Despite their meeting, the business never improved, and Gillespie shut 

down its operations. By March 14, 2016, the Squillaces retained counsel to 
9

A-3065-18

pursue Gillespie for his defaults under his business lease and his promissory 

note. The Squillaces filed an action for breach of contract and Gillespie filed an 

action for fraudulent misrepresentation. Gillespie's five count complaint only 

asserted claims based upon fraud and not breach of contract or any other 

grounds. It sought relief in the form of rescission and damages. 

At the trial held in December 2018, Gillespie, Vanelli, and Laura Squillace 

testified for plaintiffs. Ronald Squillace and the individual who introduced him 

to Gillespie testified for defendants.

After considering the testimony and other evidence adduced at trial, the 

judge entered the January 22, 2019 judgment under appeal and issued a written 

statement of reasons as a rider to the judgment. In his decision, the judge based 

his finding of fraud primarily upon the "extremely credible" testimony of 

Vanelli who "had no stake in the outcome," and the advertisements he created, 

which corroborated Gillespie's version of the events; the spreadsheet with the 

handwritten notes; "the testimony as to what records were permitted to be 

reviewed along with the discarding of records shortly after the transaction; the 

testimony of [Laura] Squillace; and, the credible yet unsophisticated testimony 

of . . . Gillespie." Addressing Ronald Squillace's credibility, the judge found 
10 A-3065-18

that it was undermined by the credible testimony of Laura Squillace and Vanelli 

as well as the advertisement and the spreadsheet. 

In reaching his conclusion, the judge found that Gillespie was an 

unsophisticated party, who actually and reasonably relied upon Squillaces' 

misrepresentations, even though he failed to conduct due diligence, which the 

judge found was exacerbated by the Squillaces' refusal to provide in-depth 

financial records. He accepted Gillespie's testimony about not earning anywhere 

near the amount represented by Squillaces, and found the claim also supported 

by the emails exchanged in March 2016. 

The judge awarded damages in the amount of $130,262, representing the 

amount that Gillespie had paid to the Squillaces towards the purchase price, but 

he declined to award amounts paid under the business' lease or attorneys' fees. 

In so holding, the judge made note of the lengthy pre-trial motions "occasioned 

by actions of counsel for Mr. Gillespie for which an award of fees [was] not 

warranted," and further noted that "[t]he relation between Mr. Gillespie and his 

counsel and the lack of proofs demonstrating an arm's length representation are 

factors in the court's decision to not award attorney's fees." 

Thereafter, Gillespie filed a motion for reconsideration on the issues of 

the amount of damages and the denial of punitive damages and attorney fees. 
11 A-3065-18

The trial judge denied the motion as to punitive damages because an award was 

a matter of discretion, "reserved for a narrow range of cases into which this one 

does not fall, in large part because Mr. Gillespie . . . had he undertaken steps on 

his own behalf, would . . . have prevented this," and that there existed no 

"reprehensible conduct" on the part of the Squillaces sufficient to punish them 

any more than requiring restitution of the amount already paid. This appeal 

followed.

II.

We begin our review by addressing Gillespie's appeal from the December 

15, 2017 order denying his motion for relief based upon the Squillaces'

spoliation of evidence in the form of the financial documents and laptop they 

destroyed allegedly as part of their downsizing before they moved to North 

Carolina. Gillespie argues that the judge failed to appreciate the appropriate 

legal factors that would have weighed in Gillespie's favor. Gillespie also claims 

that the failure to adjudicate the issue of spoliation of evidence at the pre-trial 

stage prejudiced him insofar as he was forced to expend two additional years in 

litigation and trial. We find no merit to these contentions.

In his motion, Gillespie sought an order dismissing the Squillaces' claims 

and as to Gillespie's claims, an adverse inference to be drawn at trial. He also 
12 A-3065-18

sought leave to file an amended complaint to add a claim for "intentional and 

fraudulent concealment," and an award of attorney fees. In denying Gillespie's 

motion without prejudice, the trial judge explained in his December 17, 2017 

oral decision that Gillespie's motion was not supported with a proposed amended

complaint asserting a claim for spoliation.

2

 The judge directed Gillespie to refile the motion with the proposed pleading, but Gillespie never filed a new 

motion. 

Despite the judge's denial of the motion and Gillespie's failure to file a

new motion, in his written decision the judge issued after trial, he relied in part 

on the Squillace's destruction of the documents and the laptop in support of his 

finding that the Squillaces fraudulently induced Gillespie into the subject 

transaction. Thus, the judge in essence granted the adverse inference that 

Gillespie pursued in his motion.

