Court Opinion

ID: 9930264
Source: CourtListenerOpinion
Date Created: 2024-02-06 16:11:30.685867+00
Date Added: 2024-06-11T11:10:54.756211
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NOT FOR PUBLICATION WITHOUT THE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-0167-22

BONEFISH CAPITAL, LLC,

          Plaintiff,

v.

AUTOSHRED, LLC, and
C. BRUCE RUSH, individually,

          Defendants-Respondents,

and

K-2 PARTNERS, LLC, and
VLADIMIR VASAK, individually,

          Defendants,

and

PELAS CAPITAL MANAGEMENT,
INC., d/b/a WALKER FOREST, LLC,
IMWOTH, LLC, d/b/a AUTOSHRED
NJ, and PETER LEVITT, individually,

     Defendants-Appellants.
______________________________

                   Argued January 17, 2024 – Decided February 6, 2024
            Before Judges Whipple, Mayer and Paganelli.

            On appeal from the Superior Court of New Jersey, Law
            Division, Ocean County, Docket Nos. L-1782-16 and
            L-2804-17.

            Sigmund Joseph Fleck (Brown McGarry Nimeroff
            LLC) argued the cause for appellants (Sigmund Joseph
            Fleck and Raymond J. McGarry (Brown McGarry
            Nimeroff LLC), attorneys; Sigmund Joseph Fleck and
            Raymond J. McGarry, of counsel and on the briefs).

            John J. Mensching argued the cause for respondents
            (Mensching & Lucarini, PC, attorneys; John J.
            Mensching, on the brief).

PER CURIAM

      This case returns to us after a limited remand directing the trial judge to

render credibility findings regarding a crossclaim for indemnification asserted

by defendants Pelas Capital Management, Inc. d/b/a Walker Forest (Pelas),

Imwoth, LLC d/b/a Autoshred NJ (Imwoth), and Peter Levitt (collectively,

Levitt defendants) against co-defendants Autoshred, LLC (Autoshred) and C.

Bruce Rush (collectively, Rush defendants) pursuant to an Asset Purchase

Agreement (APA). Consistent with our remand instructions, the judge entered

a July 6, 2022 order, rendering credibility findings and dismissing the Levitt

defendants' crossclaim for indemnification against the Rush defendants. We

affirm.

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      The parties are familiar with the facts, which are summarized in our prior

decision. Bonefish Capital, LLC v. Autoshred, LLC, No. A-1280-19 (App. Div.

Feb. 22, 2022). In the prior decision, we vacated the trial court's dismissal of

the Levitt defendants' crossclaim for indemnification against the Rush

defendants and remanded to the trial court for additional findings, "especially

on the issue of credibility" and "the applicability of Section 13.05(b) of the

[APA]." Id., slip op. at 43-44. The sole issue on remand was whether "Levitt

was properly notified by Rush of the Bonefish 1 action and had, at the time of the

closing, 'actual knowledge' of a breach of the APA," thereby barring the Levitt

defendants' claim for indemnification under Section 13.05(b) of the APA. Id. at

41.

      On remand, counsel agreed there was no need for another testimonial

hearing because the parties previously testified on the indemnification issue at

an August 20, 2019 plenary hearing. Thus, the judge reviewed the parties'

testimony from the 2019 plenary hearing prior to rendering his remand decision.

      The judge found "Levitt generally testified in a forthright manner . . .

[without] any hint of evasion," though he also found Levitt's "memory regarding

1
 Plaintiff Bonefish Capital, LLC filed suit against the Rush defendants and the
Levitt defendants asserting it was owed a commission for the sale of Autoshred.
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the exact details of the July 11, 2016 telephone conversation [regarding the

validity of Bonefish's claim for the payment of a commission] . . . was inexact."

