A. NEUMANN & ASSOCIATES, LLC v. DR. MICHAEL COHEN

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-3772-07T13772-07T1

A. NEUMANN & ASSOCIATES, LLC,

Plaintiff-Respondent,

v.

DR. MICHAEL COHEN, and

NEPTUNE SENIOR HEALTH, LLC,

Defendants-Respondents,

and

ARON ROSENBERG,

Defendant-Appellant.

________________________________

 

Argued January 13, 2009 - Decided

Before Judges Fuentes, Gilroy and Chambers.

On appeal from the Superior Court of New Jersey, Law Division, Monmouth County, Docket No. L-221-05.

William H. Michelson argued the cause for appellant.

Harry V. Osborne, II, argued the cause for respondent A. Neumann & Associates, LLC (Evans, Osborne and Kreizman, LLC, attorneys; Mr. Osborne, II, on the brief).

Michael Cohen, respondent pro se, has not filed a brief.

PER CURIAM

On February 25, 2008, following a bench trial, the trial court entered judgment against defendants Dr. Michael Cohen and Aron Rosenberg, "individually, jointly and severally," in the amount of $54,000, together with pre-judgment interest from March 1, 2005. Rosenberg appeals; Cohen does not. We affirm in part; reverse in part; and remand to the trial court for further proceedings consistent with this opinion.

I.

Plaintiff, A. Neumann and Associates, LLC, engages in the brokering of businesses and is affiliated with Business Brokers Network of Dallas, Texas. Achim Neumann is plaintiff's principal owner and president. Cohen is a retired physician and the former owner of NSH, a licensed, but non-operating adult day health care (ADHC) facility. The primary asset of NSH is the March 13, 2001 approval by the State of New Jersey, Department of Health and Senior Services, the Division of Long-Term Care Systems, to establish and operate a 185-slot ADHC facility in Neptune City.

On March 16, 2004, Cohen and Neumann executed plaintiff's Standard Engagement Agreement (engagement agreement). Under the engagement agreement, Cohen, as seller, granted plaintiff an exclusive right to sell NSH for a period of one year at a price of $450,000. Paragraph 3 of the engagement agreement provided that, for a period of two years after termination of the one-year exclusivity period, plaintiff would be entitled to a full commission if Cohen sold the business to a purchaser introduced to him by plaintiff.

Paragraph 10 of the engagement agreement governs the broker's commission. The agreed-upon commission was 15% of the listed sale price ($450,000) or $67,500. That paragraph also provided for a 15% minimum commission of the actual sale price, but under no circumstances less than 15% of 80% of the listed sale price ($360,000), or $54,000, if Cohen sold NSH for less than $450,000. Paragraph 11D of that agreement set forth events triggering Cohen's obligation to pay plaintiff a broker's commission for reasons other than procuring a sale. Included among the triggering events was Cohen's unilateral withdrawal of the "[b]usiness from the market and/or [if Cohen] otherwise attempt[ed] to terminate th[e] Agreement prior to its expiration date."

Pursuant to the engagement agreement, Neumann produced several prospective purchasers of NSH, one of whom was Rosenberg. On May 12, 2004, prior to providing Rosenberg with confidential information pertaining to NSH, at Neumann's request, Rosenberg signed plaintiff's "Standard Buyer's Confidentiality and Warranty Agreement" (confidentiality agreement) to protect not only Cohen's privacy, but also plaintiff's broker commission.

In the preamble to the confidentiality agreement, Rosenberg acknowledged that plaintiff possessed a valid broker's agreement with Cohen for the sale of NSH on a commission basis. Pursuant to Paragraph 3 of the confidentiality agreement, Rosenberg agreed not to contact Cohen "for any reason whatsoever without the prior consent of [plaintiff]. All contacts with [Cohen] . . . will be made through or by [plaintiff] unless otherwise agreed to by [plaintiff] in writing."

Paragraph 7 of the confidentiality agreement provided, in pertinent part, that Rosenberg, for a period of three years from the date of its execution, would not enter into any agreement for the purchase of NSH, "unless such agreement to purchase provides for commission to be paid [to plaintiff], with the commission . . . defined as the amount agreed upon by [plaintiff] and [Cohen] in the '[s]tandard [l]isting [a]greement' . . . ." Under the same paragraph, Rosenberg agreed that if he violated that provision he would be liable "for and pay said commission to [plaintiff] upon demand without any obligation on [plaintiff's] part to first exhaust any legal remedies against [Cohen]."