At the outset, we observe that where spoliation has been found, we leave 

"[t]he selection of the appropriate sanction . . . to the trial court's discretion and 

will not . . . distur[b it] if it is just and reasonable under the circumstances." 

Cockerline v. Menendez, 411 N.J. Super. 596, 620-21 (App. Div. 2010). 

2

 See Rule 4:9-1 as to the requirement for supporting the motion to amend with 

a proposed amended pleading. 
13 A-3065-18

Moreover, "[t]he best known civil remedy . . . is the so-called spoliation 

inference that comes into play where a litigant is made aware of the destruction 

or concealment of evidence during the underlying litigation[,]" wherein "all 

things are presumed against the destroyer." Rosenblit v. Zimmerman, 166 N.J. 

391, 401 (2001).

Under these circumstances, Gillespie's argument on appeal is moot

because Gillespie received what he claims he was entitled to and therefore "our 

decision . . . can have no practical effect on the existing controversy." Redd v. 

Bowman, 223 N.J. 87, 104 (2015) (quoting Deutsche Bank Nat'l Trust Co. v. 

Mitchell, 422 N.J. Super. 214, 221-22 (App. Div. 2011)). Even if it is not moot, 

we discern no abuse of the judge's discretion in denying Gillespie's motion for 

the reasons stated by the judge.

III.

Next, we consider Gillespie's argument that the trial judge erred by not 

awarding him punitive damages. As noted, the judge did not award them 

because Gillespie's failure to pursue due diligence contributed to his situation 

and there was no evidence of "reprehensible conduct." Gillespie argues that 

despite those findings, where fraud has been established punitive damages must 
14 A-3065-18

be awarded. We disagree with that assertion, but we conclude the trial judge 

did not sufficiently consider the claim.

"Punitive damages are sums awarded apart from compensatory damages 

and are awarded as punishment or deterrence for particularly egregious conduct.

. . . Generally, punitive damages are a limited remedy and must be reserved for 

special circumstances." Maudsley v. State, 357 N.J. Super. 560, 590-91 (App. 

Div. 2003) (citations omitted). "[T]o warrant a punitive award, the defendant's 

conduct must have been wantonly reckless or malicious. There must be an 

intentional wrongdoing in the sense of an 'evil-minded act' or an act 

accompanied by a wanton and willful disregard of the rights of another." Id. at 

591 (quoting Nappe v. Anschelewitz, Barr, Ansell & Bonello, 97 N.J. 37, 49

(1984)). 

"[I]t is especially fitting to allow punitive damages for actions such as 

legal fraud, since intent rather than mere negligence is the requisite state of 

mind." Nappe, 97 N.J. at 50. "[F]raudulent misrepresentations [are a] sufficient 

basis for punitive damages, since intent rather than mere negligence would thus 

be satisfied." Albright v. Burns, 206 N.J. Super. 625, 636 (App. Div. 1986)

(quoting Nappe, 97 N.J. at 50). "The key to the right to punitive damages is the 

wrongfulness of the intentional act. 'The right to award exemplary damages 
15 A-3065-18

primarily rests upon the single ground—wrongful motive.'" Nappe, 97 N.J. at

49 (quoting Dreimuller v. Rogow, 93 N.J.L. 1, 3 (Sup Ct. 1919)). 

Applying these guiding principles, while we recognize that "[t]he decision 

to award or deny punitive damages . . . rests within the sound discretion of the 

trial court," Maudsley, 357 N.J. Super. at 590, we conclude that we are 

constrained to remand to the trial judge to reconsider the issue of punitive 

damages as the judge made no findings about the Squillaces' intent. 

On remand, the judge must make specific findings as to whether the 

Squillaces' actions were the result of a wrongful motive warranting an award of 

punitive damages. If so, the judge must enter an appropriate award after taking 

"into consideration all of the circumstances surrounding the particular 

occurrence including the nature of the wrongdoing, the extent of harm inflicted, 

the intent of the party committing the act, the wealth of the perpetrator, as well 

as any mitigating circumstances which may operate to reduce the amount of the 

damages." Nappe, 97 N.J. at 50 (quoting Leimgruber v. Claridge Assocs., 73 

N.J. 450, 456 (1977)). We do not by our remand suggest any specific outcome 

of the judge's reconsideration of this issue.
16 A-3065-18

IV.

We turn to Gillespie's appeal from the judge's denial of attorneys' fees. 

Gillespie relies upon the previously cited contract clauses stating when a party 

to the contract would be able to recover attorneys' fees. As noted, the trial judge 

determined that an award was not appropriate because of Gillespie's relationship 

with his attorney and the attorney's conduct during the pretrial litigation. 

