SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0460-15T2

JOSEPH PETRONE,

Plaintiff-Appellant,

v.

ALEX J. SABO, ESQ., and

BRESSLER, AMERY & ROSS, P.C.,

Defendants-Respondents.

_______________________________________

Argued April 27, 2017 – Decided

Before Judges Lihotz and O'Connor.

On appeal from Superior Court of New Jersey, 

Law Division, Monmouth County, Docket No. L2648-12.

Elena Gammardella argued the cause for 

appellant (Law Office of Richard A. Amdur, 

Jr., and Hoagland, Longo, Moran, Dunst & 

Doukas, LLP, attorneys; Richard J. Mirra, on 

the brief).

Mark M. Tallmadge argued the cause for 

respondents (Bressler, Amery & Ross, P.C.,

attorneys; Mr. Tallmadge and Risa D. Rich, 

on the brief).

PER CURIAM

NOT FOR PUBLICATION WITHOUT THE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.

June 13, 2017
A-0460-15T2

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In this legal malpractice action, plaintiff Joseph Petrone 

appeals from the May 19, 2015 Law Division order, which granted 

partial summary judgment to defendants Alex J. Sabo and 

Bressler, Amery & Ross (BAR). After reviewing the record and 

applicable legal principles, we affirm. 

I

The motion record informs the following. In 2005, 

plaintiff was working as a broker-dealer for Investacorp, Inc., 

a financial services firm. A client of Investacorp filed a 

claim against it and plaintiff with the National Association of 

Securities Dealers (NASD), alleging they wrongfully caused the 

client to sustain losses to its investment account.1 In 2006, 

Investacorp and plaintiff retained BAR to defend and represent 

them at the NASD arbitration hearing (investor arbitration). 

Sabo was an attorney at BAR who handled this matter. 

Investacorp wanted to settle the matter with the investor, 

but plaintiff, believing he was not liable, was unwilling to 

settle. Just days before the arbitration hearing, plaintiff 

obtained his own attorney; defendants continued to represent 

Investacorp. Before the arbitration hearing commenced, 

 

1 In 2007, NASD became known as the Financial Industry 

Regulatory Authority (FINRA). 
A-0460-15T2

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Investacorp settled with the investor for $275,000. Two days 

later, plaintiff settled for $2500. 

In general, broker-dealers are required to report 

arbitration awards and settlements. Thus, Investacorp filed a 

"Form U4" with NASD in which Investacorp stated both it and 

plaintiff settled the claim with the investor, and reported the 

amount each contributed toward the settlement. Before 

Investacorp filed this form, plaintiff took the position he did 

not contribute toward Investacorp's settlement, as he separately 

settled with the investor. Moreover, because his settlement was 

less than $10,000, he was not required to report his settlement 

with NASD. Despite plaintiff's protestations, Investacorp 

declined to amend the form and filed it with NASD. 

Approximately one month later, Investacorp terminated 

plaintiff. As part of the termination process, Investacorp was 

required to and did file a Form U5 with NASD.2 In that form, 

Investacorp reported plaintiff contributed $2500 to the 

settlement of the investor's claim. Plaintiff complained to 

Investacorp it was improper to include in the U5 form that he 

had contributed toward Investacorp's settlement of the 

investor's claims, again contending his settlement was separate 

 

2 Form U5 is the Uniform Termination Notice for Securities 

Industry Registration used by broker-dealers to report the 

termination of the registration of an individual. 
A-0460-15T2

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from Investacorp's and, further, his settlement of $2500 did not 

have to be reported. Plaintiff requested Investacorp amend both 

forms and delete reference of his settlement with the investor, 

but Investacorp refused to do so. According to plaintiff, there 

is a question of fact whether BAR advised Investacorp to include 

the contested information on the forms. 

