Court Opinion

ID: 4663241
Source: CourtListenerOpinion
Date Created: 2021-02-26 15:09:03.561799+00
Date Added: 2024-06-11T08:02:27.442026
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NOT FOR PUBLICATION WITHOUT THE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-2202-19

RITABEN B. PATEL and
BHARATKUMAR T. PATEL,

          Plaintiffs-Appellants,

v.

ERIC S. PENNINGTON, ESQ.,

     Defendant-Respondent.
__________________________

                    Submitted February 1, 2021 – Decided February 26, 2021

                    Before Judges Hoffman and Smith.

                    On appeal from the Superior Court of New Jersey, Law
                    Division, Middlesex County, Docket No. L-2283-19.

                    Weisberg Law, attorneys for appellants (Matthew B.
                    Weisberg, on the brief).

                    Wilson, Elser, Moskowitz, LLP, attorneys for
                    respondent (Maxwell L. Billek, of counsel; Michael P.
                    Chipko, of counsel and on the brief).

PER CURIAM
       Plaintiffs Ritaben B. Patel (Rita) and Bharatkumar T. Patel appeal from a

January 10, 2020 Law Division order that granted the summary judgment

dismissal of their legal malpractice claim against defendant Eric S. Pennington.

We affirm.

                                       I.

       We discern the following facts from the summary judgment record. In

June 2012, Golden Plate, LLC (Golden Plate), of which Bharatkumar 1 was a

member, leased retail space in Edison owned by Beechwood Shopping Center,

LLC (Beechwood). In connection with the lease, plaintiffs executed a guarantee

imposing joint and several liability on Golden Plate and plaintiffs for breach of

the lease. Golden Plate opened a frozen yogurt shop, Yo Café Club, in the leased

space, but the business proved unsuccessful. Eventually, Golden Plate fell

behind on its rental payments and vacated the premises prematurely, in violation

of the lease. Consequently, Beechwood filed suit against Golden Plate and

plaintiffs for breach of contract and related damages in February 2014.2

1
   Intending no disrespect, we refer to plaintiffs, Rita Patel and Bharatkumar
Patel, as well as Vikesh Patel and Jayesh Patel, by their first names for ease of
reference.
2
    Docket No. MID-L-1147-14.
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                                       2
      Plaintiffs retained defendant in May 2014 to defend against Beechwood's

suit. On behalf of Bharatkumar, defendant also filed a complaint against Vikesh

Patel and Jayesh Patel in July 2014, the other members of Golden Plate and

plaintiffs' business partners, alleging Golden Plate's operating agreement

expressly required Vikesh and Jayesh to use money invested by Bharatkumar to

acquire a 7-Eleven franchise and entitled Bharatkumar to a return of his

investment, plus interest, if they failed to acquire the franchise. 3 The complaint

listed counts of breach of contract, unjust enrichment, conversion, and bad faith

against Vikesh and Jayesh based on their failure to acquire a 7-Eleven franchise,

misuse of Bharatkumar's investment, and failure to return the investment. The

January 15, 2013 operating agreement was attached to the complaint as Exhibit

A.

      Plaintiffs' answer to Beechwood's complaint, filed by defendant in August

2014, likewise included a third-party complaint against Vikesh. The third-party

complaint alleged indemnification, breach of contract, and breach of implied

contract on the basis that Vikesh promised and failed to make rental payments

owed to Beechwood for the retail space leased by Golden Plate. In March 2015,

3
  Docket No. MID-L-4218-14. Bharatkumar also joined 7-Eleven, Inc. and
Golden Plate as defendants in his complaint, but the claims against these
defendants were dismissed before trial.
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                                        3
the trial court consolidated Bharatkumar's suit against Vikesh and Jayesh with

Beechwood's suit against plaintiffs.

