Opinion ID: 1972014
Heading Depth: 1
Heading Rank: 11

Heading: The Manzo Matter

Text: Our final, most critical focus must inevitably be upon the Manzo matter. Here we review conduct that touches directly upon the administration of justice and the integrity of the judicial process. This matter involves asserted misconduct of respondent in the handling of settlement aspects of a non-jury civil proceeding before him. The claimed breach of ethics involves not only respondent's handling of the settlement proceedings but, more importantly, the personal financial interest that he developed in the subject-matter of the proceedings and his attempt to deal with this problem when its existence became known to other persons. The matter, entitled Patrick Manzo v. Michael Manzo, was instituted in 1975 in the Chancery Division of the Superior Court of New Jersey, seeking the dissolution of several closely-held corporations and the distribution of the corporate assets to three brothers, Michael, Joseph, and Patrick Manzo, who were the shareholders, officers, and directors of the corporations. The corporations were engaged in asphalt manufacturing and general contracting, particularly road construction and paving. In addition, the corporations had interests in other assets, including a shopping center, a liquor license, and developed and undeveloped real estate. One of these assets was a large house situated on three lots located on Philadelphia Boulevard in Sea Girt, New Jersey. Total corporate assets were estimated in the range of $20,000,000 to $30,000,000. We find from our independent assessment of the record the following facts to be established by the evidence beyond a reasonable doubt. Respondent became actively involved as trial judge in the Manzo matter. In July 1976 the Manzo brothers arrived at a settlement, the terms of which were placed on the record in open court and incorporated in a judgment signed by respondent. The settlement agreement provided for the physical division of certain assets among the brothers; Michael was to receive 60%, Joseph 25% and Patrick 15% of the aggregate value of all the assets, including the Sea Girt property, as set forth in the agreement. Under the terms of the judgment, the Manzos were given fifteen days to agree on the valuation of each of the assets. In the event they could not agree upon the value of any of the assets, the judgment provided that the court would appoint an appraiser or appraisers to value any disputed asset; the determination by the appraiser was to be binding on all parties. The judgment further provided that in the event of a dispute among the parties concerning the interpretation of the settlement agreement, the court was given broad authorization to make a final determination following notice to all parties. Disputes concerning the interpretation of the settlement agreement and the mechanics of its implementation arose almost immediately following entry of the judgment. As a consequence of the Manzos' inability to resolve their differences, it was agreed by the parties and their respective attorneys that respondent could meet ex parte with the individual litigants without their attorneys being present to discuss the case. The ostensible reason for this highly unusual and questionable procedure was to conserve the time of attorneys and thus reduce the costs of litigation and also to relieve the court calendar of the frequent motions made in the case. Thereafter, respondent met in chambers with the Manzo brothers, individually or severally, with or without their attorneys, and participated in several private telephone conversations with Joseph Manzo. One dispute related to the valuation of the Sea Girt property. Joseph and Patrick Manzo had selected this property as part of their share of the corporate assets being distributed under the settlement agreement. In an initial appraisal, John D. Lazarus found the fair market value of the property was $165,952; he appraised the land at $97,500 and the improvements thereon at $68,452. Respondent expressed a personal interest in the Sea Girt property during a meeting with Joseph and Patrick Manzo in his chambers sometime in February or March of 1981. Several days after this meeting Patrick Manzo gave respondent's secretary the key to the house. Respondent visited the premises with his wife, younger children, and Mr. and Mrs. Robert Rizas. Mr. Rizas, who was a friend and a building contractor in the area, testified that respondent or his wife at this time mentioned that the cost of the house would be between $110,000 and $120,000. Mr. Rizas inspected the property and concluded that it would cost approximately $75,000 to make the