In 2007, plaintiff filed a claim against Investacorp with 

FINRA, alleging the subject information in the U4 and U5 forms 

was false and caused him to lose income. As a remedy, plaintiff 

sought removal of the allegedly misleading information from the 

U4 and U5 forms, and damages in the amount of $531,500. The 

specific causes of action plaintiff asserted against Investacorp 

were breach of contract, negligence, negligent 

misrepresentation, and violation of the New Jersey Wage Payment 

Law. In an amended statement of claim presented to the 

arbitration panel, plaintiff broke down his request for $531,500 

in compensatory damages as follows: 

(1) $19,570 in lost trail commission/wages;

(2) $51,430 in lost earnings in 2007;

(3) $40,500 in lost earnings in 2008;

(4) $400,000 for estimated lost earnings 

for 2009 through 2019; and 

(5) $20,000 in penalties. 
A-0460-15T2

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Investacorp filed a counterclaim, seeking that plaintiff 

indemnify it for the $275,000 it paid in settlement to the 

investor, and attorneys fees. BAR did not represent Investacorp 

in this matter (employment arbitration). 

After three days of hearings, at which both parties were 

represented by counsel, the three-member panel of FINRA 

arbitrators heard testimony and reviewed documentary evidence. 

The panel ultimately found in plaintiff's favor. The panel 

ordered Investacorp to pay plaintiff $12,150 in compensatory 

damages, plus interest, and recommended the expungement of all 

references to the investor's claim from plaintiff's registration 

records. All of the relief Investacorp sought in its 

counterclaim was denied. 

Three years later, in 2012, plaintiff filed the within 

action against Sabo and BAR for legal malpractice. In answers 

to interrogatories, plaintiff alleged defendants had a conflict 

of interest when they represented both him and Investacorp; 

abandoned plaintiff just days before the investor arbitration; 

and were responsible for the misleading content in the U4 and U5 

forms. Plaintiff claimed the compensatory damages he sustained 

as a result of defendants' conduct was $531,500, which when 

broken down were exactly the same damages he claimed before the 

employment arbitration panel:
A-0460-15T2

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(1) $19,570 in lost trail commission/wages;

(2) $51,430 in lost earnings in 2007;

(3) $40,500 in lost earnings in 2008;

(4) $400,000 for estimated lost earnings 

for 2009 through 2019; and 

(5) $20,000 in penalties. 

In addition, he claimed attorneys fees of $22,000. 

Defendants filed a motion for summary judgment dismissal, 

arguing the doctrine of collateral estoppel precluded plaintiff 

from recovering the aforementioned compensatory damages from 

defendants. Their motion was denied but, on reconsideration, 

the court granted defendants partial summary judgment. The 

court found plaintiff collaterally estopped from seeking the 

same damages sought, litigated, and considered by the 

arbitrators during the employment arbitration hearing. However, 

the court also found that to "the extent the plaintiff has 

claims for damages beyond those amounts attributable directly to 

Investacorp's improper filing of the U4 and U5 forms, they may 

be pursued in this matter." 

Thereafter, the parties entered into a consent order 

stating all remaining claims were settled, but that plaintiff 

preserved his right to appeal the order granting defendants 

partial summary judgment. This appeal ensued.
A-0460-15T2

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II

Plaintiff's principal argument on appeal is the trial court 

erred when it found plaintiff barred from relitigating the 

subject damages on the grounds of collateral estoppel. We 

disagree and affirm. 

The doctrine of collateral estoppel operates to preclude 

the relitigation of issues that have been previously decided.

Olivieri v. Y.M.F. Carpet, Inc., 186 N.J. 511, 522 (2006). For 

the doctrine to apply, the party asserting the bar must show: 

(1) the issue to be precluded is identical 

to the issue decided in the prior 

proceeding; (2) the issue was actually 

litigated in the prior proceeding; (3) the 

court in the prior proceeding issued a final 

judgment on the merits; (4) the 

determination of the issue was essential to 

the prior judgment; and (5) the party 

against whom the doctrine is asserted was a 

party to or in privity with a party to the 

earlier proceeding.

