SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-3461-14T3

A-3550-14T3

MARK CHERNALIS, ANTHONY

CHERNALIS, ONE SUNNY HILL

ASSOCIATES LLC and TWO SUNNY

HILL ASSOCIATES LLC,

Plaintiffs-Appellants/

Cross-Respondents,

v.

DEBRA TAYLOR, a/k/a DEBRA

HELEN AZARIAN, ROBERT TAYLOR

and THE ROBERT TAYLOR FAMILY

URBAN FARMS REAL ESTATE TRUST,

Defendants/Third-Party PlaintiffsRespondents/Cross-Appellants,

v.

RICHARD TAYLOR, ALETA TAYLOR,

TOBOGGAN RIDGE PARTNERS LLC and

SANDY RIDGE PARTNERS LLC,

Third-Party Defendants-Respondents.

___________________________________

MARK CHERNALIS, ANTHONY

CHERNALIS, ONE SUNNY HILL

ASSOCIATES LLC and TWO SUNNY

HILL ASSOCIATES LLC,

Plaintiffs-Respondents,

NOT FOR PUBLICATION WITHOUT THE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-3461-14T3

v.

DEBRA TAYLOR, a/k/a DEBRA

HELEN AZARIAN, ROBERT TAYLOR

and THE ROBERT TAYLOR FAMILY

URBAN FARMS REAL ESTATE TRUST,

Defendants/Third-Party PlaintiffsRespondents/Cross-Appellants,

v.

RICHARD TAYLOR, ALETA TAYLOR,

TOBOGGAN RIDGE PARTNERS LLC and

SANDY RIDGE PARTNERS LLC,

Third-Party DefendantsAppellants/Cross-Respondents.

__________________________________

Argued February 14, 2018 – Decided

Before Judges Koblitz, Manahan and Suter.

On appeal from Superior Court of New Jersey, 

Chancery Division, Bergen County, Docket No. 

C-000228-12.

Anthony X. Arturi argued the cause for 

appellants/cross-respondents (in A-3461-14)

Arturi Law, LLC, attorneys; Anthony X. Arturi, 

of counsel and on the briefs).

Kevin P. Harrington argued the cause for 

appellants/cross-respondents (in A-3550-14)

(Harrington and Lombardi, LLP, attorneys; 

Thomas R. Rumana, of counsel; Kevin P. 

Harrington, on the brief).

David M. Blackwell argued the cause for 

respondents/cross-appellants (in A-3461-14 

and A-3550-14)(Donnelly Minter & Kelly, LLC, 

attorneys; David M. Blackwell and Patrick B. 

Minter, of counsel and on the briefs).

June 7, 2018
3 A-3461-14T3

PER CURIAM

The dispute underlying these appeals stems from the purchase 

of a shopping center. The transaction was complex. It was 

structured to effectuate not only the purchase by a separate entity 

formed for the purpose of the acquisition, Urban Farms Acquisition 

LLC (Urban Farms). It was also structured to maintain family 

control despite the participation of outside investors and to 

channel profits and equity growth to the outside investors and

family trusts for estate tax considerations. The transaction also 

included operating agreements and provisions relative to 

compensation.

Subsequent to the closing of the transaction, Mark and Anthony 

Chernalis (collectively plaintiffs) became aware that certain 

transactional documents provided defendants, Debra Taylor (Debra), 

Robert Taylor (Robert), and the Robert Taylor Family Trust and 

Urban Farms (RTT) (collectively defendants) with a greater 

interest than contemplated. Mark and Anthony, individually and 

in the capacity of their entities, One Sunny Hill Associates LLC 

and Two Sunny Hill Associates LLC, instituted an action, later 

amended, seeking defendants' expulsion from the management of the 

property as well as compensatory and punitive damages and counsel 

fees. Defendants filed an answer and counter-claim seeking 

compensatory damages and counsel fees. Defendants also filed a 
4 A-3461-14T3

third-party complaint naming Richard Taylor (Richard), Aleta 

Taylor, Tobaggan Ridge Partners LLC and Sandy Ridge Partners LLC,

as third-party defendants, later amended, alleging breach of 

fiduciary duties and other tortious misconduct. The third-party 

defendants were outside investors.