The judge further noted "Rush's recollection of any communications he may

have had with . . . Levitt . . . relating to the Bonefish claim[] was limited." The

judge concluded:

            Levitt clearly knew of the Bonefish claim before his
            closing of the Autoshred sale and, in fact, knew that
            litigation had been commenced by Bonefish to enforce
            its commission claims. . . . [A]ny reliance by Levitt on
            Rush's statements that . . . Bonefish's claims were . . .
            without merit [was] not reasonable. . . . Even if Rush
            was less than forthcoming in his opinion of Bonefish's
            claims, Levitt was clearly put on notice of Bonefish's
            demand letter and of the actual filing of a [c]omplaint
            by Bonefish in furtherance of its claims. The court
            finds, therefore, that Levitt had actual and adequate
            knowledge of the claims . . . .

Based on his credibility determinations and factual findings, the judge entered

an August 5, 2022 order again dismissing the Levitt defendants' crossclaim for

indemnification under the APA.

      The Levitt defendants appealed the July 6, 2022 and August 5, 2022

orders. On appeal, the Levitt defendants argue the judge erred in concluding

Section 13.05(b) of the APA barred their crossclaim for indemnification. For

the first time on appeal, the Levitt defendants assert the Rush defendants were

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judicially estopped from arguing the Levitt defendants had actual knowledge of

Rush's breach of the APA.

      In reviewing a trial judge's factual findings, we apply a deferential

standard. Balducci v. Cige, 240 N.J. 574, 594-95 (2020). We "give deference

to the trial court that heard the witnesses, sifted the competing evidence, and

made reasoned conclusions." Griepenburg v. Twp. of Ocean, 220 N.J. 239, 254

(2015). A reviewing court "should 'not disturb the factual findings and legal

conclusions of the trial judge' unless convinced that those findings and

conclusions were 'so manifestly unsupported by or inconsistent with the

competent, relevant and reasonably credible evidence as to offend the interests

of justice.'" Ibid. (quoting Rova Farms Resort, Inc. v. Invs. Ins. Co. of Am., 65

N.J. 474, 484 (1974)). "Appellate courts owe deference to the trial court's

credibility determinations as well because it has 'a better perspective than a

reviewing court in evaluating the veracity of a witness.'" C.R. v. M.T., 248 N.J.

428, 440 (2021) (quoting Gnall v. Gnall, 222 N.J. 414, 428 (2015)).

      We begin with the judicial estoppel argument raised by the Levitt

defendants for the first time on appeal. We need not consider issues raised for

the first time on appeal unless they are jurisdictional in nature, substantially

implicate a public interest, or otherwise constitute plain error. See Nieder v.

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                                       5
Royal Indemnity Ins. Co., 62 N.J. 229, 234 (1973).          The judicial estoppel

argument is neither jurisdictional nor does the issue implicate a public interest.

      Further, the Levitt defendants failed to demonstrate plain error under Rule

2:10-2. The Rule requires a party show an error or omission was "clearly

capable of producing an unjust result." Szczecina v. PV Holding Corp., 414 N.J.

Super. 173, 184 (App. Div. 2010) (quoting R. 2:10-2). Moreover, "[r]elief under

the plain error rule . . . in civil cases, is discretionary and 'should be sparingly

employed.'" Baker v. Nat'l State Bank, 161 N.J. 220, 226 (1999) (quoting Ford

v. Reichert, 23 N.J. 429, 435 (1957)). We discern no error, let alone plain error,

in the judge's remand decision.

      We next consider the Levitt defendants' argument that the judge erred in

concluding Section 13.05(b) of the APA barred their crossclaim for

indemnification. We reject this argument.

      Here, the judge followed our remand instructions. In our prior decision,

we remanded for additional findings, "especially on the issue of credibility" and

"the applicability of Section 13.05(b) of the [APA]." Bonefish Capital, LLC,

slip op. at 43-44. The sole issue on remand was whether "Levitt was properly

notified by Rush of the Bonefish action and had, at the time of the closing, 'actual

knowledge' of a breach of the APA." Id. at 41. In accordance with our prior

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decision, the judge rendered credibility determinations on the indemnification

issue based on the parties' testimony during the August 2019 plenary hearing.

