Court Opinion

ID: 4431255
Source: CourtListenerOpinion
Date Created: 2019-08-20 19:54:35.691322+00
Date Added: 2024-06-11T14:51:06.918575
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NOT FOR PUBLICATION WITHOUT THE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-3461-14T3
                                                  A-3550-14T3

MARK CHERNALIS, ANTHONY
CHERNALIS, ONE SUNNY HILL
ASSOCIATES LLC and TWO SUNNY
HILL ASSOCIATES LLC,

        Plaintiffs-Appellants/
        Cross-Respondents,

v.

DEBRA TAYLOR, a/k/a DEBRA
HELEN AZARIAN, ROBERT TAYLOR
and THE ROBERT TAYLOR FAMILY
URBAN FARMS REAL ESTATE TRUST,

        Defendants/Third-Party Plaintiffs-
        Respondents/Cross-Appellants,

v.

RICHARD TAYLOR, ALETA TAYLOR,
TOBOGGAN RIDGE PARTNERS LLC and
SANDY RIDGE PARTNERS LLC,

     Third-Party Defendants-Respondents.
___________________________________

MARK CHERNALIS, ANTHONY
CHERNALIS, ONE SUNNY HILL
ASSOCIATES LLC and TWO SUNNY
HILL ASSOCIATES LLC,

        Plaintiffs-Respondents,
v.

DEBRA TAYLOR, a/k/a DEBRA
HELEN AZARIAN, ROBERT TAYLOR
and THE ROBERT TAYLOR FAMILY
URBAN FARMS REAL ESTATE TRUST,

     Defendants/Third-Party Plaintiffs-
     Respondents/Cross-Appellants,

v.

RICHARD TAYLOR, ALETA TAYLOR,
TOBOGGAN RIDGE PARTNERS LLC and
SANDY RIDGE PARTNERS LLC,

     Third-Party Defendants-
     Appellants/Cross-Respondents.
__________________________________

         Argued February 14, 2018 – Decided June 7, 2018

         Before Judges Koblitz, Manahan and Suter.

         On appeal from Superior Court of New Jersey,
         Chancery Division, Bergen County, Docket No.
         C-000228-12.

         Anthony X. Arturi argued the cause for
         appellants/cross-respondents (in A-3461-14)
         Arturi Law, LLC, attorneys; Anthony X. Arturi,
         of counsel and on the briefs).

         Kevin P. Harrington argued the cause for
         appellants/cross-respondents (in A-3550-14)
         (Harrington and Lombardi, LLP, attorneys;
         Thomas R. Rumana, of counsel; Kevin P.
         Harrington, on the brief).

         David M. Blackwell argued the cause for
         respondents/cross-appellants (in A-3461-14
         and A-3550-14)(Donnelly Minter & Kelly, LLC,
         attorneys; David M. Blackwell and Patrick B.
         Minter, of counsel and on the briefs).

                                  2                        A-3461-14T3
PER CURIAM

     The dispute underlying these appeals stems from the purchase

of a shopping center.            The transaction was complex.           It was

structured to effectuate not only the purchase by a separate entity

formed for the purpose of the acquisition, Urban Farms Acquisition

LLC (Urban Farms). It was also structured to maintain family

control despite the participation of outside investors and to

channel profits and equity growth to the outside investors and

family trusts for estate tax considerations.              The transaction also

included     operating    agreements        and    provisions    relative      to

compensation.