premises habitable. Approximately a week or two thereafter, respondent asked Richard Smith, another building contractor, to inspect the property. Smith agreed to do so, and he, respondent, and their wives inspected the property. While at the property, respondent told Smith that he was interested in purchasing the house. In response to an inquiry by Smith as to the anticipated purchase price, respondent replied that the sellers were asking between $60,000 and $80,000. Smith thereupon expressed to respondent his view that this was an excellent deal. Smith, who believed that the property consisted of only two lots, was of the opinion that the land, absent the house, was in and of itself worth at least $100,000, or $50,000 a lot. Smith was not aware at the time that the house was situated on three lots. During the inspection with Smith, respondent told Smith that the Sea Girt property was one of the assets that was being distributed in the Manzo proceeding pending before him. Although respondent disputes this, we agree with the special panel's findings that he asked Smith to take the house in [Smith's] name and when the case was disposed of, then the house would go back to  [respondent]. Smith's testimony that respondent suggested that he take title to the Sea Girt property is corroborated by Theodore W. Geiser, Esq., one of respondent's former attorneys. Mr. Geiser testified that he questioned respondent as to why he needed Smith to take title to the property, and that respondent stated that that may have been an excess of caution. Respondent further requested of Smith that he get in touch with Joseph Manzo to find out if we could get this thing worked out, and that he arrange for plumbers and electricians to inspect the house to determine the extent of the damage and the cost of repairs. Smith, who did not know Joseph Manzo or any of his brothers and had never dealt with any of the Manzo corporations, did not immediately contact Joseph Manzo. Respondent eventually called Smith to find out whether he had gotten in touch with Joseph Manzo. Smith told respondent that he had not done so because he did not have Joseph Manzo's telephone number. Respondent thereupon gave Smith Joseph Manzo's office and home telephone numbers and Smith agreed to get in touch with Joseph Manzo. Smith then called Joseph Manzo and made an appointment to meet with him at the latter's office. In that telephone conversation, Joseph Manzo expressed an interest in pre-engineered metal buildings that Smith was selling at the time and asked Smith to bring brochures with him to the meeting. Smith met with Joseph Manzo at the latter's office. The conversation commenced with a discussion of the pre-engineered metal buildings and then moved to the Sea Girt property. Smith and Joseph Manzo discussed the manner in which Smith was to take title to the property and later, when the Manzo case was disposed of, transfer title to respondent. They did not, however, discuss the purchase price as it was Smith's understanding that the price was always between sixty and eighty thousand dollars. During this meeting, Joseph Manzo showed Smith documentation pertaining to another offer that had been received for the property in the amount of either $175,000 or $275,000. Respondent and Joseph Manzo then agreed to have the property reappraised by Lazarus in order to have Lazarus, who, as noted, had originally appraised the property in 1977 at $165,952, evaluate it in the $60,000 price range. [11] It is not critical to our determination whether Manzo or respondent suggested Lazarus; it is clear that respondent knew Lazarus was doing the reappraisal. Joseph Manzo immediately called Lazarus and told Lazarus that respondent was to call him to request that he reappraise the Sea Girt property. Joseph Manzo told Lazarus that they were trying to figure a way to sell, you know, to sell the house to [respondent] and that respondent wanted [Lazarus'] to reappraise it at a lower figure. Joseph Manzo informed Lazarus that respondent wants to come in around 60. Lazarus replied, [i]t's tough with that lot, you know the land alone. Nonetheless, Lazarus stated that [a]nything that I can do to facilitate ... a workable arrangement with all of you there, I'm only too happy to help. In fact, in accordance with his testimony, Lazarus believed Joseph Manzo's figure was ridiculous, that it was not possible to appraise the property even as low as $125,000, and therefore he never responded to the $60,000 figure mentioned by Joseph Manzo in the June 29, 1981, telephone conversation. Respondent himself acknowledged that he spoke to Lazarus about another appraisal of the property. [12] Lazarus reappraised