      Vikesh and Jayesh claimed plaintiffs fabricated the allegations against

them to improperly shift liability for the breached lease agreement to Vikesh

and Jayesh. According to Vikesh and Jayesh, the parties never sought to pursue

a 7-Eleven franchise, but rather agreed to open the Yo Café Club store that

ultimately failed.   During discovery, Vikesh and plaintiffs both produced

evidence establishing the parties' cooperation in opening and operating Yo Café

Club. On November 24, 2015, counsel for Vikesh served defendant, as counsel

for Bharatkumar and Rita, a frivolous litigation letter, pursuant to R. 1:4-8(b)(1),

demanding they dismiss their pleadings against Vikesh within twenty-eight

days, emphasizing the lack of evidentiary support for their allegations.

      By January 2016, Vikesh had produced significant evidence indicating

plaintiffs' January 15 operating agreement was forged. From the attorney who

drafted it, John Wiley, Vikesh obtained Golden Plate's real operating agreement,

dated January 11, 2013, which made no mention of a 7-Eleven franchise and did

not contain the provisions favorable to Bharatkumar. Wiley further certified

that his office did not draft the January 15 agreement offered by plaintiffs.

Vikesh also later produced an expert report from a forensic document examiner

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                                         4
who opined plaintiffs' January 15 operating agreement was altered and

fraudulent. On January 5, 2016, Vikesh served defendant a second frivolous

litigation letter, which highlighted the evidence obtained from Wiley. Another

letter dated January 12, 2016 included Wiley's certification.

      On February 10, 2016, defendant filed a motion to be relieved as counsel

for plaintiffs, pursuant to R. 1:11-2(a), citing an irreconcilable deterioration of

the attorney-client relationship based on plaintiffs' expressed dissatisfaction

with, and lack of trust in, defendant's representation. The trial court granted

defendant's motion on March 4, 2016, about nine weeks before the trial date set

for May 9, 2016.

      At that point, plaintiffs retained Harrison Byck as their new attorney. On

March 15, 2016, Vikesh's counsel sent Byck a frivolous litigation letter, copies

of the previous frivolous litigation letters, and a copy of the expert report

concluding plaintiffs' January 15 operating agreement was forged. Vikesh sent

two more frivolous litigation notices to Byck on April 14 and May 31, 2016.

      Following oral argument on May 6, 2016, the trial court granted summary

judgment in favor of Beechwood with respect to their claim against Rita and

dismissed plaintiffs' third-party claim against Vikesh. The following issues

remained for trial: (1) Bharatkumar's personal liability for Golden Plate's breach

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                                        5
of the lease agreement with Beechwood, 4 (2) the amount of damages plaintiffs

owed for the breached lease, and (3) Bharatkumar's claims against Vikesh and

Jayesh based on the disputed Golden Plate operating agreements. Trial on these

issues was delayed for nearly two years, to April 30, 2018, primarily due to

plaintiffs filing for bankruptcy three times.

      After presiding over a bench trial, on May 8, 2018, Judge Melvin L.

Gelade dismissed plaintiffs' claims against Vikesh and Jayesh on the merits. In

an oral decision, Judge Gelade found plaintiffs' factual allegations were

"completely false and fraudulent" and that "[e]very material document presented

in this case [was] a fraud[,]" including the January 15 operating agreement

offered by plaintiffs. Specifically, Judge Gelade determined plaintiffs' operating

agreement was altered to omit Bharatkumar as a capital contributor to Golden

Plate and to require Vikesh to make ninety percent of the capital contributions

to Golden Plate. The judge further found that the actual operating agreement

required Bharatkumar to make eighty percent of the capital contributions to

Golden Plate, with Vikesh and Jayesh only responsible for ten percent each.

4
   The court granted summary judgment in favor of Beechwood against Rita
because she admitted to signing the lease guarantee. The court did not grant
summary judgment as to Bharatkumar because he maintained his signature on
the lease agreement was forged.
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                                         6
      Additionally, Judge Gelade found plaintiffs fraudulently inserted multiple

paragraphs into their operating agreement which were completely absent from

the real operating agreement.     These bogus paragraphs provided that the

members of Golden Plate agreed "to buy 7-11 franchises and businesses in New

Jersey[,]" Bharatkumar contributed at least $275,000 to Golden Plate for that

purpose, Bharatkumar's contribution was to be held in a separate account and

only used in pursuit of the 7-Eleven franchise(s), Bharatkumar retained the right

to terminate the agreement and demand from Vikesh and Jayesh a return of his

investment plus fourteen percent interest if Golden Plate failed to purchase a

franchise by January 15, 2014, and Vikesh and Jayesh "jointly and severally

personally guarantee[d] the performance of [the] agreement."