[Id. at 521 (quoting In re Estate of Dawson, 

136 N.J. 1, 20-21 (1994)).]

This doctrine applies not only to issues raised in a prior 

action, but also to facts that were in dispute as well. Id. at 

522. Moreover, collateral estoppel may apply even if the prior 

proceeding was an arbitration hearing. Habick v. Liberty Mut. 

Fire Ins. Co., 320 N.J. Super. 244, 257-58 (App. Div.), certif. 

denied, 161 N.J. 149 (1999). 
A-0460-15T2

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Applying the elements of collateral estoppel to this 

matter, first, the damages defendants seek to preclude from 

being relitigated are the very same damages plaintiff sought to 

recover from Investacorp during the employment arbitration 

hearing. After plaintiff's entitlement to compensatory damages 

was litigated before the panel, the arbitrators determined these 

damages were $12,150. But for the attorneys fees plaintiff 

seeks from defendants, there is no question the damages 

plaintiff seeks in this matter are identical to those sought in 

the employment arbitration. However, the trial court did not 

preclude plaintiff from seeking all damages from defendants in 

the within matter, just those sought and litigated during the 

arbitration hearing. 

As for the second element, whether the damages the trial 

court barred from relitigation on collateral estoppel grounds 

was litigated in the prior proceeding, there is no question when 

before the panel, plaintiff advocated he was entitled to the 

very same $531,500 in damages he seeks in the within matter. 

After three days of hearings, during which the panel heard 

testimony and reviewed various documents, the panel found in 

plaintiff's favor, although it determined he was entitled to 

only $12,150 in compensatory damages. 
A-0460-15T2

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The third element is whether the court in the prior 

proceeding issued a final judgment on the merits. An 

arbitration panel is not, of course, a court and, thus, cannot 

enter a final judgment. However, "the dispositions reached by 

arbitrators are afforded collateral estoppel effect by reviewing 

courts." Levine v. Wiss & Co., 97 N.J. 242, 250 (1984). As for 

the fourth and fifth elements, there is no question the damages 

plaintiff sought to recover in the arbitration hearing were 

essential to the arbitration award, and the party against whom 

the doctrine is asserted was a party to the earlier proceeding. 

We note that even if the elements of collateral estoppel 

are met, a court may exercise its discretion to deny preclusion 

where its application would be unfair. "Even where these 

requirements are met, the doctrine [of collateral estoppel], 

which has its roots in equity, will not be applied when it is

unfair to do so." Pace v. Kuchinsky, 347 N.J. Super. 202, 215 

(App. Div. 2002). Here, plaintiff argues applying this doctrine 

to bar the subject damages would be inequitable. We are not 

persuaded. 

As we observed in Pace, supra, 347 N.J. Super. at 216, 

factors disfavoring preclusion include: 

[T]he party against whom preclusion is 

sought could not have obtained review of the 

prior judgment; the quality or extent of the 
A-0460-15T2

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procedures in the two actions is different; 

it was not foreseeable at the time of the 

prior action that the issue would arise in 

subsequent litigation; and the precluded 

party did not have an adequate opportunity 

to obtain a full and fair adjudication in 

the prior action.

Here, even if the arbitration award could not be reviewed, 

none of the other factors applies. The arbitration hearing was 

a contested hearing and, although there was no jury, the hearing 

was otherwise sufficiently comparable to a non-jury hearing

conducted in court. Plaintiff knew or should have known the 

damages he sought to litigate and have decided at the 

arbitration proceeding could be precluded in subsequent 

litigation. Finally, plaintiff did have an adequate opportunity 

to fully adjudicate his entitlement to the subject damages 

during the arbitration proceeding. In summary, it is clear the 

five elements of collateral estoppel were met, and fairness 

weighs in favor of preclusion. 

We have considered plaintiff's remaining arguments and 

conclude they are without sufficient merit to warrant discussion 

in a written opinion. See R. 2:11-3(e)(1)(E). 

Affirmed.