A bench trial was conducted over several days in April and 

May 2014. Following the trial, the judge issued an opinion finding 

that Debra acted as an attorney for plaintiffs during the entirety 

of the transaction. The judge held that Debra failed to satisfy 

the stringent documentation and disclosure requirements for 

attorneys who enter into business ventures with their clients. As 

such, the judge held that the defendants' direct cash investment 

was terminated and to be refunded without entitlement to future 

earnings on the investment or to unpaid fees for services relating 

to the transaction.

The judge further held that defendants' interest in the 

property and their consequential compensation was greater than 

intended. However, the judge determined that the unintended

interest and compensation was not the product of fraud or 

misconduct that would warrant disgorgement of any payments 
5 A-3461-14T3

defendants received or warrant an award of punitive damages or 

counsel fees.1 For the reasons that follow, we affirm.

I.

We summarize the following from the voluminous record. Mark 

and Anthony operated a grocery and catering business known as The 

Market Basket. The Market Basket was the anchor tenant in a 

shopping center. Mark and Anthony desired to purchase the shopping 

center pursuant to a right of first refusal. Their first attempt 

to purchase the shopping center failed. Mark and Anthony were 

determined to succeed at the next opportunity, so they hired Debra,

based upon her combination of skills as a financial advisor,

licensed accountant, and lawyer.

As contemplated, Urban Farms would be comprised of three 

classes of individuals and entities that would receive 

compensation dependent upon their assigned class holder status. 

The outside investors, Class A, would participate in the property's 

appreciation and the preferred fixed return, or "dividend" of six 

percent on their direct cash investments. The Class A members 

would also receive thirty-five percent of the remaining earnings.

The Class B members, comprised sole of Anthony and his wife, would 

 

1 Thereafter, the judge issued a supplemental opinion repeating 

the decision to deny counsel fees as well as certain post-judgment 

claims which are not the subject of these appeals. 
6 A-3461-14T3

share only in the preferred fixed return with any preferred 

dividend to be allocated to the Class C members.

By agreement, the property would be managed by a separate 

company, Merrywood Associates LLC (Merrywood), which Mark and 

Debra would run in exchange for a share of the operating profits. 

Debra's participation in Merrywood was not through her name but 

through RTT.

 II.

Debra was the principal of Taylor Financial Group, which she 

described as a wealth management firm. Debra held securities 

licenses and an affiliation with a broker-dealer. She was a 

Certified Public Accountant (CPA) and a licensed real estate 

salesperson.

Debra was also an attorney, licensed to practice in New 

Jersey. She elected to retire from the practice of law in 2001,

but subsequently returned to the practice in August 2012. During 

her retirement, Debra understood that she was ineligible to draft 

or to revise legal documents, to render legal assistance, or to 

give legal advice.

When their first attempt to acquire the shopping center 

failed, Mark and Anthony attributed the failure in part to the 

limitations of their counsel at the time. When the property became 

available again in 2009, Mark and Anthony were eager to pursue it 
7 A-3461-14T3

and sought Debra to assist them in the acquisition. Mark believed 

that Debra was "uniquely qualified" because she was an attorney 

and a CPA with experience in financial planning and estate 

planning, as well as in real estate. Mark and Anthony understood 

from the onset that Debra "was going to help quarterback the deal" 

by being "our attorney" and advising both the family and any other 

attorney that was to be involved. Mark believed that the 

arrangement was "perfect" because being a lawyer meant that Debra 

could "deal with legal aspects" in addition to "communications" 

and financing, which amounted to handling all aspects of getting 

the deal done. 

Despite the absence of a written retainer agreement or any 

writing relative to the scope of services that Debra would provide, 

Mark and Anthony believed that she was, at all times, acting as 

their attorney.

 A.

For purpose of the transaction, Debra recommended that the 

family hire a new accountant, Martin Goldstein, for his experience 

in real estate financing. Throughout the transaction, Goldstein 

operated in that capacity including developing the general 

structure for the investments and the interests in Urban Farms.

Debra also recommended that the family replace their prior 

attorney with an experienced real estate attorney, Jack Zakim.
8 A-3461-14T3

Zakim was involved only with the negotiations with the lender and 

the property's owner. He viewed Debra's role in the transaction 

to be multi-faceted including as attorney, financial advisor and 

spokesperson for the family.