     Subsequent to the closing of the transaction, Mark and Anthony

Chernalis (collectively plaintiffs) became aware that certain

transactional documents provided defendants, Debra Taylor (Debra),

Robert Taylor (Robert), and the Robert Taylor Family Trust and

Urban   Farms   (RTT)    (collectively       defendants)     with   a   greater

interest than contemplated.            Mark and Anthony, individually and

in the capacity of their entities, One Sunny Hill Associates LLC

and Two Sunny Hill Associates LLC, instituted an action, later

amended, seeking defendants' expulsion from the management of the

property as well as compensatory and punitive damages and counsel

fees.      Defendants    filed    an   answer     and   counter-claim   seeking

compensatory damages and counsel fees.              Defendants also filed a

                                        3                               A-3461-14T3
third-party    complaint       naming   Richard      Taylor   (Richard),      Aleta

Taylor, Tobaggan Ridge Partners LLC and Sandy Ridge Partners LLC,

as    third-party    defendants,     later      amended,    alleging      breach    of

fiduciary duties and other tortious misconduct.                 The third-party

defendants were outside investors.

       A bench trial was conducted over several days in April and

May 2014. Following the trial, the judge issued an opinion finding

that Debra acted as an attorney for plaintiffs during the entirety

of the transaction.       The judge held that Debra failed to satisfy

the    stringent     documentation      and     disclosure    requirements         for

attorneys who enter into business ventures with their clients.                      As

such, the judge held that the defendants' direct cash investment

was terminated and to be refunded without entitlement to future

earnings on the investment or to unpaid fees for services relating

to the transaction.

       The judge further held that defendants' interest in the

property and their consequential compensation was greater than

intended.     However, the judge determined that the unintended

interest    and     compensation    was       not   the   product   of    fraud     or

misconduct    that     would    warrant       disgorgement    of    any    payments

                                          4                                 A-3461-14T3
defendants received or warrant an award of punitive damages or

counsel fees.1    For the reasons that follow, we affirm.

                                     I.

     We summarize the following from the voluminous record.            Mark

and Anthony operated a grocery and catering business known as The

Market Basket.      The Market Basket was the anchor tenant in a

shopping center. Mark and Anthony desired to purchase the shopping

center pursuant to a right of first refusal.          Their first attempt

to purchase the shopping center failed.             Mark and Anthony were

determined to succeed at the next opportunity, so they hired Debra,

based upon her combination of skills as a financial advisor,

licensed accountant, and lawyer.

     As contemplated, Urban Farms would be comprised of three

classes   of     individuals   and       entities   that   would   receive

compensation dependent upon their assigned class holder status.

The outside investors, Class A, would participate in the property's

appreciation and the preferred fixed return, or "dividend" of six

percent on their direct cash investments.            The Class A members

would also receive thirty-five percent of the remaining earnings.

The Class B members, comprised sole of Anthony and his wife, would

1
   Thereafter, the judge issued a supplemental opinion repeating
the decision to deny counsel fees as well as certain post-judgment
claims which are not the subject of these appeals.

                                     5                             A-3461-14T3
share only in the preferred fixed return with any preferred

dividend to be allocated to the Class C members.

     By agreement, the property would be managed by a separate

company, Merrywood Associates LLC (Merrywood), which Mark and

Debra would run in exchange for a share of the operating profits.

Debra's participation in Merrywood was not through her name but

through RTT.

                            II.

     Debra was the principal of Taylor Financial Group, which she

described as a wealth management firm.     Debra held securities

licenses and an affiliation with a broker-dealer.      She was a

Certified Public Accountant (CPA) and a licensed real estate

salesperson.

     Debra was also an attorney, licensed to practice in New

Jersey.   She elected to retire from the practice of law in 2001,

but subsequently returned to the practice in August 2012.    During

her retirement, Debra understood that she was ineligible to draft

or to revise legal documents, to render legal assistance, or to

give legal advice.

     When their first attempt to acquire the shopping center

failed, Mark and Anthony attributed the failure in part to the

limitations of their counsel at the time. When the property became

available again in 2009, Mark and Anthony were eager to pursue it

                                  6                         A-3461-14T3
and sought Debra to assist them in the acquisition.                  Mark believed

that Debra was "uniquely qualified" because she was an attorney

and   a   CPA    with     experience    in       financial   planning    and     estate

planning, as well as in real estate.                 Mark and Anthony understood

from the onset that Debra "was going to help quarterback the deal"

by being "our attorney" and advising both the family and any other

attorney    that    was     to   be   involved.        Mark   believed        that   the

arrangement was "perfect" because being a lawyer meant that Debra

could "deal with legal aspects" in addition to "communications"

and financing, which amounted to handling all aspects of getting

the deal done.

