Court Opinion

ID: 4191763
Source: CourtListenerOpinion
Date Created: 2017-08-02 14:08:15.397325+00
Date Added: 2024-06-11T14:40:02.140276
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NOT FOR PUBLICATION WITHOUT THE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-2537-14T1

WILLIAM LEWIS, ROBERT LEWIS
and LEWIS ENTERPRISES,

           Plaintiffs-Respondents,

     v.

ROBERT HULL,

           Defendant-Appellant,

     and

POINT PLEASANT LANDCO, LLC,
SINGULARITY HOLDINGS, LLC, and
SURF LAUNDROMAT, LLC,

     Defendants.
______________________________________________________

           Submitted February 7, 2017 – Decided March 2, 2017

           Before Judges Fisher, Ostrer and Leone.

           On appeal from the Superior Court of New
           Jersey, Law Division, Ocean County, Docket No.
           L-3759-11 and Monmouth County, Docket No. L-
           220-16.

           Law Offices of William M. Luers, LLC,
           attorneys for appellant (William M. Luers, on
           the brief).
            Koster, Brady & Nagler, LLP, attorneys for
            respondents (Danielle M. Hughes, on the
            briefs).

PER CURIAM

     This is the second of two suits between Robert Lewis, William

Lewis   and     their     business,   Lewis   Enterprises    (collectively

"Lewis"), on one hand, and Robert Hull and his business, Point

Pleasant Landco, LLC (collectively "Hull"), on the other. This

second suit was based on a settlement agreement reached in the

first, by which Hull agreed to remediate contaminated property

previously owned by Lewis and later by Hull, and to hold Lewis

harmless for any further claims on or remediation of the property,

in exchange for Lewis's payment of $290,000. When Hull later

refused to remediate, Lewis undertook the task and commenced this

suit, alleging, among other things, Hull's breach of the settlement

agreement. Summary judgment was entered on Lewis's claim that Hull

breached the settlement agreement and, in later proceedings, the

judge summarily awarded Lewis $290,000 and attorneys' fees, as

authorized by the settlement agreement.        In appealing, Hull argues

summary judgment was improvidently granted, claiming a question

of   fact     regarding    whether    Lewis   fraudulently   induced    the

settlement agreement by failing to disclose in discovery he had

insurance coverage for Hull's claims in the first suit. We affirm

because, even assuming Lewis was deceptive during discovery, Hull

                                      2                            A-2537-14T1
chose not to perform the settlement agreement and therefore had

no right to retain the settlement funds paid by Lewis.

     To put the issues in perspective, we start at the beginning.

In 1947, Claude and Ida Asa purchased property on Richmond Avenue

in Point Pleasant, where they operated a laundry service and dry

cleaning business until selling the property to Lewis in 1969.

Lewis continued operating a laundry service on part of the property

and leased out the remaining portion,1 until 1978 when Lewis

operated a dry cleaning business as well as a suede and leather

cleaning business on the premises; after a few years, the dry

cleaning   operation   was   discontinued,   but   Lewis   continued    to

operate a suede and leather cleaning business until selling the

property to Hull in 1993.

     Hull operated a dry cleaning business on the premises.          When

Hull attempted to sell the property in 2002, the buyer's inspection

revealed the presence of PCE contamination.2 In response to notices

and demands about the contamination, Lewis asserted it did not use

1
 Lewis also leased a portion of the property to New Jersey Natural
Gas, which operated a customer service and appliance showroom
there between 1969 and 1971.
2
  The parties use the acronyms PCE and TCE interchangeably while
apparently referring to the same chemical formula, C2Cl4, which is
known as both Perchloroethylene (PCE) and Tetrachloroethylene
(TCE). Our resolution of the issues on appeal does not require
that we delve further into the nature of the contamination or the
world of chemistry.

                                   3                             A-2537-14T1
or store PCE on the premises but instead used Valclene, a non-

pollutant comprised of fluorinated-chlorinated hydrocarbons. Hull

claimed he did not use TCE during his ownership of the property.