Debra also advised plaintiffs to retain the services of 

another attorney, Mark Press, to handle issues relating to outside 

investors. Press was involved in drafting documents relative to 

the operating agreements including those that provided for 

compensation to Richard, Mark and Debra. Press viewed Debra's 

role as a financial advisor to the Chernalis family who was 

involved in "orchestrating the entire transaction." Press relied 

on Debra to explain documents to the family although he did not 

agree that when doing so that she was necessarily acting as a 

lawyer. When Debra described her background to Press, she included 

being an attorney.

Debra requested that another attorney, David Edelbaum, who 

specialized in tax and estate planning, become involved. Edelbaum 

considered Debra's role to be a financial advisor only, despite 

knowing that she was an attorney and a CPA.

B.

Mark initially raised the issue of Debra's compensation as 

the family did not want to see "a huge bill all of a sudden." At 

first, Debra said that she was satisfied with compensation through 
9 A-3461-14T3

her work on The Market Basket's retirement plan and by future 

business referrals. However, as the transaction became more 

involved, Debra recommended her compensation come from a Class C 

share interest, which she referenced as a "co-promote fee," as is

consistent with industry usage for participation in a transaction 

not arising from a tangible investment. Mark and Anthony agreed 

to this method of Debra's compensation. It was later agreed that 

the compensation would flow through Merrywood and that Debra's 

interest would be payable to RTT. The percentages of the 

compensation were stated explicitly in the numerous drafts of the 

operating agreements. It was also agreed that Debra could make a 

cash investment for a Class A interest in Urban Farms, but as an 

outside investor and not as compensation for her services.

C.

The closing on the property took place on December 17, 2009,

although the parties executed the closing documents, including the 

operating agreements, two days earlier. The final version of the 

Merrywood operating agreement contained two class members. The 

Class A members were Mark, Toboggan Ridge Partners, LCC (Toboggan 

Ridge) and RTT.2 The Class B members were Mark and RTT. The 

 

2 Toboggan Ridge was an entity used by Richard Taylor for his 

investment in order to remain under the bank's threshold requiring 

a personal lender to give a personal guarantee. 
10 A-3461-14T3

percentages assigned to the members of Class A became the focal 

point of contention when Mark and Anthony were apprised of them. 

Mark had seen a spreadsheet calculating the distributions for 

fiscal year 2009 pursuant to the Urban Farms operating agreement 

that included percentages far greater than those discussed by the 

parties for Debra's compensation. When Debra insisted that the

percentages were in accord with the closing documents, this 

litigation ensued.

III.

At the conclusion of the bench trial, Judge Robert P. Contillo 

placed his decision on the record. In reaching his decision, 

Judge Contillo made the following factual findings. 

The family engaged Debra because she "stressed" that her 

unique qualifications as a financial advisor, attorney and CPA, 

plus her substantial real estate experience, would let her handle 

both "the financial and real estate components of the transaction." 

Anthony and Mark "believed that her skill set was exactly what 

they needed to achieve their goal." 

Debra advised them that she would quarterback the deal and 

assemble a team of professionals that would work together to 

represent the family in negotiations over the terms of acquisition, 

the requisite financing, the corporate structures of the 

acquisition, the post-acquisition management of the property, the 
11 A-3461-14T3

tax implications and the estate planning aspects of what was by 

all accounts a highly complex undertaking with multiple moving 

parts. Mark and Anthony lacked sophistication and experience 

about such matters, even though they were adept at managing their 

own business. They came "to depend heavily and primarily on Debra 

Taylor for advice and guidance in all these aspects of the deal." 

Debra was responsible for ensuring that the family understood 

that she did not intend to provide legal advice and was ineligible 

to do so. She allowed them or led them to believe that she was 

willing and able to provide legal advice, and did not disclose her 

retirement from practice, which was only revealed after the 

closing.

While "[o]thers served discrete functions to the Chernalis

family as the efforts to purchase got underway — lawyers, tax 

advisors, financial advisors, accounting advisors, estate 

planners, real estate advisors — [] Debra Taylor never ceased 

serving — serving well, but nevertheless serving — in each of 

those capacities." Zakim, although retained as an attorney,

"always considered" Debra to be the family's counsel.

