Court Opinion

ID: 4665608
Source: CourtListenerOpinion
Date Created: 2021-03-08 15:08:49.708508+00
Date Added: 2024-06-11T08:02:44.115448
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE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.

                                                        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,
      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/cross-
            respondents.

            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

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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

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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

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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 rec ords,

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.

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      At one meeting in May 2015, Gillespie and his attorney 1 inspected 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.

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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

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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

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                                        8
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

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                                         9
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.

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                                       10
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

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                                        11
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 re-

file 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.
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                                         12
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

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                                      13
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

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                                       14
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.

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                                       15
                                       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

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                                       16
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

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                                       17
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

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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

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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).

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      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.").

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      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

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                                       22
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

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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

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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.

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                                      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.

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