After Rosenberg reviewed NSH's confidential information, he made an offer to purchase NSH through plaintiff for $325,000. On July 14, 2004, plaintiff telefaxed the offer to Cohen. The offer was not accepted. Rather, Cohen's attorney sent a letter to Neumann on the same day terminating the engagement agreement. Subsequent to the July 14, 2004 letter, Neumann conversed with Cohen's attorney about Rosenberg's offer. During that conversation, Cohen's attorney advised Neumann that Cohen was negotiating directly with Rosenberg. Following that telephone conference, Neumann sent e-mails to both Cohen and his attorney, demanding payment of a broker's commission.

On September 27, 2004, Premier of Neptune, LLC, as purchaser, and NSH as seller, entered into an asset purchase agreement (purchase agreement) for the purchase and sale of the assets of NSH. Rosenberg signed the agreement on behalf of Premier, and Cohen signed on behalf of NSH. Neither Cohen nor Rosenberg informed plaintiff of that purchase agreement.

On January 13, 2005, plaintiff filed its complaint against Cohen and NSH, contending that it was owed a broker's commission because those defendants terminated the engagement agreement prior to its expiration date. On March 1, 2005, Rosenberg, on behalf of Premier, and Cohen, on behalf of NSH, executed a second purchase agreement for the purchase and sale of NSH's assets for the sum of $250,000. Under Paragraph 5c of that purchase agreement, NSH represented that no litigation was pending or threatened against it, relating to the assets or the sale transaction. Paragraph 12a of the March 2005 purchase agreement provided:

Expenses. Buyer and [s]eller each agrees to pay its own costs and expenses in connection with the transactions contemplated by this [a]greement, including without limitation legal and accounting expenses and brokerage commissions. Seller has engaged a third party as a broker with respect to this transaction and [s]eller is solely responsible for any fees and commissions that are due with respect to the sale. Any sales, transfer or similar taxes arising due to the transfers hereunder shall be paid by [s]eller.

NSH agreed in Paragraph 10 of the March 2005 purchase agreement to indemnify Premier and hold it harmless from and against "any loss, costs, damages, or expense (including reasonable attorneys' fees)" arising from or relating to all liabilities or obligations of NSH, not specifically assumed by Premier, and for any damages resulting from any misrepresentation or breach of the agreement on behalf of NSH. Lastly, Paragraph 12b provided that "all representations, covenants, warranties and agreements contained in this Agreement shall survive the Closing."

At a court ordered mediation proceeding, Cohen informed Neumann that in March 2005 NSH had sold its right to establish and operate the 185-slot ADHC facility and its trade name to Rosenberg. Plaintiff moved for leave to file an amended complaint to add Rosenberg as an additional defendant. On June 23, 2006, the trial court granted plaintiff's motion. On July 12, 2006, plaintiff filed its amended complaint, asserting a breach of contract claim against Rosenberg, contending that, contrary to the provisions of the confidentiality agreement, he negotiated directly with Cohen and did not protect plaintiff's broker's commission.

Because Rosenberg resided out of State, plaintiff had difficulty effecting service of process. In early 2007, the court dismissed plaintiff's amended complaint as to Rosenberg pursuant to Rule 1:13-7(a). In the interim, the discovery period closed on March 6, 2007, and Rosenberg's New Jersey attorney agreed to accept service of the amended complaint and summons.

In early April 2007, Rosenberg attempted to file his answer and cross-claim, but the pleading was returned with advice that before the court would accept the answer for filing, plaintiff needed to reinstate the amended complaint. On or about April 24, 2007, plaintiff moved to reinstate the amended complaint. On May 11, 2007, an order was entered vacating the dismissal and granting Rosenberg leave to file his answer. On May 30, 2007, the court filed Rosenberg's answer nunc pro tunc as of May 11, 2007.