      Judge Gelade further found the members of Golden Plate all agreed to

open Yo Café Club, with Bharatkumar investing $319,000 into the venture.

Golden Plate used Bharatkumar's investment to "construct and outfit the frozen

yogurt shop[,]" though ultimately Yo Café Club failed. The judge specifically

rejected plaintiffs' claim that Vikesh and Jayesh misappropriated some or all of

Bharatkumar's investment for their own personal use, finding Vikesh credibly

testified "with documents to support it" that Golden Plate devoted "about

$200,000 plus" towards opening Yo Café Club. The judge concluded there was

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                                       7
"utterly no basis in fact or law to this complaint" and dismissed all of

Bharatkumar's claims with prejudice.

      On May 14, 2018, Judge Gelade entered an order for judgment requiring

plaintiffs pay Beechwood $150,952.35, plus costs and post-judgment interest.

The order also stated that Beechwood "is entitled to legal fees and

disbursements," pursuant to the guarantee executed by plaintiffs, upon filing of

a separate motion. On May 23, 2018, Beechwood filed that motion, and Vikesh

also filed a motion for fees based on frivolous litigation. Judge Gelade grant ed

these motions, awarding Beechwood an additional $46,698.00 and Vikesh

$96,770.33. Plaintiffs filed a notice of appeal, but we ultimately dismissed the

appeal on January 2, 2019 for failure "to prosecute the appeal and provide the

complete transcript record."

      On March 20, 2019, plaintiffs filed the legal malpractice action under

review against defendant. Plaintiffs alleged that defendant's failure to subpoena

the financial records of Vikesh and Jayesh during discovery and defendant's

failure to provide Byck with his entire file, left plaintiffs unable to mount a

defense against Beechwood's claims and unable to prove their case against

Vikesh and Jayesh.

                                                                           A-2202-19
                                       8
      On October 11, 2019, defendant moved for summary judgment, which

Judge Thomas D. McCloskey granted following oral argument.                In a

comprehensive oral decision, Judge McCloskey explained no rational factfinder

could conclude defendant proximately caused plaintiffs' alleged damages. Since

proximate cause constitutes a necessary element for establishing legal

malpractice, the judge held that plaintiffs' claim failed as a matter of law,

entitling defendant to the dismissal of plaintiffs' claims.

      This appeal followed, with plaintiffs presenting the following points of

argument for our review:

                1. The Trial Judge Committed Reversible Error
                   When He Concluded Plaintiffs Are Collaterally
                   Estopped From Pursuing Their Legal Malpractice
                   Claim Against Defendant Pennington.

                2. The Trial Judge Committed Reversible Error
                   When He Concluded Plaintiffs Cannot Prove
                   Defendant Pennington's Negligence Proximately
                   Caused Their Loss.

                3. To the Extent the Trial Judge's Grant of Summary
                   Judgment in Favor of Defendant Pennington was
                   Based on the Doctrine of Unclean Hands, it
                   Constitutes Reversible Error.

                                        II.

      Review of a ruling on summary judgment is de novo, and we apply the

same legal standard as the trial court. Nicholas v. Mynster, 213 N.J. 463, 477-

                                                                         A-2202-19
                                         9
78 (2013). Summary judgment is appropriate where "the pleadings, depositions,

answers to interrogatories and admissions on file, together with the affidavits, if

any, show that there is no genuine issue as to any material fact challenged and

that the moving party is entitled to a judgment or order as a matter of law." R.

4:46-2(c).