     Consequently, Hull sued Lewis and others in Ocean County in

2004.    On June 2, 2008, Hull and Lewis entered into a settlement

agreement. Despite insistence that any contamination was caused

by predecessors, Lewis agreed to pay Hull $290,000 for Hull's

past, present and future remediation expenses and costs, and Hull

agreed to complete the property's remediation, to hold Lewis

harmless, and to indemnify Lewis for any past, present or future

claims   and   costs   of   any   kind   related   to   the   environmental

contamination of the property. The agreement also contained the

parties' stipulation that "[a]ny party which obtains judicial

relief as a result of a material breach of the terms and conditions

of [the settlement agreement] by any other party shall be entitled

to recover its reasonable attorneys' fees and costs from the

breaching party." The suit was dismissed with prejudice as required

by the settlement agreement.

     A few months after the settlement, the New Jersey Department

of Environmental Protection (NJDEP) issued to Hull a notice of

deficiency regarding the property.        Hull did not respond, and, on

May 19, 2010, the NJDEP issued a notice of deficiency not only to

Hull but also Lewis.    On June 1, 2010, Hull responded to the NJDEP

                                     4                              A-2537-14T1
by advising he had no intention of remediating the property.3 Lewis

unsuccessfully sought to informally extricate himself from the

thrust of the NJDEP's directive and began remediating the property.

       In 2011, Lewis also filed this suit in Ocean County against

Hull, seeking damages based on, among other theories, Hull's breach

of the settlement agreement. Cross-motions for summary judgment

were filed in 2014, and the trial judge concluded as a matter of

law    and    undisputed   fact    that       Hull     breached   the    settlement

agreement. On the scheduled trial date soon thereafter, the judge

heard Lewis's oral application for final relief and agreed there

were no triable issues; the judge found Lewis was entitled to

$290,000 in damages, as well as attorneys' fees pursuant to the

terms    of    the    settlement   agreement.          Lewis   also     voluntarily

dismissed his alleged causes of action against Hull. After Lewis's

counsel fees were quantified in the amount of $45,570.01, judgment

was entered on October 20, 2014, in favor of Lewis and against

Hull, in the amount of $335,570.

       The    trial    judge   denied         Hull's    subsequent      motion   for

reconsideration, and Hull filed a timely appeal, arguing in a

single point that his summary judgment motion should not have been

denied and that he should have been permitted to present a defense

3
    Hull transferred the property to an unrelated entity in 2010.

                                          5                                 A-2537-14T1
of fraud based on what he claims was Lewis's misrepresentations

during discovery about insurance coverage.

     While the appeal was pending, Hull moved in this court for

supplementation of the record to include discovery obtained during

the course of a legal malpractice action commenced by Hull against

attorneys who represented him in the first suit; specifically,

Hull sought to provide this court with information that suggested

Lewis failed to disclose it possessed insurance coverage for the

claims asserted by Hull in the first suit. He claimed that this

factual assertion was relevant because he believed when he settled

the first suit that Lewis was a "collection risk[]" if they had

gone to trial in the first case and he obtained a large judgment.

Hull claimed that, for this reason, he agreed to the $290,000

settlement even though that amount only constituted approximately

nineteen percent of the fees and environmental engineering costs

incurred. We denied without prejudice the motion to supplement the

record on appeal and, instead, granted a limited remand so Hull

could move in the trial court for relief from the judgment in

light of the information in question.   After a delay caused by a

transfer of the matter from Ocean to Monmouth County, Hull filed

his Rule 4:50 motion. By way of a comprehensive and thoughtful

oral decision, Judge Jamie S. Perri denied relief.

                                6                          A-2537-14T1
    We thereafter allowed Hull to file an amended notice of appeal

as the means of seeking review of the denial of his Rule 4:50

motion, and the parties filed additional briefs. Hull argues in

this portion of his appeal that:

         I. THE JUDGMENT SHOULD BE VACATED BECAUSE
         [LEWIS HAS] SUFFERED NO DAMAGES THAT CAN BE
         RECOVERED AT CONTRACT.