On June 19, 2007, unaware that the discovery period had closed on March 6, 2007, Rosenberg served plaintiff and Cohen with interrogatories and a demand for production of documents. On June 28, 2007, plaintiff filed a second amended complaint, asserting that defendants had tortously interfered with its contractual rights and prospective economic advantage. Plaintiff also sought an injunction against Cohen, seeking to prohibit him from dissipating his assets pending judgment in the action.

On September 18, 2007, after plaintiff and Cohen failed to answer the discovery requests, Rosenberg moved to dismiss the amended complaint and to suppress Cohen's cross-claim pursuant to Rule 4:23-5(a). Although no one objected, the court denied the motion, advising Rosenberg's counsel that the motion should have been filed prior to the discovery end date, citing Rule 4:24-2, and that the matter was scheduled for trial on January 7, 2008.

Unfortunately, Rosenberg neither formally moved for reconsideration nor for an extension of the discovery end date. Rather, Rosenberg's counsel only sent letters to the trial judge and Civil Division Case Manager, requesting that the judge reconsider the motion, contending that his client had only recently been joined in the action after the close of the discovery period, and that he would be prejudiced if forced to try the matter without discovery responses from either adversary. The trial court denied the requests.

The matter proceeded to trial on January 7, 2008, with counsel waiving trial by jury. The only witnesses to testify were Neumann and Cohen. Although Rosenberg's counsel appeared at trial and cross-examined the witnesses, Rosenberg did not appear. During opening statements, Rosenberg's counsel informed the court that his discovery motion had been denied and that, other than receiving "some of the central documents in the case at the end of last week" from Cohen's attorney, he had not received discovery in the action. When asked by the court whether he was seeking an adjournment, Rosenberg's counsel stated:

Well, I don't think it necessarily calls for an adjournment. But what I would ask is that . . . we have a couple of weeks to brief the issues in light of what will be, in effect, the discovery that we never received, which we're hearing for the first time at trial. I think that that would be fair to give us a couple of weeks before judgment is issued in this case to brief the issues.

The court concurred, and the matter proceeded to trial with the court reserving decision, pending receipt of written summations.

On February 8, 2008, the trial court rendered an oral decision, rejecting as "completely unworthy of belief" Cohen's explanation for terminating plaintiff's engagement agreement. In entering judgment against Cohen, the court reasoned that Cohen's sending of the "letter of termination was an attempt by Cohen to evade the commission obligations to Neumann." The trial court made the following statement in support of its decision, holding Rosenberg and Cohen jointly and severally liable to plaintiff:

In the final analysis, this [c]ourt finds that defendants Cohen and Rosenberg concocted a transaction between themselves, which was intended to eliminate a commission to Neumann, despite the obligation to do so.

Under the agreement between Neumann and Rosenberg, Rosenberg agreed not to contact the seller without the prior consent of the broker and to make all contacts with the seller through the broker. He further agreed not to enter into any agreement with the seller, unless that agreement provided for a brokerage commission.

. . . .

The parties are sophisticated businessmen who knew exactly what they were agreeing to do. And, in fact, the contract is designed by Neumann to prevent the very acts which defendants perpetrated. What is unconscionable here is the conduct of defendants.

Concluding that defendants had attempted to misuse their limited liability companies to perpetrate a fraud on plaintiff, the court pierced the entities' corporate veils and entered judgment against Cohen and Rosenberg.

The [c]ourt will enter a judgment jointly and severally against Cohen and Rosenberg, personally, in the amount of $54,000. And I . . . set the damages at that amount[] because there was . . . a contract that eventually closed, and under the terms, that is the amount of damages.

Lastly, the court dismissed all counterclaims and cross-claims of defendants. A confirming order was entered on February 25, 2008, entering judgment against Cohen and Rosenberg "individually, jointly and severally" in the amount of $54,000, together with pre-judgment interest from March 1, 2005, in the amount of $7,289.28.

II.