the property as of July 10, 1981. At that time he valued the land at $100,000, $2,500 more than he evaluated it at in the 1977 appraisal, and evaluated the improvements thereon at $33,448 as compared to the $68,452 value of four years earlier, which, he said, was as low as I could support it. Lazarus sent Joseph Manzo and respondent copies of the appraisal letter dated August 19, 1981. Respondent testified that after receiving this appraisal he told Smith he was no longer interested in the property. Smith, on the other hand, testified that respondent did not tell him to forget about the house until sometime in October or November 1981. The circumstances surrounding the origins and existence of the tape recorded telephone conversations became relevant to additional charges of judicial misconduct. Following the meeting at which the subject of the Sea Girt property first came up and respondent expressed an interest in the property, Joseph Manzo decided to record conversations with respondent. Despite his assertion that his purpose was to protect himself, Joseph Manzo's real purpose in recording the conversations was to obtain documented evidence that he would use to force respondent to disqualify himself from hearing the Manzo case. With that object in mind, during the next several months Joseph Manzo recorded a number of telephone conversations between himself and respondent and between himself and others, including Lazarus. Some of the tapes were placed in evidence, heard by the panel, and have been considered in this appeal as part of the record. As noted, one of these conversations occurred on June 29, 1981. Supra at 371 n. 10. [13] In February of 1982, John R. Fiorino, a real-estate broker and the Monmouth County Democratic Chairman, contacted Michael Manzo to inquire whether the Manzos still owned the Sea Girt property, and if so, whether it was available for sale. Fiorino was interested in buying the property because he wanted to build a new house on the site. Michael Manzo told Fiorino that the property was involved in litigation, but that when the litigation terminated, he would contact him. Thereafter, when Michael Manzo failed to get in touch with Fiorino, Fiorino at the urging of his wife contacted Joseph Manzo to inquire about the property. On or about February 14, 1982, Joseph Manzo went to Fiorino's office to discuss the Sea Girt property. Joseph Manzo at this time told Fiorino that they [the Manzos] were seeking approximately $200,000 for the property. However, Joseph Manzo indicated that he really could not sell Fiorino the house because respondent wanted it. Joseph Manzo complained bitterly to Fiorino about respondent's handling of the Manzo case and stated that respondent was in bed with his [Joseph Manzo's] brother Mike. Joseph Manzo also informed Fiorino that he possessed tape-recorded conversations wherein respondent expressed an interest in the Sea Girt property. The following day Joseph Manzo returned to Fiorino's office and played portions of these tapes. However, because Fiorino was pressed for time and was unable to listen to all of the tapes, Joseph Manzo offered to prepare a composite of the tapes and deliver it to Fiorino. After hearing the tapes, Fiorino sought and obtained legal advice from John Bonello, Esq., whom he knew to be a friend of respondent. On or about Thursday, February 18, 1982, John Bonello met with Fiorino in the latter's office. It was decided that John Bonello would contact Geiser, whom John Bonello knew since Geiser served as counsel to his law firm. Geiser at this time was also a member of the defense team representing respondent in connection with other complaints then pending before the Advisory Committee on Judicial Conduct. John Bonello testified that he felt that Geiser would be in a stronger position to speak to the judge, and contacted Geiser by telephone to arrange a meeting with him later that evening. John Bonello, Geiser, and Fiorino met that evening at the Colts Neck Inn. There, Fiorino related to Geiser what he had been told by Joseph Manzo and gave Geiser a synopsis of what was on the tapes. Geiser indicated that he would listen to the tapes if they were produced. The following day Joseph Manzo delivered to Fiorino's secretary an envelope containing a cassette tape. In accordance with Geiser's instructions, Fiorino left the tape in a mail box at the Sea Girt home of John B. Murray, Esq., a partner in Geiser's law firm. On Saturday, February 20, 1982, Murray contacted Geiser and told him that he had listened to the tape. Geiser then called respondent for the first time and informed him of the existence of the Manzo tapes. According to Geiser, respondent