The original concept for the transaction did not include 

giving Debra a financial interest. The suggestions that Debra 

could make a capital investment or have a role in managing the 

property arose only after her attorney-client relationship with 
12 A-3461-14T3

the family had begun, and after "Mark and Anthony had come to 

depend upon her as their primary advisor." The notion that Debra 

was Mark's "partner in the transaction," was "a litigation 

construct, designed to obscure the fiduciary nature of Debra 

Taylor's fundamental role as the primary advisor to the Chernalis

family." 

Mark was "a credible and forthright witness." While Mark and 

Anthony agreed to give her "a piece of the deal," the "nature, 

extent and value of those interests remained amorphous and 

changing," to the extent that none of the other professionals was 

able to confirm the "compensation arrangement" that Debra was 

claiming to have reached with the family. 

The family eventually agreed to let Debra make a cash 

investment for a Class A interest, and to give her a Class C 

interest as compensation for her services. Debra "never advised 

any Chernalis, orally or in writing, to seek independent advice" 

with respect to either of those interests. "No one else — none 

of the other professionals in the case — gave advice to any of the 

Chernalis family with respect to" those interests, and Debra "did 

not think and had no reason to think" otherwise. At no point 

during Debra's efforts to obtain a Class C interest did she seek 

"to clarify or memorialize[] her role as the Chernalis family 

legal advisor and advisor on all aspects of the transaction, or 
13 A-3461-14T3

her terms of compensation." 

Debra served as Mark and Anthony's attorney "from the moment 

she agreed to represent their interests" in connection with 

acquiring the property. Debra "emphasized her credentials and 

skills as a lawyer" as well as her other abilities "to make the 

relationship adhere." Debra never told them that she intended to 

refrain from giving legal advice, or that any legal advice she 

gave should be confirmed by independent counsel. The legal advice 

advice and work that Debra performed, "quite competently," 

included reviewing the lease to discover the right of first 

refusal, reviewing the pleadings and giving legal advice in the 

lis pendens action, and being "deeply involved in the revision of 

complex legal documents deeply implicating the Chernalis family's

rights, including the operating agreements and private placement 

memorandum." 

The ability of professionals other than lawyers to read and 

interpret such documents was irrelevant, because "[w]hen you are 

someone's attorney and you are giv[ing] them legal advice," the 

relationship is established with all of its professional 

responsibilities. That the family signed a retainer agreement 

with one of the other attorneys for limited supplemental legal 

services in no way justified an inference that the family must 

have understood the lack of a retainer agreement for Debra to mean 
14 A-3461-14T3

that she was not providing any legal services or advice in the 

course of her uniquely central role in all aspects of the 

transaction.

Debra did not engage in fraudulent conduct nor engage in acts 

of intentional misrepresentation. The allegations in the third 

party complaint and the third party defendants' counterclaim 

seeking counsel fees were not supported by the proofs. 

Having made these findings, the judge provided his 

conclusions of law. In doing so, the judge held the following.

Debra was bound by the Rules of Professional Conduct (RPCs).

In serving the family as an attorney without a retainer agreement, 

Debra violated RPC 1.5(b). Debra's entry into a business 

transaction with the family, specifically, her Class C interest, 

violated most of the conditions of RPC 1.8(a), since she did not 

provide full written disclosure of the nature and extent of her 

interest in terms that the family could have been expected to 

understand, and because she did not advise them of the reasons why 

they should seek independent counsel about it. The inability of 

the other professionals in the transaction to confirm that the 

family intended Debra to have the 47.69% interest that she was 

claiming in Class C's 65% share of remaining available cash was 

further proof that she failed to comply with RPC 1.8(a).

The record contained no evidence to indicate what constituted 
15 A-3461-14T3

a "fair and reasonable" Class C interest for Debra to receive as 

compensation. The RPCs placed the burden of proof on Debra, and 

she did not meet her burden. Debra's violations of RPC 1.5(b) and 

RPC 1.8(a) made the terms of defendants' Class C interest 

unenforceable. Thus, defendants "cannot retain any Class C 

interest in [p]laintiffs' property."

Defendants' Class A interest was "a pure investment 

opportunity" and not controversial because it was not intended as 

compensation for any aspect of Debra's service to the family. 

There was "no suggestion that the Chernalis family failed to grasp 

the simple concept that Debra Taylor would get six percent on her 

money, with no management rights." There was also no suggestion 

that it was unfair or unreasonable for Debra to receive the same 

rate of return as other the Class A members. As such, Debra should 

not be penalized for acquiring the Class A investment. 