While the Levitt defendants may disagree with the judge's credibility

determinations, we must defer to such findings which were supported by the

record.

      On appeal, the Levitt defendants contend the issue "is not whether [Levitt

was] aware of Bonefish's claim against Rush and Autoshred[,] [but] whether

[Levitt] had actual knowledge that the representation of no other brokers was

false." The Levitt defendants assert "[t]here is no possibility [Levitt] could have

'actual knowledge' of a breach that Rush . . . assured Levitt did not exist." We

reject this argument.

      Section 13.05(b) of the APA provided Levitt would not be indemnified:

            with respect to any false, incorrect or misleading
            representation or warranty in [the APA] . . . or breach
            thereof . . . that [Levitt] had actual knowledge on the
            Closing Date, where such actual knowledge was
            acquired because of the events, circumstances and
            consequences thereof were clear on its face from
            materials actually provided to or obtained by [Levitt]
            prior to [purchasing Autoshred].

      The term "actual knowledge" is undefined in the APA. Black's Law

Dictionary defines "actual knowledge" as: (1) "[d]irect and clear knowledge, as

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                                        7
distinguished from constructive knowledge"; or (2) "[k]nowledge of information

that would lead a reasonable person to inquire further."

      Here, the judge found Levitt had actual and adequate knowledge of

Bonefish's claim for payment of a brokerage commission. Based on the 2019

plenary hearing testimony, the judge concluded Levitt, prior to purchasing

Autoshred, received a copy of Bonefish's contract with Autoshred for payment

of a commission, and the contract expressly stated Bonefish served as the

exclusive broker for the sale of Autoshred. Levitt never denied receiving a copy

of Bonefish's contract prior to purchasing Autoshred.      Because Bonefish's

contract unequivocally stated the document constituted Bonefish's sole

agreement with Autoshred, and could only be amended by a writing attached to

and incorporated in the APA, the Levitt defendants had information regarding

Bonefish's claimed entitlement to payment of a brokerage commission prior to

their purchasing Autoshred.

      The judge also determined Levitt knew Bonefish commenced litigation

against the Rush defendants to enforce payment of a commission and asserted

the same claim against fictitiously named defendants who allegedly purchased

Autoshred. The judge noted Levitt admitted receiving a copy of Bonefish's

complaint prior to the Levitt defendants purchasing Autoshred. Because Levitt

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                                       8
knew about the Bonefish litigation, the judge found "any reliance by Levitt on

Rush's statements that . . . Bonefish's claims were . . . without merit [was] not

reasonable." Even if Rush told Levitt that Bonefish agreed to a "verbal carve

out" in the brokerage agreement, Levitt had a copy of the contract, which stated

any modifications to the agreement had to be in writing.

      Further, Levitt also knew Bonefish claimed to have a competing letter of

intent to purchase Autoshred from a broker representing a different purchaser

and that letter demanded payment of a brokerage commission to a party other

than Bonefish. During the plenary hearing, Levitt testified he telephoned Rush

to discuss the commission payment demand.

      Based on the foregoing testimony, the judge found Levitt had "actual

knowledge" of Rush's breach of Section 7.10 of the APA, which represented and

warranted Autoshred had not "incurred any liability or obligation to any broker

. . . for any brokerage fees, finder's fees or commissions with respect to the

transactions contemplated by [the APA] for which [the Levitt defendants] shall

be responsible in whole or in part."

      Having reviewed the record, the judge complied with our instructions on

remand.    The judge rendered credibility determinations in support of his

conclusion that Levitt had "actual knowledge" of Rush's breach of the APA and,

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                                       9
therefore, Section 13.05(b) of the APA barred Levitt's crossclaim for

indemnification. We are satisfied the judge's credibility determinations and

findings on remand are well-supported by the record.

      Any remaining arguments raised by the Levitt defendants are without

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

      Affirmed.

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