Gillespie claims that the judge's conclusion was not supported by any evidence 

and that in any event it should not have led to the denial of his request for fees. 

While "[w]e afford trial courts 'considerable latitude in resolving fee 

applications,'" Wear v. Selective Ins., 455 N.J. Super. 440, 459 (App. Div. 2018) 

(quoting Grow Co. v. Chokshi, 424 N.J. Super. 357, 367 (App. Div. 2012)), and 

such "determinations . . . will be disturbed only on the rarest of occasions, and 

then only because of a clear abuse of discretion," Packard-Bamberger & Co. v. 

Collier, 167 N.J. 427, 444 (2001) (quoting Rendine v. Pantzer, 141 N.J. 292, 

317 (1995)), we conclude the trial judge did not properly consider Gillespie's

fee application if the award of fees are warranted. See Grow Co., 424 N.J. Super. 

at 367-68 (describing procedure to be followed in fee applications). However, 

we also conclude Gillespie was not entitled to an award for a different reason; 

he pursued and prevailed on his claim for rescission of the contract. As we 
17 A-3065-18

review orders and judgments and not reasons, Do-Wop Corp. v. City of Rahway, 

168 N.J. 191, 199 (2001), we affirm the denial of counsel fees for that reason

and not the reasons cited to by the trial judge.

Plaintiff's complaint consisted of five counts, all claiming in one manner 

or another that he was entitled to relief because of the Squillaces' fraudulent 

conduct. Each count sought rescission, as well as damages. As the trial judge 

observed, "Gillespie [sought] rescission and return of monies paid in the 

transaction based upon a claim of fraud, both legal and equitable, by the

Squillace[s]." There was no claim for breach of contract and in awarding 

damages to Gillespie, the trial judge limited Gillespie's award to the amount he 

paid under the sales agreement in order to restore him to where he would have 

been had no payments been made under that contract. 

"In general, New Jersey disfavors the shifting of attorneys' fees . . . . 

However, a prevailing party can recover those fees if they are expressly provided 

for by statute, court rule, or contract." Litton Indus., Inc. v. IMO Indus., Inc., 

200 N.J. 372, 385 (2009) (citation omitted). However, where a contract has been 

rescinded, it is "wholly undone and no contract provisions remain in force to 

bind either of the parties." Cnty. of Morris v. Fauver, 153 N.J. 80, 96-97 (1998). 

Indeed, "[r]escission voids the contract . . . meaning that it is considered 'null 
18 A-3065-18

from the beginning' and treated as if it does not exist for any purpose." First 

Am. Title Ins. v. Lawson, 177 N.J. 125, 137 (2003). 

Here, Gillespie achieved his goal of recession. Having done so he was 

not entitled to enforce his claim for attorneys' fee under the rescinded agreement. 

V.

Next, we consider the Squillaces' cross-appeal challenging the entry of 

judgment in favor of Gillespie. In their cross-appeal, the Squillaces argue that 

"Gillespie's defense of fraud [should not have] barred [their] breach of contract 

claims." They also contend that there was insufficient clear and convincing

evidence of the elements of fraud including damages.

In addition, the Squillaces assert that Gillespie's claims were barred by the 

parties contract, which contained express acknowledgments by Gillespie that the 

Squillaces made no representations to him other than what was incorporated into 

the agreement, and that Gillespie "independently investigated" the business' 

"value and profitability" before agreeing to purchase Castalia. Although the 

Squillaces recognize on appeal that the contract's provisions "cannot be an 

absolute defense to fraud," they assert that because the clauses were specifically 

negotiated, the trial judge should not have disregarded them. Moreover, they 
19 A-3065-18

contend that Ronald Squillace's testimony that he never made any 

representations was credible. We disagree. 

Our review of a trial judge's decision after a bench trial is limited. Final 

determinations made by the judge "premised on the testimony of witnesses and 

written evidence at a bench trial" are reviewed in accordance with a deferential 

standard. D'Agostino v. Maldonado, 216 N.J. 168, 182 (2013). "[W]e do not 

disturb the factual findings and legal conclusions of the trial judge unless we are 

convinced that they are so manifestly unsupported by or inconsistent with the 

competent, relevant and reasonably credible evidence as to offend the interests 

of justice[.]" Seidman v. Clifton Sav. Bank, S.L.A., 205 N.J. 150, 169 (2011) 

(second alteration in original) (quoting In re Trust Created By Agreement Dated 

Dec. 20, 1961, ex rel. Johnson, 194 N.J. 276, 284 (2008)). 