stated, [p]lease don't tell anyone about those tapes for the time being. Respondent testified that upon receipt of this information, he called Charles J. Uliano, Esq., who was also a member of his defense team. Uliano advised respondent to sit tight, and not take action of any kind. On or about Monday, February 22, 1982, Murray delivered the Manzo tape to Geiser, who had a copy made at his law firm and placed the copy in respondent's file. The original tape was later returned to Fiorino. Respondent testified that notwithstanding Uliano's advice, he attempted to contact John Bonello and Fiorino to find out what was going on. However, both men refused to discuss the matter with him at that time. On March 3, 1982, respondent met with Michael D. Schottland, Esq. and Uliano to discuss the situation regarding the Manzo tapes. Respondent suggested that the litigants in the Manzo case be ordered into court and that they be questioned on the record about the tapes and directed to turn the tapes over to the court. Schottland testified that although Uliano felt that this was a good idea, he [Schottland] did not because he felt that such action might be viewed as a misuse by respondent of his authority. Schottland advised respondent not to do anything, and a meeting was set for Saturday, March 6, 1982. On March 5 respondent met with Richard Bonello and John Bonello late in the afternoon at the law offices of Anschelewitz, Barr, Ansell and Bonello in Ocean Township. Respondent testified that at this meeting John Bonello confessed that a deal had been made between Fiorino and Joseph Manzo to knock the Judge [respondent] out of the case and that Joseph Manzo would then replace his existing counsel with John Bonello. This confession was denied by Bonello and was not otherwise corroborated. We reject respondent's contention that John Bonello confessed to being part of a conspiracy with Fiorino and Joseph Manzo to force respondent's recusal from the Manzo case. The following afternoon, Saturday, March 6, 1982, at the law offices of Chamlin, Schottland, Rosen, Cavanagh & Uliano in West Long Branch, attorneys George Chamlin, Thomas W. Cavanagh, Jr., Joseph Dempsey, Charles A. Costanzo, Richard D. Schottland, Charles Uliano, and Theodore Geiser met. The Manzo tape was played and a discussion ensued as to the course of action respondent should follow. Respondent and John Bonello arrived at approximately 5:00 p.m. Geiser suggested that respondent seek retirement based on medical disability and that he not return to the bench on Monday. After respondent rejected this advice, Geiser withdrew as one of respondent's attorneys; he then disclosed the contents of the tapes to respondent. Cavanagh expressed the opinion that respondent was obliged to report the matter to the Supreme Court immediately and that if he did not, the attorneys might themselves have an obligation to do so. Respondent became irate, and told Cavanagh to leave, which he did. Respondent left shortly thereafter. In a meeting with Richard Bonello on the evening of March 6, 1982, respondent told Bonello that the Manzo tapes had to be destroyed; he told Bonello that an affidavit had to be obtained from Joseph Manzo stating that the tapes never existed. Respondent called Bonello the next morning, on March 7, 1982, and told him that Joseph Manzo should destroy the tapes and then state in open court that they had existed but contained nothing relevant. On the evening of March 7 Geiser informed Collete Coolbaugh, Secretary of the Advisory Committee on Judicial Conduct of the existence of these tapes. Richard Bonello, on the following day, March 8, 1982, delivered the original and a copy of the tape to the State Police. While we have scrupulously examined the transcript of the testimony governing these events, we recognize that the issues of credibility are extremely close and sharply contested. We are satisfied that the special panel properly and conscientiously decided upon the credibility of the various witnesses. The panel resolved this issue against respondent. Their findings are not contradicted by our own independent assessment of the evidence and cannot be effectively assailed on a review of the record. Respondent claims by way of defense in this phase of the Manzo matter that the evidence presented was the result of a breach of the attorney-client privilege, and therefore the evidence should have been excluded from these proceedings. Respondent specifically argues that the disclosures concerning his actions in the Manzo matter were revealed to the ACJC by Geiser, his attorney, and this revelation violated the attorney-client privilege, tainting the Committee's presentments and therefore the complaint. Respondent relies upon the privilege under Evidence Rule 26, and the Disciplinary Rule of attorney-client confidentiality, DR 4-101. Evidence Rule 26(2) itself provides that the privilege shall not extend to a communication in the course of legal service sought or obtained in aid of the commission of a crime or a fraud.... We have recently recognized that the concept of fraud is sufficiently broad to encompass deceitful and deceptive acts that might not otherwise warrant criminal or civil sanctions. Fellerman v. Bradley, 99 N.J. 493 (1985); see Matter of Stein, 1 N.J. 228 (1949); In re Callan, 122 N.J. Super. 