      Despite the absence of a written retainer agreement or any

writing relative to the scope of services that Debra would provide,

Mark and Anthony believed that she was, at all times, acting as

their attorney.

                                       A.

      For purpose of the transaction, Debra recommended that the

family hire a new accountant, Martin Goldstein, for his experience

in real estate financing.             Throughout the transaction, Goldstein

operated    in     that    capacity     including       developing      the    general

structure for the investments and the interests in Urban Farms.

      Debra also recommended that the family replace their prior

attorney with an experienced real estate attorney, Jack Zakim.

                                             7                                  A-3461-14T3
Zakim was involved only with the negotiations with the lender and

the property's owner.    He viewed Debra's role in the transaction

to be multi-faceted including as attorney, financial advisor and

spokesperson for the family.

      Debra also advised plaintiffs to retain the services of

another attorney, Mark Press, to handle issues relating to outside

investors.   Press was involved in drafting documents relative to

the   operating   agreements   including   those    that   provided   for

compensation to Richard, Mark and Debra.           Press viewed Debra's

role as a financial advisor to the Chernalis family who was

involved in "orchestrating the entire transaction."        Press relied

on Debra to explain documents to the family although he did not

agree that when doing so that she was necessarily acting as a

lawyer. When Debra described her background to Press, she included

being an attorney.

      Debra requested that another attorney, David Edelbaum, who

specialized in tax and estate planning, become involved.       Edelbaum

considered Debra's role to be a financial advisor only, despite

knowing that she was an attorney and a CPA.

                                  B.

      Mark initially raised the issue of Debra's compensation as

the family did not want to see "a huge bill all of a sudden."           At

first, Debra said that she was satisfied with compensation through

                                   8                             A-3461-14T3
her work on The Market Basket's retirement plan and by future

business referrals.        However, as the transaction became more

involved, Debra recommended her compensation come from a Class C

share interest, which she referenced as a "co-promote fee," as is

consistent with industry usage for participation in a transaction

not arising from a tangible investment.          Mark and Anthony agreed

to this method of Debra's compensation.         It was later agreed that

the compensation would flow through Merrywood and that Debra's

interest   would   be    payable   to    RTT.   The   percentages   of   the

compensation were stated explicitly in the numerous drafts of the

operating agreements.      It was also agreed that Debra could make a

cash investment for a Class A interest in Urban Farms, but as an

outside investor and not as compensation for her services.

                                        C.

     The closing on the property took place on December 17, 2009,

although the parties executed the closing documents, including the

operating agreements, two days earlier.         The final version of the

Merrywood operating agreement contained two class members.               The

Class A members were Mark, Toboggan Ridge Partners, LCC (Toboggan

Ridge) and RTT.2        The Class B members were Mark and RTT.           The

2
   Toboggan Ridge was an entity used by Richard Taylor for his
investment in order to remain under the bank's threshold requiring
a personal lender to give a personal guarantee.

                                        9                           A-3461-14T3
percentages assigned to the members of Class A became the focal

point of contention when Mark and Anthony were apprised of them.

Mark had seen a spreadsheet calculating the distributions for

fiscal year 2009 pursuant to the Urban Farms operating agreement

that included percentages far greater than those discussed by the

parties for Debra's compensation.           When Debra insisted that the

percentages   were   in   accord    with    the    closing   documents,   this

litigation ensued.

                                    III.

      At the conclusion of the bench trial, Judge Robert P. Contillo

placed his decision on the record.                In reaching his decision,

Judge Contillo made the following factual findings.