Notwithstanding, Debra must relinquish "her right to future 

interest payments" on the investment after a refund of her capital 

contribution.

Plaintiffs were not entitled to punitive damages based upon 

insufficient proof. Plaintiffs and third-party defendants were 

not entitled to counsel fees. The third-party complaint was 

dismissed based upon insufficient proof that Richard engaged in 

actionable conduct. 
16 A-3461-14T3

On appeal, plaintiffs raise the following arguments:

POINT I

THE $30,000 IN DIVIDENDS AND $160,000 IN 

MANAGEMENT FEES THAT DEFENDANTS RECEIVED 

THROUGH UNENFORCEABLE BUSINESS TRANSACTIONS 

BETWEEN LAWYER AND CLIENT SHOULD HAVE BEEN 

DEEMED PRINCIPAL AND CREDITED TO PLAINTIFFS.

POINT II

THE COURT SHOULD HAVE AWARDED PLAINTIFFS' 

LEGAL FEES THEY WERE FORCED TO INCUR BY THE 

INTENTIONAL MISCONDUCT OF DEBRA TAYLOR AS AN 

ATTORNEY.

POINT III

THE COURT SHOULD HAVE AWARDED LEGAL FEES TO 

PLAINTIFFS PURSUANT TO DIMISA v. ACQUAVIVA, 

198 N.J. 547, 553-54 [] (2009), BECAUSE DEBRA

TAYLOR'S BREACH OF FIDUCIARY DUTY FORCED 

PLAINTIFFS TO SUE A THIRD PARTY TO RECOVER 

BACK THEIR WRONGFULLY HELD PROPERTY INTERESTS.

POINT IV

THE EVIDENCE WARRANTED A PUNITIVE DAMAGE AWARD 

WHERE DEBRA'S BREACH OF DUTY AND CONVERSION 

OF A 47.69% INTEREST IN PLAINTIFF[S'] 

TRANSACTION WAS MADE WITH RECKLESS DISREGARD 

FOR THE HARM HER ACTIONS WOULD CAUSE TO HER 

CLIENTS.

POINT V

THE COURT SHOULD HAVE HELD DEBRA LIABLE FOR 

FRAUD BASED ON HER ADMISSIONS ABOUT WHAT SHE 

KNEW PRE-CLOSING. 

On cross-appeal, defendants raise the following arguments:
17 A-3461-14T3

POINT I

DEBBIE WAS NOT ACTING AS AN ATTORNEY FOR THE 

CHERNALIS FAMILY AND, AS SUCH, SHE DID NOT 

VIOLATE THE RULES OF PROFESSIONAL CONDUCT.

POINT II

THE OPERATING AGREEMENTS AS DRAFTED, REVIEWED, 

APPROVED AND SIGNED ACCURATELY SET FORTH HOW 

THE ACQUISITION WAS INTENDED TO BE STRUCTURED. 

POINT III

THE CHANCERY DIVISION CORRECTLY DENIED THE 

PLAINTIFFS' APPLICATION FOR ATTORNEYS' FEES.

POINT IV

THE CHANCERY DIVISION CORRECTLY FOUND THAT THE 

DEFENDANTS NEED NOT DISGORGE EITHER THE CLASS 

A PREFERRED INTEREST DISTRIBUTIONS OR ANY 

MANAGEMENT FEES THAT WERE PAID.

POINT V

THE TRIAL COURT CORRECTLY FOUND THAT 

PLAINTIFFS WERE NOT ENTITLED TO PUNITIVE 

DAMAGES.

POINT VI

THE TRIAL COURT CORRECTLY FOUND THAT DEBBIE 

WAS NOT LIABLE FOR FRAUD.

On appeal, defendants/third-party plaintiffs raise the 

following arguments:

POINT I

RICH TAYLOR HAS ABANDONED ANY CHALLENGE TO 

JUDGE CONTILLO'S DISMISSAL OF HIS COUNTERCLAIM 

AND, IN ANY EVENT, THE COUNTERCLAIM WAS 

PROPERTLY [SIC] DISMISSED.
18 A-3461-14T3

POINT II

THERE WAS NEVER ANY REQUEST FOR ATTORNEYS' 

FEES OR ORDER ENTERED DENYING ATTORNEYS' FEES 

AND, IN ANY EVENT, THE ATTORNEYS' FEES WERE 

PROPERLY DECLINED.