              A. The Court Should Deny [Lewis] the
              Windfall   Judgment    Sought   that
              Breaks with the National Consensus
              on the Collateral Source Rule.

                   1. The National Consensus
                   Disallows the Recovery
                   [Lewis] Seek[s] under the
                   Collateral Source Rule.

                   2. The Policies under-
                   lying Contract Law Mili-
                   tate Against the Recovery
                   that [Lewis] Seek[s].

                   3. There are no Special
                   Circumstances  in   this
                   Case to Justify Applica-
                   tion of the Collateral
                   Source Rule.

              B. Under New Jersey Law, [Lewis]
              Should Not Obtain the Windfall
              Judgment [Sought].

         II. THE COURT SHOULD REMAND THE MATTER TO THE
         TRIAL COURT TO DETERMINE IF [LEWIS IS] IN
         MATERIAL BREACH OF THE SETTLEMENT AGREEMENT.

                               7                           A-2537-14T1
We consider, first, the issues raised in the parties' initial

briefs,    and   then   the   issues       arising     from   the   Rule   4:50

determination required by our limited remand.

                                       I

       The standard applied when reviewing an order granting summary

judgment is the same Brill4 standard that governed the trial judge.

Townsend v. Pierre, 221 N.J. 36, 59 (2015). We examine only those

materials submitted in support of and opposition to the motion,

and interpret the factual assertions in the light most favorable

to the opponent. Brill, supra, 142 N.J. at 540.

       In now arguing that summary judgment, which was based on his

breach of the settlement agreement, was erroneously granted, Hull

asserts he was misled about whether Lewis was covered by insurance

during the legal proceedings leading up to the settlement. Hull,

however, offered nothing in support at that time; indeed, it is

not even clear from the record on appeal that Hull made that

argument when opposing summary judgment.             Instead, although in his

initial brief here he asserts that summary judgment should not

have been granted because he was misled about insurance coverage,

he refers only to a certification filed in support of a later

motion for reconsideration. The motion judge could not have erred

4
    Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995).

                                       8                               A-2537-14T1
in   granting    summary   judgment    by   failing   to   consider     factual

allegations only asserted at a later date.5

      In his reply brief, Hull asserted we should reverse the

summary judgment because the judge did not provide a ruling that

had sufficient specificity demanded by Rule 1:7-4(a). Because this

argument was not raised in his initial brief, we need not now

consider   it.    See   State   v.    Smith,   55   N.J.   476,   488    (1970)

(recognizing the impropriety of raising an argument for the first

time in a reply brief). Moreover, despite the brevity of the

judge's ruling, we find no merit in this contention. The judge

found that Hull breached the settlement agreement because there

was no dispute that Hull had not honored his part of the bargain.

In fact, Hull clearly and indisputably refused to remediate the

property despite the promise he made to Lewis when he received

$290,000 from Lewis. The argument of counsel on the summary

judgment motion's return date demonstrates this; at that time

5
  We would further note that Hull did not identify in his notice
of appeal that he was seeking our review of the order denying
reconsideration nor did he argue in his brief that the judge erred
in denying reconsideration. Consequently, we do not review that
order. See Sikes v. Twp. of Rockaway, 269 N.J. Super. 463, 465-66
(App. Div.) (orders not designated in the notice of appeal are not
subject to review), aff’d o.b., 138 N.J. 41 (1994); see also Almog
v. Israel Travel Advisory Serv., Inc., 298 N.J. Super. 145, 155
(App. Div. 1997) (only arguments appearing under "appropriate
point headings" are considered), appeal dismissed, 152 N.J. 361,
cert. denied, 525 U.S. 817, 119 S. Ct. 55, 142 L. Ed. 2d 42 (1998).