      The family engaged Debra because she "stressed" that her

unique qualifications as a financial advisor, attorney and CPA,

plus her substantial real estate experience, would let her handle

both "the financial and real estate components of the transaction."

Anthony and Mark "believed that her skill set was exactly what

they needed to achieve their goal."

      Debra advised them that she would quarterback the deal and

assemble a team of professionals that would work together to

represent the family in negotiations over the terms of acquisition,

the   requisite   financing,       the     corporate    structures   of    the

acquisition, the post-acquisition management of the property, the

                                     10                               A-3461-14T3
tax implications and the estate planning aspects of what was by

all accounts a highly complex undertaking with multiple moving

parts.     Mark and Anthony lacked sophistication and experience

about such matters, even though they were adept at managing their

own business.   They came "to depend heavily and primarily on Debra

Taylor for advice and guidance in all these aspects of the deal."

     Debra was responsible for ensuring that the family understood

that she did not intend to provide legal advice and was ineligible

to do so.    She allowed them or led them to believe that she was

willing and able to provide legal advice, and did not disclose her

retirement   from   practice,   which   was   only   revealed   after   the

closing.

     While "[o]thers served discrete functions to the Chernalis

family as the efforts to purchase got underway — lawyers, tax

advisors,    financial    advisors,     accounting    advisors,     estate

planners, real estate advisors — [] Debra Taylor never ceased

serving — serving well, but nevertheless serving — in each of

those capacities."       Zakim, although retained as an attorney,

"always considered" Debra to be the family's counsel.

     The original concept for the transaction did not include

giving Debra a financial interest.         The suggestions that Debra

could make a capital investment or have a role in managing the

property arose only after her attorney-client relationship with

                                  11                               A-3461-14T3
the family had begun, and after "Mark and Anthony had come to

depend upon her as their primary advisor."               The notion that Debra

was   Mark's   "partner     in   the   transaction,"       was    "a    litigation

construct, designed to obscure the fiduciary nature of Debra

Taylor's fundamental role as the primary advisor to the Chernalis

family."

      Mark was "a credible and forthright witness."               While Mark and

Anthony agreed to give her "a piece of the deal," the "nature,

extent   and   value   of   those      interests   remained       amorphous     and

changing," to the extent that none of the other professionals was

able to confirm the "compensation arrangement" that Debra was

claiming to have reached with the family.

      The   family   eventually     agreed   to    let    Debra    make    a   cash

investment for a Class A interest, and to give her a Class C

interest as compensation for her services.               Debra "never advised

any Chernalis, orally or in writing, to seek independent advice"

with respect to either of those interests.                "No one else — none

of the other professionals in the case — gave advice to any of the

Chernalis family with respect to" those interests, and Debra "did

not think and had no reason to think" otherwise.                       At no point

during Debra's efforts to obtain a Class C interest did she seek

"to clarify or memorialize[] her role as the Chernalis family

legal advisor and advisor on all aspects of the transaction, or

                                       12                                  A-3461-14T3
her terms of compensation."

      Debra served as Mark and Anthony's attorney "from the moment

she   agreed   to   represent   their      interests"     in    connection     with

acquiring the property.         Debra "emphasized her credentials and

skills as a lawyer" as well as her other abilities "to make the

relationship adhere."        Debra never told them that she intended to

refrain from giving legal advice, or that any legal advice she

gave should be confirmed by independent counsel.                The legal advice

advice   and   work   that    Debra   performed,        "quite       competently,"

included reviewing the lease to discover the right of first

refusal, reviewing the pleadings and giving legal advice in the

lis pendens action, and being "deeply involved in the revision of

complex legal documents deeply implicating the Chernalis family's

rights, including the operating agreements and private placement

memorandum."