      When determining whether there is a genuine issue of material fact, we

must consider "whether the competent evidential materials presented, when

viewed in the light most favorable to the non-moving party, are sufficient to

permit a rational factfinder to resolve the alleged disputed issue in favor of the

non-moving party." Brill v. Guardian Life Ins. Co of Am., 142 N.J. 520, 540

(1995). "In applying that standard, a court properly grants summary judgment

'when the evidence is so one-sided that one party must prevail as a matter of

law.'" Davis v. Brickman Landscaping, 219 N.J. 395, 406 (2014) (quoting Brill,

142 N.J. at 540). We afford no deference to the trial court's legal conclusions.

Nicholas, 213 N.J. at 478.

      "Legal-malpractice suits are grounded in the tort of negligence."

McGrogan v. Till, 167 N.J. 414, 425 (2001). "[A] legal malpractice action has

three essential elements: '(1) the existence of an attorney-client relationship

creating a duty of care by the defendant attorney, (2) the breach of that duty by

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                                       10
the defendant, and (3) proximate causation of the damages claimed by the

plaintiff.'" Jerista v. Murray, 185 N.J. 175, 190-91 (2005) (quoting McGrogan,

167 N.J. at 425). The plaintiff bears the burden of proving all three elements.

Davis, 219 N.J. at 406.

      In finding plaintiffs could not prevail on their legal malpractice claim as

a matter of law, Judge McCloskey declined to consider whether defendant

breached his duty of care towards plaintiffs, and instead rested his decision on

the grounds that "proximately caused damages here could never be found." He

explained, "no damage allegedly suffered by the plaintiffs could have been the

result of anything done by [defendant], because the claims below, in the

Beechwood and 7-Eleven matters[,] were found by Judge Gelade to be entirely

fraudulent, and based upon a false operating agreement that they created."

Invoking the doctrine of collateral estoppel, Judge McCloskey found Judge

Gelade's prior findings barred plaintiffs from arguing they had viable, non -

fraudulent claims against Vikesh and Jayesh, which would have been successful

but for defendant's malpractice. Rather, "There[ was] nothing that defendant

. . . could have done to turn the plaintiff's fraud into a viable claim."

Additionally, Judge McCloskey concluded defendant's alleged malpractice did

not proximately cause the attorneys fees imposed on plaintiffs, as they "were

                                                                           A-2202-19
                                      11
given countless opportunities to cease the litigation well after [defendant] was

relieved from the case," yet proceeded anyway with their fraudulent claims

against Vikesh and Jayesh.

      On appeal, plaintiffs argue that Judge McCloskey erred in concluding

defendant did not proximately cause plaintiffs' damages.       They assert that

defendant's failure to subpoena the financial records of Vikesh and Jayesh

caused the court to conclude their misappropriation claims were fraudulent and

meritless.   Had defendant subpoenaed the bank records during discovery,

plaintiffs argue "Bharatkumar could have succeeded" on his unjust enrichment,

conversion, and bad faith claims by showing Vikesh and Jayesh misappropriated

$119,000 of the invested $319,000. In turn, they argue plaintiffs would not have

been forced to pay attorney's fees because their successful suit would not have

been deemed frivolous. Furthermore, plaintiffs argue they are not collaterally

estopped from arguing they could have recovered $119,000 via Bharatkumar's

misappropriation claim because Judge Gelade stated Vikesh accounted for only

$200,000, not the total $319,000 Bharatkumar invested in Golden Plate. These

arguments lack merit.

      To establish proximate causation and damages in a legal malpractice

action, a plaintiff must first establish causation in fact, which "requires proof

                                                                           A-2202-19
                                      12
that the result complained of probably would not have occurred 'but for' the

negligent conduct of the defendant." Conklin v. Hannoch Weisman, 145 N.J.

395, 417 (1996) (quoting Vuocolo v. Diamond Shamrock Chems. Co., 240 N.J.