479 (Ch.Div. 1973), aff'd, 126 N.J. Super. 103 (App.Div. 1973), rev'd on other grounds, 66 N.J. 401 (1975). It is abundantly clear that the subject matter of the communications involving the tapes was of a fraudulent character. In these circumstances the Disciplinary Rules, particularly DR 4-101, furnish no confidentiality or secrecy to a communication that is not privileged because of its fraudulent nature. See Fellerman v. Bradley, supra . [14] Moreover, neither Evidence Rule 26(2) nor Disciplinary Rule 4-101 furnishes protection for respondent because the communications concerning the existence of the Manzo tapes were not cloaked with an attorney-client confidentiality or secrecy. As noted, the existence of the tapes had been independently revealed by persons who were outside the attorney-client relationship and the tapes or their contents had been circulated by such individuals among several people. Accordingly, we conclude that a violation of the attorney-client privilege has not been established. Based upon our independent assessment of the record, we determine that the evidence establishes beyond a reasonable doubt that respondent's agreement to conduct these judicial proceedings by meeting the parties ex parte, in chambers, off the record, and without their attorneys present was highly improper and contrary to the Rules of Court. In the absence of highly unusual, emergent circumstances, such ex parte communications are impermissible. R. 1:2-1. By engaging in extended ex parte communications with the individual litigants, respondent failed to conduct himself in a manner that promotes public confidence in the integrity and impartiality of the judiciary. Respondent placed the litigants in a position in which they could believe that they were able to influence the decisions of matters pending before him. Moreover, respondent's ex parte communications cannot be considered simply as technical violations on the basis that the litigants and their attorneys consented to the procedure. As a member of the judiciary of this state, respondent had an independent and affirmative duty to adhere to those procedural strictures that support the integrity and independence of the judicial system. This conduct violated not only Canon 3A(4), but also the letter and spirit of Canons 1, 2A and 2B, as well as the mandate of Rule 1:2-1 that all trials, hearings on motions, and other applications be conducted in open court. We determine, further, that the evidence establishes beyond a reasonable doubt that respondent developed a personal interest in and improperly attempted to buy the Sea Girt property. The inevitable appearance to an informed person is that respondent exploited his judicial position as the judge responsible for the determination of the disputes between the parties by seeking to obtain the Sea Girt property at an unreasonably favorable price. In his attempt to purchase the Sea Girt property from a litigant in a matter pending before him, respondent also tried to impugn the credibility of an expert witness who was already retained to provide opinion evidence in the proceedings. Respondent thus involved himself in personal financial or business dealings that compromised his fairness, objectivity, and impartiality. Moreover, respondent's conduct generated an absolute and impermissible conflict of interest that could not be rectified or overcome by disclosure and waiver. We therefore conclude that he violated Canons 3C, 3D, 5(C)(1) and 5(C)(7). The facts derived from our independent assessment of the record also demonstrate beyond a reasonable doubt that respondent refused to disclose his conduct with respect to his attempt to obtain the Sea Girt property to proper authority. Respondent attempted to conceal his wrongdoing by a pattern of conduct that at the very least could lead a knowledgeable observer to believe that there was an attempt to have persons suborn perjury and to have evidence of wrongdoing destroyed. We conclude that respondent has violated Canons 1, 2A, 2B, 3A(4), 3C, 3D, 5C(1) and 5C(7).