                                       9                                A-2537-14T1
Hull's attorney argued his client "certified and suggests that he

was using passive remediation, which is a nice way of saying [he]

will do nothing." In light of that unequivocal acknowledgement

that Hull had not upheld and would not uphold his part of the

bargain, we reject Hull's contention that summary judgment on the

breach of contract theory was erroneous.                 That argument and any

other arguments that might be discerned from Hull's pre-remand

submissions     are   without       sufficient     merit    to    warrant     further

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

                                        II

      As noted earlier, Hull also appeals the denial of the Rule

4:50 motion, which we permitted to be filed and considered during

the pendency of this appeal.

      At the remand stage, Hull did a better job of providing

evidence supportive of his claim that Lewis misled him prior to

the   settlement      agreement      about    the    existence      of    insurance

coverage. But we find no abuse of the judge's discretion in denying

relief.   See    Hodgson    v.      Applegate,      31     N.J.   29,    37     (1959)

(recognizing    that    such    a    motion   is    "addressed      to   the     sound

discretion of the trial court, guided by equitable principles");

see also F.B. v. A.L.G., 176 N.J. 201, 207 (2003); ATFH Real Prop.,

LLC v. Winberry Realty P'ship, 417 N.J. Super. 518, 528 (App. Div.

                                        10                                     A-2537-14T1
2010), certif. denied, 208 N.J. 337 (2011).             Although Judge Perri

assumed Lewis was not entirely open about insurance coverage in

pre-settlement discovery, she denied the motion for a number of

reasons. Now, in appealing the denial of the Rule 4:50 motion,

Hull does not seem to reprise his fraud argument but instead

asserts that the return to Lewis of the $290,000 in settlement

proceeds constitutes a windfall or is otherwise barred by his

argument for an expansive application of the collateral source

rule.   We find Hull's arguments to be without sufficient merit to

warrant further discussion, R. 2:11-3(e)(1)(E), adding only the

following brief comments.

      As we have observed, Judge Perri appropriately assumed Lewis

was not sufficiently forthcoming in discovery about insurance

coverage in the first suit. On this point, Hull relied on Lewis's

response   to     an   interrogatory    seeking      insurance      information;

without waiving his general objections, Lewis asserted that he had

"been unsuccessful in locating any insurance policies pre-1986

with respect to the property or business operations conducted at

the property and accordingly has not been able to assert any claims

for   potential    coverage   against       any   insurance   carriers."       That

answer was certified by Lewis on September 27, 2004, prior to the

settlement.     Nothing    obtained     from      discovery    in    the     legal

malpractice action demonstrated that this was a false statement

                                       11                                  A-2537-14T1
at the time it was made. To the contrary, the record created in

the trial court following our remand suggests only that there was

some litigation or communications, or both, between Lewis and

insurance companies and that Lewis and certain insurers resolved

their disputes about the existence of coverage by agreeing to fund

the $290,000 settlement with Hull that shortly followed. But Lewis

had an obligation to seasonably amend his discovery responses.

Rule 4:17-7. And although there is little in the record to suggest

that Hull was particularly interested in the status of Lewis's

attempts to secure coverage prior to reaching a settlement for

$290,000, we agree with Judge Perri that it was fair to assume,

for   purposes   of   the   Rule   4:50   motion,   that   Lewis   was   not

"forthcoming" about his attempts to obtain insurance to cover

Hull's claims against him. Accordingly, even though Hull presented

little but his conclusory assertions about his state of mind when

settling the first case, we will assume for present purposes that

Lewis concealed relevant information about insurance coverage

prior to the settlement of the first suit.6

6
  Hull has also referred to the answers to interrogatories given
by Lewis in this second suit. In response to Hull's interrogatory
about insurance coverage, Lewis informed Hull that he (Lewis) was
the "plaintiff[] in this matter and as such, there will be no
judgment entered against [him] in relation to this lawsuit." Even
if we were to assume in spite of the logic of Lewis's response,
that it was misleading, we fail to see how this 2013 statement