POINT III

THERE WAS SUFFICIENT EVIDENCE FROM WHICH THE 

CHANCERY COURT COULD HAVE FOUND IN FAVOR OF 

DEBBIE WITH REGARD TO THE CLAIMS IN THE THIRDPARTY COMPLAINT AGAINST RICH TAYLOR.

On appeal, the third-party defendants raise the following 

arguments:

POINT I

THE COURT WRONGFULLY DISMISSED THIRD[-]PARTY 

DEFENDANT'S COUNTERCLAIM UNDER THE THIRD[-

]PARTY EXCEPTION TO THE AMERICAN RULE ESPOUSED 

BY THE SUPREME COURT IN DIMISA v. ACQUAVIVA, 

198 N.J. 547, 553-54 (2009).

POINT II

THE TRIAL COURT ERRED IN FINDING THAT THIRD[-

]PARTY DEFENDANT DID NOT INCURR [SIC] 

ATTORNEYS['] FEES DISTINCTLY RELATED TO ROBERT 

TAYLOR AND THE TRUST'S INVOLVEMENT IN THE 

SUIT.

We review the factual findings made by a trial judge to 

determine whether they are "supported by adequate, substantial and 

credible evidence." Rova Farms Resort, Inc. v. Inv'rs Ins. Co. 

of Am., 65 N.J. 474, 484 (1974). Such findings made by a judge 

in a bench trial "should not be disturbed 'unless they are so 

wholly insupportable as to result in a denial of justice.'" Id.
19 A-3461-14T3

at 483-84 (quoting Greenfield v. Dusseault, 60 N.J. Super. 436, 

444 (App. Div. 1960)). Factual findings that "are substantially 

influenced by [the judge's] opportunity to hear and see the 

witnesses and to have the 'feel' of the case" enjoy deference on 

appeal. State v. Johnson, 42 N.J. 146, 161 (1964).

After carefully reviewing the record developed by the parties 

before Judge Contillo, we affirm substantially for the reasons 

expressed in his oral opinion and his supplemental opinion. We

add the following. 

An attorney-client relationship can exist even in the absence 

of "a specific retainer [agreement] memorializing" it. Kaye v. 

Rosefielde, 432 N.J. Super. 421, 477 (App. Div. 2013) (citing 

Seidman v. Clifton Sav. Bank, 205 N.J. 150, 169 (2009)), rev’d, 

in part on other grounds and remanded, 223 N.J. 218, 220-22 (2015)

(reversing lower courts' blinkered view of their inherent 

discretion to fashion equitable remedies, and remanding only for 

new determination on remedy). "To form an attorney-client 

relationship, it is enough that the attorney has voluntarily agreed 

and acted as the client's legal advisor, and the client equally 

willingly sought and was guided by the attorney's counsel." Ibid. 

While the attorney must "affirmatively accept" that "professional 

responsibility," ibid. (quoting In re Silverman, 113 N.J. 193, 

207 (1998)), the acceptance "need not necessarily be articulated, 
20 A-3461-14T3

in writing or speech but may, under certain circumstances, be 

inferred from the conduct of the parties." Ibid. (quoting In re 

Palmieri, 76 N.J. 51, 58-59 (1978)). As for the client, "there 

must be some act, some word, some identifiable manifestation that 

the reliance on the attorney is in his professional capacity," 

instead of "plainly no more than part and parcel of a joint 

business venture among sophisticated businessmen." Palmieri, 76 

N.J. at 60.

The RPCs govern all attorney-client relationships. In re 

Greenberg, 155 N.J. 138, 152 (1997); Karamatos v. Paliaz, 360 N.J. 

Super. 76, 84 (App. Div. 2003). They "establish the state's public 

policies with respect to attorney conduct," and contracts between 

attorneys and clients, whether retainer agreements or for business 

transactions, "that violate the RPCs" in any way "violate public 

policy, and courts must deem them unenforceable." Jacob v. Norris, 

McLaughlin & Marcus, 128 N.J. 10, 17 (1992).

The disclosure requirements for business transactions between 

an attorney and client are stringent, in part because they are 

presumed to pose a conflict of interest. See RPC 1.8. 