"The general rule is that findings by the trial court are binding on appeal 

when supported by adequate, substantial, credible evidence." Cesare v. Cesare, 

154 N.J. 394, 411-12 (1998). In reviewing the judge's fact findings, "[w]e do 

not weigh the evidence, assess the credibility of witnesses, or make conclusions 

about the evidence." Mountain Hill, LLC v. Twp. of Middletown, 399 N.J. 

Super. 486, 498 (App. Div. 2008) (alteration in original) (quoting State v. 

Barone, 147 N.J. 599, 615 (1997)). While "our review of the sufficiency of the 
20 A-3065-18

facts to satisfy an applicable legal standard is a question of law" that is subject 

to "plenary" review, id. at 498-99, "[r]eversal is reserved only for those 

circumstances when we determine the factual findings and legal conclusions of 

the trial judge went 'so wide of the mark that a mistake must have been made.'" 

Llewelyn v. Shewchuk, 440 N.J. Super. 207, 214 (App. Div. 2015) (quoting N.J. 

Div. of Youth & Fam. Servs. v. M.M., 189 N.J. 261, 279 (2007)).

However, a trial court's legal determinations are not entitled to any special 

deference and are reviewed de novo. D'Agostino, 216 N.J. at 182 (citing 

Manalapan Realty, LP v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995)). 

Informed by this deferential standard of review, we turn to the substantive 

principles governing this cross-appeal.

A contract that is procured by fraud is subject to rescission. See Merchs.

Indem. Corp. v. Eggleston, 37 N.J. 114, 130-31 (1962). To state a claim for 

common law fraud, a plaintiff must allege facts that, if proven, would establish 

the following five elements: "(1) a material misrepresentation of a presently 

existing or past fact; (2) knowledge or belief by the defendant of its falsity; (3) 

an intention that the other person rely on it; (4) reasonable reliance thereon by 

the other person; and (5) resulting damages." Gennari v. Weichert Co. Realtors, 

148 N.J. 582, 610 (1997) (citation omitted).
21 A-3065-18

In order to establish the tort of fraudulent inducement, a plaintiff must 

prove a misrepresentation of material fact, knowledge or belief by the defendant 

of its falsity, intent that the other party rely on it, and detrimental reliance 

thereon by the other party. Nolan v. Lee Ho, 120 N.J. 465, 472 (1990) (citing 

Jewish Ctr. of Sussex Cnty. v. Whale, 86 N.J. 619, 625 (1981)). Fraud in the 

inducement does not differ materially from common law fraud, as it provides a 

cognizable basis for equitable relief in the event a false promise induced 

reliance. See Lipsit v. Leonard, 64 N.J. 276, 283-84 (1974). 

However, "fraud is never presumed, but must be established by clear and 

convincing evidence." Weil v. Express Container Corp., 360 N.J. Super. 599, 

613 (App. Div. 2003). The plaintiff's reliance must also be reasonable. Daibo 

v. Kirsch, 316 N.J. Super. 580, 588 (App. Div. 1998). The precise definition of 

what is "reasonable" has been examined previously by our courts. Reliance on 

a misrepresentation is not reasonable or justifiable if the recipient "knows that 

it is false or its falsity is obvious to him." Restatement (Second) of Torts § 541 

(Am. Law Inst., 1977) (hereinafter Restatement); see also Walid v. Yolanda for 

Irene Couture, 425 N.J. Super. 171, 182 (App. Div. 2012) ("The principles set 

forth in the Restatement accurately reflect the law in New Jersey.").
22 A-3065-18

Applying our limited review of the trial judge's findings, we conclude the 

Squillaces' contentions that challenge the sufficiency of the credible evidence 

supporting the trial judge's judgment are without merit. Suffice it to say, the 

judge made credibility determinations and found the facts detailed in his written 

decision that clearly and convincingly established the Squillaces' fraudulent 

conduct, including the fact that after the sale, Castalia failed to realize revenue 

in amounts consistent with the Squillaces misrepresentations that were made in 

order to induce Gillespie to purchase the business.

We also conclude that the judge's legal determinations were correct. 

Specifically, and contrary to the Squillaces' argument before the judge and now 

on appeal, the provisions of the sales agreement did not bar Gillespie's claims

even if they were negotiated.