                                    12                              A-2537-14T1
     Judge   Perri,   however,   correctly   recognized   that   this

assumption was irrelevant.   That is, Judge Perri determined that

even if Hull had been misled when settling the first case, he

presented no legal or equitable reason to support his efforts to

retain the $290,000 settlement proceeds.     Stated another way, the

final order in the second suit called only for the return to Lewis

of the $290,000 settlement proceeds and no other aspect of the

agreement is relevant here.7 And Hull's arguments in support of

his Rule 4:50 motion both in the trial court and here, relate

solely to the propriety of the return of the $290,000. Even if we

assume the judge who granted summary judgment in Lewis's favor

reached that conclusion for the wrong reasons, that determination

may still stand if the right reasons call for the same result. See

Isko v. Planning Bd. of Livingston, 51 N.J. 162, 175 (1968).

     So, if we assume Hull was misled when he settled the first

action, the question is whether that alleged fact permits Hull to

retain the funds paid by Lewis in settlement.       Clearly not, as

Judge Perri correctly held. In similar circumstances, our Supreme

Court has held that when a contract is procured through fraud, the

could have misled Hull when he settled the first case with Lewis
in 2008.
7
  We are mindful that the final judgment also compelled Hull's
payment of Lewis's counsel fees, but that aspect of the judgment
was not appealed.

                                 13                          A-2537-14T1
injured party must make a choice: rescind or affirm. Merchants

Indem.   Corp.   v.   Eggelston,      37   N.J.   114,   130   (1962).    When

rescinding, the injured party "must return what he received."

Ibid.    The injured party cannot choose both; only when choosing

to   affirm   the   contract,   may    the   injured     party   retain   the

consideration and seek damages proximately caused by the deceit.

Ibid.    It is undisputed, and Hull argues even now, that he chose

to rescind by unequivocally refusing to remediate the property and

by refusing to indemnify and hold Lewis harmless. Having so chosen,

Hull cannot retain the settlement proceeds.          Accordingly, whether

the summary judgment entered in favor of Lewis was based on a

different or even incorrect analysis based on what was later

learned or assumed, the outcome must be the same. For these

reasons, and for substantially the reasons set forth by Judge

Perri in her thoughtful oral decision, we affirm.

      We would further add that we find no merit in Hull's arguments

in his supplement brief that Lewis will now receive an unjust

windfall or that the collateral source rule obligates his (Hull's)

retention of the $290,000. Clearly, the results of this litigation

do not provide Lewis with a windfall, merely the return of money

paid to Hull in exchange for a promise Hull never kept; the only

windfall that would occur here would be if Hull were allowed to

retain those funds.

                                      14                             A-2537-14T1
     Hull's argument about the collateral source rule is equally

misguided. Although New Jersey's collateral source rule is a

creature of legislation, and applies only to actions for personal

injury or death, N.J.S.A. 2A:15-97, the point of the rule – even

if we were to assume it had application here – is to prevent an

injured   party   from   obtaining   a    double   recovery.   Perreira   v.

Rediger, 169 N.J. 399, 409 (2001). In asserting Lewis would obtain

a windfall or double recovery, Hull assumes those funds belong to

Lewis's insurer not Lewis. Whether true or not – and we agree with

Judge Perri that it is not likely so8 – what becomes of the funds

is a matter between Lewis and his insurer; in these circumstances,

Hull has no standing to complain about the disposition of the

funds.

     We find no merit in any other argument that may be discerned

from Hull's submissions.

     Affirmed.

8
 The record presented on remand revealed that the insurer settled
Lewis's claims against it by agreeing to fund Lewis's settlement
with Hull. If the Lewis-Hull dispute never settled, there is no
reason to believe the insurer would be entitled to the funds it
agreed to convey because those funds were the consideration for
the insurer's settlement of the claims asserted by Lewis against
it.

                                     15                            A-2537-14T1