      The ability of professionals other than lawyers to read and

interpret such documents was irrelevant, because "[w]hen you are

someone's attorney and you are giv[ing] them legal advice," the

relationship    is    established     with     all   of        its    professional

responsibilities.      That the family signed a retainer agreement

with one of the other attorneys for limited supplemental legal

services in no way justified an inference that the family must

have understood the lack of a retainer agreement for Debra to mean

                                      13                                   A-3461-14T3
that she was not providing any legal services or advice in the

course    of   her   uniquely      central    role     in   all     aspects    of   the

transaction.

     Debra did not engage in fraudulent conduct nor engage in acts

of intentional misrepresentation.              The allegations in the third

party    complaint    and    the   third     party    defendants'        counterclaim

seeking counsel fees were not supported by the proofs.

     Having     made       these    findings,        the    judge     provided      his

conclusions of law.         In doing so, the judge held the following.

     Debra was bound by the Rules of Professional Conduct (RPCs).

In serving the family as an attorney without a retainer agreement,

Debra    violated    RPC    1.5(b).        Debra's     entry      into    a   business

transaction with the family, specifically, her Class C interest,

violated most of the conditions of RPC 1.8(a), since she did not

provide full written disclosure of the nature and extent of her

interest in terms that the family could have been expected to

understand, and because she did not advise them of the reasons why

they should seek independent counsel about it.                    The inability of

the other professionals in the transaction to confirm that the

family intended Debra to have the 47.69% interest that she was

claiming in Class C's 65% share of remaining available cash was

further proof that she failed to comply with RPC 1.8(a).

     The record contained no evidence to indicate what constituted

                                       14                                      A-3461-14T3
a "fair and reasonable" Class C interest for Debra to receive as

compensation.      The RPCs placed the burden of proof on Debra, and

she did not meet her burden.            Debra's violations of RPC 1.5(b) and

RPC   1.8(a)     made    the    terms    of    defendants'         Class    C    interest

unenforceable.          Thus,    defendants      "cannot      retain       any       Class    C

interest in [p]laintiffs' property."

      Defendants'       Class     A     interest      was    "a     pure     investment

opportunity" and not controversial because it was not intended as

compensation for any aspect of Debra's service to the family.

There was "no suggestion that the Chernalis family failed to grasp

the simple concept that Debra Taylor would get six percent on her

money, with no management rights."               There was also no suggestion

that it was unfair or unreasonable for Debra to receive the same

rate of return as other the Class A members.                  As such, Debra should

not   be   penalized       for     acquiring         the    Class     A     investment.

Notwithstanding,        Debra    must    relinquish         "her    right       to     future

interest payments" on the investment after a refund of her capital

contribution.

      Plaintiffs were not entitled to punitive damages based upon

insufficient proof.            Plaintiffs and third-party defendants were

not   entitled    to    counsel       fees.    The   third-party       complaint           was

dismissed based upon insufficient proof that Richard engaged in

actionable conduct.

                                          15                                          A-3461-14T3
On appeal, plaintiffs raise the following arguments:

    POINT I

    THE $30,000 IN DIVIDENDS AND $160,000 IN
    MANAGEMENT FEES THAT DEFENDANTS RECEIVED
    THROUGH UNENFORCEABLE BUSINESS TRANSACTIONS
    BETWEEN LAWYER AND CLIENT SHOULD HAVE BEEN
    DEEMED PRINCIPAL AND CREDITED TO PLAINTIFFS.

    POINT II

    THE COURT SHOULD HAVE AWARDED PLAINTIFFS'
    LEGAL FEES THEY WERE FORCED TO INCUR BY THE
    INTENTIONAL MISCONDUCT OF DEBRA TAYLOR AS AN
    ATTORNEY.

    POINT III

    THE COURT SHOULD HAVE AWARDED LEGAL FEES TO
    PLAINTIFFS PURSUANT TO DIMISA v. ACQUAVIVA,
    198 N.J. 547, 553-54 [] (2009), BECAUSE DEBRA
    TAYLOR'S BREACH OF FIDUCIARY DUTY FORCED
    PLAINTIFFS TO SUE A THIRD PARTY TO RECOVER
    BACK THEIR WRONGFULLY HELD PROPERTY INTERESTS.