As we already noted, the Squillaces argue the agreement's clauses that 

state they made no representations and Gillespie investigated the business' 

profitability undercut Gillespie's claims of fraud. However, a "no 

representations" clause is not a bar to claim of fraud where there is reliance upon 

facts that are "peculiarly within th[e other] party's knowledge and were, in fact, 

intentionally misrepresented," Walid, 425 N.J. Super. at 185-86, an independent

investigation of the facts had not been conducted, and the misrepresentation is 
23 A-3065-18

not obvious from a cursory review of the facts revealed to the party claiming 

fraud. See Bilotti v. Accurate Forming Corp., 39 N.J. 184, 204 (1963); Walid, 

425 N.J. Super. at 185; Restatement § 541 cmt. a. Thus, a recipient of a 

misrepresentation is justified in relying on that misrepresentation even though 

an investigation might have revealed its falsity, Walid, 425 N.J. Super. at 181; 

Restatement § 540, because "[o]ne who engages in fraud . . . may not urge that 

one's victim should have been more circumspect or astute." Jewish Ctr., 86 N.J. 

at 626 n.1. As one court has observed:

New Jersey law does not impose upon a party to an 

arm's length transaction a general duty of inquiry.

Accordingly, during negotiations a party may accept 

another party's representations as truth. A party that 

elects to make an independent investigation, however, 

will be accountable for everything such party could 

have discerned by employing reasonable diligence.

[John Hancock Mut. Life Ins. of Boston v. Cronin, 139 

N.J. Eq. 392, 398 (1947).] Put differently, if upon 

conducting an investigation the representee learns facts 

such that he is alerted to the falsity of the representor's 

statements, he will be barred from seeking relief. 

[House of Drugs, Inc. v. RD Elmwood Assocs. (In re 

House of Drugs, Inc.), 251 B.R. 206, 211 (Bankr. 

D.N.J. 2000).]

We have previously followed that model. For example, in Walid, 425 N.J. 

Super. at 174-75, we examined a fraud claim arising from a purchase of a bridal 
24 A-3065-18

shop. The seller in that case provided the purchasers with bank deposit 

summaries, tax returns, pending purchase orders, profit and loss statements, and 

a "fact sheet" listing annual sales and operating profit. Id. at 175-76. Against 

the advice of their attorney, the purchasers decided not to engage an accountant 

to examine these documents and opted instead to review the documents 

themselves. Ibid. After the sale, the business failed, and the purchasers filed 

suit. Id. at 176. The plaintiffs alleged, and the judge subsequently found, that 

the seller had misrepresented the business's gross incomes. Id. at 177.

On appeal, we first noted in Walid that the plaintiffs were not experts in 

examining business documents, and so the documents provided by the seller 

would not have been obviously fraudulent to the plaintiffs. Id. at 184. 

Moreover, the plaintiffs did not conduct any additional investigation beyond 

reviewing the documents, and so they would not have had any other way of 

knowing that a fraud was being perpetrated upon them. Ibid. We therefore 

concluded that the plaintiffs were justified in their reliance upon the seller's 

representations of the business's profitability. Id. at 184-86. 

We reached a different conclusion in the earlier matter of Trautwein v. 

Bozzo, 35 N.J. Super. 270, 272 (Ch. Div. 1955), aff'd o.b., 39 N.J. Super. 267 

(App. Div. 1956). There, the plaintiff sought rescission of his purchase of a 
25 A-3065-18

hotel because, he alleged, the defendant misrepresented the weekly gross of the 

bar within the hotel. In particular, the seller represented in an advertisement 

that the weekly gross was $1,100. Id. at 273. The plaintiff said that prior to the 

sale, he saw a notebook containing records of daily bar receipts for each week 

indicating that receipts were "far less than" the advertised amount. Id. at 278. 

For those reasons, the judge concluded in that case that the plaintiff "was not in 

fact deceived" and that the plaintiff entered into the agreement for other reasons. 

Id. at 279. The court therefore refused to order rescission of the sale. Ibid.

The law therefore does not allow the perpetrator of a fraud to use the 

resulting contract as a shield against a claim. Contrary to the Squillaces' 

contention, Gillespie was, as the trial judge concluded, legally entitled to rely 

upon the false representations that trial judge found the Squillaces made, where 

there was no evidence that Gillespie made any independent investigation and 

instead relied upon the Squillaces' honesty. It makes no difference, as the 

Squillaces contend without any legal support, that the contract's clauses were 

negotiated by the parties. We have no cause to disagree with the trial judge's 

dismissal of the Squillaces' claims or his awarding relief to Gillespie.
26 A-3065-18

VI.

In sum, we affirm the entry of the judgment except as to the issue of 

punitive damages, which we remand for reconsideration. To the extent we have 

not specifically addressed any of the parties' remaining arguments, we conclude 

they are without sufficient merit to warrant discussion in a written opinion. R.

2:11-3(e)(1)(E). 

Affirmed in part; vacated and remanded in part for further proceedings 

consistent with our opinion. We do not retain jurisdiction.