Super. 289, 295 (App. Div. 1990)). Additionally, a plaintiff "must present

evidence to support a finding that defendant's negligent conduct was a

'substantial factor' in bringing about plaintiff's injury, even though there may be

other concurrent causes of the harm." Froom v. Perel, 377 N.J. Super. 298, 313

(App. Div. 2005) (quoting Conklin, 145 N.J. at 419). Finally, the plaintiff must

"show what injuries were suffered as a proximate consequence of the attorney's

breach of duty," ordinarily measured by "the amount that a client would have

received but for the attorney's negligence." 2175 Lemoine Ave. Corp. v. Finco,

Inc., 272 N.J. Super. 478, 488 (App. Div. 1994).

      The burden is on the plaintiff to establish proximate causation and

damages "by a preponderance of the competent, credible evidence and is not

satisfied by mere 'conjecture, surmise or suspicion.'" Finco, 272 N.J. Super. at

488 (quoting Long v. Landy, 35 N.J. 44, 54 (1961)).           Although issues of

proximate causation are typically for the jury to resolve, "a court may decide the

issue as a matter of law where 'no reasonable jury could find that the plaintiff's

injuries were proximately caused' [by the defendant's conduct.]" Broach-Butts

                                                                             A-2202-19
                                       13
v. Therapeutic Alts., Inc., 456 N.J. Super. 25, 40 (App. Div. 2018) (quoting Vega

by Muniz v. Piedilato, 154 N.J. 496, 509 (1998)).

      In legal malpractice cases, proximate causation must ordinarily be

established by expert testimony that addresses the particular facts of the case.

Vort v. Hollander, 257 N.J. Super. 56, 61 (App. Div. 1992); see also Froom, 377

N.J. Super. at 318; Finco, 272 N.J. Super. at 490. However, expert testimony

may not be required to establish proximate cause where the causal relationship

between the attorney's malpractice and the client's loss is so obvious that the

trier of fact can resolve the issue as a matter of common knowledge. Sommers

v. McKinney, 287 N.J. Super. 1, 11 (App. Div. 1996).

      The most common way to establish the measure of damages is by

proceeding by way of a "suit-within-a-suit," that is, by presenting to the jury the

proofs that would have been presented had no malpractice occurred. Garcia v.

Kozlov, Seaton, Romanini & Brooks, P.C., 179 N.J. 343, 358 (2004). Other

methods available for calculating damages include reasonable modifications of

the suit-within-a-suit strategy and expert testimony. Ibid.

      In this case, we agree with Judge McCloskey that plaintiffs cannot

establish proximate cause as a matter of law because the record here is devoid

of evidence suggesting Bharatkumar's misappropriation claims against Vikesh

                                                                             A-2202-19
                                       14
and Jayesh would have been successful but for any negligent conduct on the part

of defendant. A review of the record reveals defendant's actions or inaction s

were not a substantial factor in bringing about plaintiffs' financial loss.

      Expert testimony is necessary in this case to prove proximate causation

and damages. This is not a case in which proximate cause could be determined

by the trier of fact as a matter of common knowledge. Rather, only an expert

could show that defendant could have successfully obtained and introduced

Vikesh's and Jayesh's bank records, and that this evidence would have entitled

Bharatkumar to prevail on at least one of his claims against Vikesh and Jayesh.

An expert's testimony on proximate cause is particularly vital in this case

considering that Judge Gelade deemed plaintiffs' allegation of misappropriation

completely fraudulent. Plaintiffs, however, failed to produce the opinion or

testimony of a legal malpractice expert prepared to guide the trier of fact through

the necessary proximate causation analysis.

      Plaintiffs did submit an affidavit of merit from an expert-attorney, as

required by N.J.S.A. 2A:53A-27; however, the statement of this expert was

entirely conclusory. The expert swore:

            Based upon my review and analysis of the facts and
            circumstances surrounding the representation of
            Plaintiffs by Defendant Pennington I have concluded to
            a reasonable degree of legal certainty that Defendant

                                                                              A-2202-19
                                        15
            Pennington committed legal malpractice in that he
            deviated from the customary standards and practices of
            New Jersey lawyers and failed to exercise the skill,
            knowledge, ability and judgment required of him under
            the circumstances.