    POINT IV

    THE EVIDENCE WARRANTED A PUNITIVE DAMAGE AWARD
    WHERE DEBRA'S BREACH OF DUTY AND CONVERSION
    OF   A   47.69%  INTEREST   IN   PLAINTIFF[S']
    TRANSACTION WAS MADE WITH RECKLESS DISREGARD
    FOR THE HARM HER ACTIONS WOULD CAUSE TO HER
    CLIENTS.

    POINT V

    THE COURT SHOULD HAVE HELD DEBRA LIABLE FOR
    FRAUD BASED ON HER ADMISSIONS ABOUT WHAT SHE
    KNEW PRE-CLOSING.

On cross-appeal, defendants raise the following arguments:

                         16                            A-3461-14T3
         POINT I

         DEBBIE WAS NOT ACTING AS AN ATTORNEY FOR THE
         CHERNALIS FAMILY AND, AS SUCH, SHE DID NOT
         VIOLATE THE RULES OF PROFESSIONAL CONDUCT.

         POINT II

         THE OPERATING AGREEMENTS AS DRAFTED, REVIEWED,
         APPROVED AND SIGNED ACCURATELY SET FORTH HOW
         THE ACQUISITION WAS INTENDED TO BE STRUCTURED.

         POINT III

         THE CHANCERY DIVISION CORRECTLY DENIED THE
         PLAINTIFFS' APPLICATION FOR ATTORNEYS' FEES.

         POINT IV

         THE CHANCERY DIVISION CORRECTLY FOUND THAT THE
         DEFENDANTS NEED NOT DISGORGE EITHER THE CLASS
         A PREFERRED INTEREST DISTRIBUTIONS OR ANY
         MANAGEMENT FEES THAT WERE PAID.

         POINT V

         THE   TRIAL  COURT CORRECTLY        FOUND  THAT
         PLAINTIFFS WERE NOT ENTITLED        TO PUNITIVE
         DAMAGES.

         POINT VI

         THE TRIAL COURT CORRECTLY FOUND THAT DEBBIE
         WAS NOT LIABLE FOR FRAUD.

    On   appeal,    defendants/third-party   plaintiffs   raise   the

following arguments:

         POINT I

         RICH TAYLOR HAS ABANDONED ANY CHALLENGE TO
         JUDGE CONTILLO'S DISMISSAL OF HIS COUNTERCLAIM
         AND, IN ANY EVENT, THE COUNTERCLAIM WAS
         PROPERTLY [SIC] DISMISSED.

                                17                           A-3461-14T3
          POINT II

          THERE WAS NEVER ANY REQUEST FOR ATTORNEYS'
          FEES OR ORDER ENTERED DENYING ATTORNEYS' FEES
          AND, IN ANY EVENT, THE ATTORNEYS' FEES WERE
          PROPERLY DECLINED.

          POINT III

          THERE WAS SUFFICIENT EVIDENCE FROM WHICH THE
          CHANCERY COURT COULD HAVE FOUND IN FAVOR OF
          DEBBIE WITH REGARD TO THE CLAIMS IN THE THIRD-
          PARTY COMPLAINT AGAINST RICH TAYLOR.

     On appeal, the third-party defendants raise the following

arguments:

          POINT I

          THE COURT WRONGFULLY DISMISSED THIRD[-]PARTY
          DEFENDANT'S COUNTERCLAIM UNDER THE THIRD[-
          ]PARTY EXCEPTION TO THE AMERICAN RULE ESPOUSED
          BY THE SUPREME COURT IN DIMISA v. ACQUAVIVA,
          198 N.J. 547, 553-54 (2009).