Furthermore, the disclosure of every aspect of the attorney's 

interest, the explanation of the desirability of independent legal 

counsel for the client concerning the transaction, and the client's 

informed consent to the transaction must all be in writing. RPC 
21 A-3461-14T3

1.8(a). The attorney must also explain when his or her activity 

would represent the provision of legal services to the client as 

opposed to furtherance of their business interests. RPC 1.8(a)(3). 

"[I]t is the substance of the relationship, involving as it 

does a heightened aspect of reliance, that triggers the need for 

the rule's prescriptions of full disclosure and informed consent." 

Silverman, 113 N.J. at 214.

In Silverman, the Court noted that, while an attorney-client 

relationship is not created simply because the attorney performs 

some tasks connected to the business venture with the client that 

lay persons are authorized to perform, the client's belief that 

the attorney "would exercise his legal skills for his benefit in 

carrying out these collateral tasks" can nonetheless establish 

sufficient reliance to create the relationship. Id. at 219-20.

Here, we discern no basis to disturb the judge's determination 

that Debra served as an attorney and obtained a financial interest 

in a business transaction in violation of the RPCs. The factual 

findings on this score were supported by sufficient credible 

evidence. The conclusions of law that flowed from those findings 

are unassailable.

An award of punitive damages should be reserved for special 

circumstances, where the conduct is particularly egregious. 

Maudsley v. State, 357 N.J. Super. 560, 590-91 (App. Div. 2003). 
22 A-3461-14T3

A party seeking punitive damages must prove by clear and convincing 

evidence that "the harm suffered was the result of . . . acts or 

omissions . . . actuated by actual malice or accompanied by a 

wanton and willful disregard . . . ." Longo v. Pleasure Prods., 

Inc., 215 N.J. 48, 58 (2013) (quoting N.J.S.A. 2A:15-5.12). We 

review the decision to deny punitive damages for abuse of 

discretion. Maudsley, 357 N.J. Super. at 590.

We are satisfied that the judge's decision not to award 

punitive damages is supported by substantial credible evidence in 

the record. Specifically, the judge found that Debra was not 

responsible for the inaccuracies in the final drafts of the 

operating agreements relative to the Class C interests. There was 

no proof that Debra was aware of the inaccuracies prior to the 

closing. Even though Debra sought to utilize the inaccuracies,

post-closing, to her advantage, the judge did not find her conduct 

was malicious. Given our limited review of punitive damages 

awards, we find no basis to disturb the judge's finding. 

"[A] reviewing court will disturb a trial court's award of 

counsel fees 'only on the rarest of occasions, and then only 

because of a clear abuse of discretion.'" Litton Indus., Inc. v. 

IMO Indus., Inc, 200 N.J. 372, 386 (2009) (quoting PackardBamverger & Co. v. Collier, 167 N.J. 427, 443-44 (2001)). The 

same standard of review applies to the denial of counsel fees.
23 A-3461-14T3

New Jersey generally follows the so-called "American Rule" 

(Rule) which requires that each party pay its own legal costs. 

Rendine v. Pantzer, 141 N.J. 292, 322 (1995). Plaintiffs and 

third-party defendants argue that they were entitled to counsel 

fees premised upon exceptions to the Rule. Plaintiffs argue 

entitlement premised upon both attorney misconduct and upon fees 

they incurred as a result of the third-party litigation. Thirdparty defendants argue entitlement premised upon fees incurred in 

defending the third–party complaint instituted by RTT. 

For the same reasons that the judge held that punitive damages 

were not warranted, i.e., lack of intentional conduct by Debra 

pre-closing, the judge denied an award of counsel fees based upon 

her alleged misconduct. The judge further held that RTT and Debra 

were essentially "alter egos" and that neither plaintiffs nor 

third-party defendants incurred any separate or distinct attorney 

fees predicated upon the third-party action. As such, the 

exception to the Rule was not applicable as this was not 

"litigation against a stranger". DiMisa v. Acquaviva, 198 N.J. 

549, 554 (2009). We discern no error in either of these 

determinations.

Finally, we conclude that the remaining arguments raised in 

these appeals, not specifically addressed herein, lack sufficient 

merit to warrant discussion in a written opinion. R. 2:11-
24 A-3461-14T3

3(e)(1)(E). 

Affirmed.