            [] I have further concluded to a reasonable degree of
            legal certainty and that Defendants' legal malpractice
            proximately caused damages suffered by Plaintiffs,
            which Plaintiff seeks in this action.

Without reference to the evidence, methodology, or even the facts of the case

that enabled the expert to reach these conclusions, the affidavit of merit amounts

to a net opinion with no evidential weight. See Townsend v. Pierre, 221 N.J.

36, 55 (2015) ("The net opinion rule . . . mandates that experts be able to identify

the factual bases for their conclusions, explain their methodology, and

demonstrate that both the factual bases and the methodology are reliable. An

expert's conclusion is excluded if it is based merely on unfounded speculation

and unquantified possibilities.") (citations and internal quotation marks

omitted); see also Kaplan v. Skoloff & Wolfe, P.C., 339 N.J. Super. 97, 103-04,

(App. Div. 2001) (holding that trial court properly excluded an expert report in

a legal malpractice action where the expert failed to reference any evidential

support of duty of care). Beyond the net opinion contained in the affidavit of

                                                                              A-2202-19
                                        16
merit, plaintiffs provided no expert evidence or opinion on proximate causation

and damages supported by reliable evidence and methodology.

      Moreover, no other evidence in the record, even when viewed in the light

most favorable to plaintiffs, would permit a rational trier of fact to find

defendant proximately caused plaintiffs' claimed damages. Plaintiffs indicate

that Byck subpoenaed PNC Bank and Unity Bank for the records of Vikesh and

Jayesh on December 19, 2019, yet the results of those subpoenas are not

contained in the record. Additionally, a copy of the January 11, 2013 Golden

Plate operating agreement, which Judge Gelade determined was the actual

operating agreement, is conspicuously absent from the record. Without this

evidence establishing a business or fiduciary relationship between plaintiffs and

Vikesh and Jayesh, a trier of fact could not reasonably conclude that

Bharatkumar had a valid basis for asserting a misappropriation claim. Because

plaintiffs failed to offer expert testimony or any other competent, credible

evidence establishing proximate cause, we agree with Judge McCloskey that

plaintiffs' claim for legal malpractice must fail as a matter of law.

      Though we need not apply collateral estoppel to reach our conclusion, we

acknowledge that Judge McCloskey did not err in applying the equitable

doctrine. After hearing plaintiffs' argument and considering plaintiffs' evidence

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                                       17
at the bench trial, Judge Gelade rejected Bharatkumar's misappropriation claim

on its merits, finding Vikesh accounted for the invested money and plaintiffs'

assertions were fraudulent and incredible. Plaintiffs therefore cannot claim

whether Vikesh and Jayesh mishandled Bharatkumar's money is a factual issue

that remains in dispute and could have been resolved in plaintiffs' favor had

defendant subpoenaed the bank records. See Pivnick v. Beck, 326 N.J. Super.

474, 485-487 (App. Div. 1999) (applying collateral estoppel to preclude a

plaintiff's legal malpractice action).        Since Judge Gelade's prior findings

preclude plaintiffs from alleging their misappropriation action against Vikesh

and Jayesh would have succeeded but for defendant's failure to serve the

subpoenas, plaintiffs cannot prove causation in fact, a necessary component to

establishing proximate cause.

       We also note here that the evidence in the record likewise does not

establish defendant breached the duty of care he owed plaintiffs as their attorney.

As with proximate cause, expert testimony is generally required to set forth a

lawyer's duties to his or her client and explain how and when those duties are

breached, as the average juror is unfamiliar with the professional standards of

legal practice. Buchanan v. Leonard, 428 N.J. Super. 277, 288 (App. Div. 2013).

Plaintiffs' failure to present sufficient expert evidence establishing defendant's

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                                         18
duty and breach likewise entitles defendant to judgment dismissing plaintiff's

legal malpractice claim as a matter of law.

      Plaintiffs remaining arguments lack sufficient merit to warrant discussion

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

      Affirmed.

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                                      19