          POINT II

          THE TRIAL COURT ERRED IN FINDING THAT THIRD[-
          ]PARTY   DEFENDANT   DID  NOT   INCURR   [SIC]
          ATTORNEYS['] FEES DISTINCTLY RELATED TO ROBERT
          TAYLOR AND THE TRUST'S INVOLVEMENT IN THE
          SUIT.

     We review the factual findings made by a trial judge to

determine whether they are "supported by adequate, substantial and

credible evidence."   Rova Farms Resort, Inc. v. Inv'rs Ins. Co.

of Am., 65 N.J. 474, 484 (1974).    Such findings made by a judge

in a bench trial "should not be disturbed 'unless they are so

wholly insupportable as to result in a denial of justice.'"     Id.

                               18                          A-3461-14T3
at 483-84 (quoting Greenfield v. Dusseault, 60 N.J. Super. 436,

444 (App. Div. 1960)).     Factual findings that "are substantially

influenced by [the judge's] opportunity to hear and see the

witnesses and to have the 'feel' of the case" enjoy deference on

appeal.   State v. Johnson, 42 N.J. 146, 161 (1964).

      After carefully reviewing the record developed by the parties

before Judge Contillo, we affirm substantially for the reasons

expressed in his oral opinion and his supplemental opinion.              We

add the following.

      An attorney-client relationship can exist even in the absence

of "a specific retainer [agreement] memorializing" it.           Kaye v.

Rosefielde, 432 N.J. Super. 421, 477 (App. Div. 2013) (citing

Seidman v. Clifton Sav. Bank, 205 N.J. 150, 169 (2009)), rev’d,

in part on other grounds and remanded, 223 N.J. 218, 220-22 (2015)

(reversing   lower    courts'   blinkered    view   of   their   inherent

discretion to fashion equitable remedies, and remanding only for

new   determination   on   remedy).    "To   form   an   attorney-client

relationship, it is enough that the attorney has voluntarily agreed

and acted as the client's legal advisor, and the client equally

willingly sought and was guided by the attorney's counsel."         Ibid.

While the attorney must "affirmatively accept" that "professional

responsibility," ibid.      (quoting In re Silverman, 113 N.J. 193,

207 (1998)), the acceptance "need not necessarily be articulated,

                                  19                              A-3461-14T3
in writing or speech but may, under certain circumstances, be

inferred from the conduct of the parties."        Ibid.   (quoting In re

Palmieri, 76 N.J. 51, 58-59 (1978)).         As for the client, "there

must be some act, some word, some identifiable manifestation that

the reliance on the attorney is in his professional capacity,"

instead of "plainly no more than part and parcel of a joint

business venture among sophisticated businessmen."          Palmieri, 76

N.J. at 60.

     The RPCs govern all attorney-client relationships.               In re

Greenberg, 155 N.J. 138, 152 (1997); Karamatos v. Paliaz, 360 N.J.

Super. 76, 84 (App. Div. 2003). They "establish the state's public

policies with respect to attorney conduct," and contracts between

attorneys and clients, whether retainer agreements or for business

transactions, "that violate the RPCs" in any way "violate public

policy, and courts must deem them unenforceable." Jacob v. Norris,

McLaughlin & Marcus, 128 N.J. 10, 17 (1992).

     The disclosure requirements for business transactions between

an attorney and client are stringent, in part because they are

presumed   to   pose   a   conflict    of   interest.     See   RPC    1.8.

Furthermore, the disclosure of every aspect of the attorney's

interest, the explanation of the desirability of independent legal

counsel for the client concerning the transaction, and the client's

informed consent to the transaction must all be in writing.             RPC

                                  20                              A-3461-14T3
1.8(a).     The attorney must also explain when his or her activity

would represent the provision of legal services to the client as

opposed to furtherance of their business interests. RPC 1.8(a)(3).

     "[I]t is the substance of the relationship, involving as it

does a heightened aspect of reliance, that triggers the need for

the rule's prescriptions of full disclosure and informed consent."

Silverman, 113 N.J. at 214.

     In Silverman, the Court noted that, while an attorney-client

relationship is not created simply because the attorney performs

some tasks connected to the business venture with the client that

lay persons are authorized to perform, the client's belief that

the attorney "would exercise his legal skills for his benefit in

carrying out these collateral tasks" can nonetheless establish

sufficient reliance to create the relationship.        Id. at 219-20.

     Here, we discern no basis to disturb the judge's determination

that Debra served as an attorney and obtained a financial interest

in a business transaction in violation of the RPCs.           The factual

findings on this score were supported by sufficient credible

evidence.    The conclusions of law that flowed from those findings

are unassailable.

     An award of punitive damages should be reserved for special

circumstances,    where   the   conduct   is   particularly    egregious.

Maudsley v. State, 357 N.J. Super. 560, 590-91 (App. Div. 2003).

                                   21                             A-3461-14T3
A party seeking punitive damages must prove by clear and convincing

evidence that "the harm suffered was the result of          . . . acts or

omissions . . . actuated by actual malice or accompanied by a

wanton and willful disregard . . . ."         Longo v. Pleasure Prods.,

Inc., 215 N.J. 48, 58 (2013) (quoting N.J.S.A. 2A:15-5.12).                We

review   the   decision   to   deny    punitive   damages   for   abuse    of

discretion.    Maudsley, 357 N.J. Super. at 590.

     We are satisfied that the judge's decision not to award

punitive damages is supported by substantial credible evidence in

the record.     Specifically, the judge found that Debra was not

responsible for the inaccuracies in the final drafts of the

operating agreements relative to the Class C interests.           There was

no proof that Debra was aware of the inaccuracies prior to the

closing.   Even though Debra sought to utilize the inaccuracies,

post-closing, to her advantage, the judge did not find her conduct

was malicious.     Given our limited review of punitive damages

awards, we find no basis to disturb the judge's finding.

     "[A] reviewing court will disturb a trial court's award of

counsel fees 'only on the rarest of occasions, and then only

because of a clear abuse of discretion.'"         Litton Indus., Inc. v.

IMO Indus., Inc, 200 N.J. 372, 386 (2009) (quoting                Packard-

Bamverger & Co. v. Collier, 167 N.J. 427, 443-44 (2001)).                 The

same standard of review applies to the denial of counsel fees.

                                      22                            A-3461-14T3
        New Jersey generally follows the so-called "American Rule"

(Rule) which requires that each party pay its own legal costs.

Rendine v. Pantzer, 141 N.J. 292, 322 (1995).                      Plaintiffs and

third-party defendants argue that they were entitled to counsel

fees premised upon exceptions to the Rule.                     Plaintiffs argue

entitlement premised upon both attorney misconduct and upon fees

they incurred as a result of the third-party litigation.                        Third-

party defendants argue entitlement premised upon fees incurred in

defending the third–party complaint instituted by RTT.

       For the same reasons that the judge held that punitive damages

were not warranted, i.e., lack of intentional conduct by Debra

pre-closing, the judge denied an award of counsel fees based upon

her alleged misconduct.        The judge further held that RTT and Debra

were essentially "alter egos" and that neither plaintiffs nor

third-party defendants incurred any separate or distinct attorney

fees   predicated   upon      the   third-party     action.        As   such,       the

exception    to   the   Rule    was   not    applicable       as   this   was       not

"litigation against a stranger".             DiMisa v. Acquaviva, 198 N.J.

549,   554   (2009).     We    discern      no   error   in    either     of     these

determinations.

        Finally, we conclude that the remaining arguments raised in

these appeals, not specifically addressed herein, lack sufficient

merit to warrant discussion in a written opinion.                         R. 2:11-

                                      23                                       A-3461-14T3
3(e)(1)(E).

    Affirmed.

                24   A-3461-14T3