A judgment shall not be overturned except where, after a careful review of the record and weighing of the evidence, the appellate court determines that "'continued viability of the judgment would constitute a manifest denial of justice.'" In re Adoption of a Child by P.F.R., 308 N.J. Super. 250, 255 (App. Div. 1998) (quoting Baxter v. Fairmont Food Co., 74 N.J. 588, 597-98 (1977)). We will not disturb the factual findings and legal conclusions of a trial court unless they are "'so manifestly unsupported by or inconsistent with the competent, relevant and reasonably credible evidence as to offend the interests of justice.'" Rova Farms Resort, Inc. v. Investors Ins. Co., 65 N.J. 474, 484 (1974) (citation omitted). Consequently, "the appellate court should exercise its original fact finding jurisdiction sparingly and in none but a clear case where there is no doubt about the matter." Ibid. "'That the case may be a close one or that the trial court decided all evidence or inference conflicts in favor of one side has no special effect.'" Czoch v. Freeman, 317 N.J. Super. 273, 283 (App. Div.) (quoting State v. Johnson, 42 N.J. 146, 162 (1964)), certif. denied, 161 N.J. 149 (1999)).

The rationale underlying this limited scope of appellate review is that "a trial judge's findings are substantially influenced by his or her opportunity to hear and see the witnesses and to get a 'feel' for the case that the reviewing court [cannot] enjoy." Twp. of W. Windsor v. Nierenberg, 150 N.J. 111, 132 (1997). For this reason, credibility determinations are entitled to particular deference, because the trial judge has a superior perspective "in evaluating the veracity of witnesses." Id. at 132-33. However, the same level of deference is not required when we are reviewing a legal conclusion. Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995). It is against these principles that we consider plaintiff's arguments.

III.

Rosenberg argues in Point I that the trial court erred by denying his Rule 4:23-5(a) motion seeking to dismiss plaintiff's amended complaint and suppress Cohen's cross-claim for failure to answer discovery requests. Rosenberg contends that the discovery period should have been automatically extended by the court for a period of sixty days on the filing of his answer and that the failure to do so "was tantamount to holding that [he] had no right to conduct discovery at all." Lastly, because the discovery period closed on March 6, 2007, several months prior to him filing an answer, Rosenberg asserts that he did not receive the benefit of court notice advising parties of the discovery end date, R. 4:36-2, depriving him of the opportunity to file for an extension of the discovery period.

A review of the court's automated case management system discloses that the parties were originally granted 300 days of discovery and that an order was entered on December 6, 2006, extending the discovery end date to March 6, 2007. We agree with Rosenberg that on filing of his answer on May 11, 2007, "the scheduled discovery end date [should have been] extended for a 60-day period, unless reduced or enlarged by the court for good cause shown." R. 4:24-1(b). Here, it was not. However, we deem the court's failure to automatically extend the discovery period for a period of sixty days harmless. While Rosenberg's service of his discovery requests on plaintiff and Cohen would have occurred within such an extended discovery period, that extended discovery period would have expired on July 10, 2007. Accordingly, Rosenberg's motion to dismiss filed on September 18, 2007, would have been untimely. R. 4:24-2.

Rosenberg contends that he never received notice of the discovery end date as required by R. 4:36-2. Although that is true, Rosenberg was not a party of the action when the discovery end date closed. Information concerning the discovery end date for civil cases filed in the Law Division are available to all litigants without formal notice by the court. For example, the discovery end date for civil cases may be found at http://www.judiciary.state.nj.us/acms/disc/CV0227W0E.ASP.

Moreover, we consider Rosenberg's arguments in Point I moot. On the first day of trial, after his counsel informed the trial court that he had not received all discovery requested from his adversaries, the court asked counsel whether he was requesting an adjournment. Counsel informed the court that he did not want an adjournment, only time to file a brief addressing the legal issues post-trial. The court granted the relief requested. Rosenberg cannot now argue that he was prejudiced by the trial going forward without possessing all discovery documents he requested. Brett v. Great Amer. Recreation, 144 N.J. 479, 503 (1996) ("The doctrine of invited error operates to bar a disappointed litigant from arguing on appeal that an adverse decision below was the product of error, when that party urged the lower court to adopt the proposition now alleged to be error.").

Rosenberg argues next that the trial court's determination that he is liable to plaintiff is not supported by credible evidence in the record. On the trial court's determination of liability, we conclude that Rosenberg's argument is without sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).

However, Rosenberg's contention that the trial court erred in determining him liable for the full amount of pre-judgment interest has merit. The first-amended complaint was not filed until July 12, 2006, almost eighteen months after filing of the complaint. The amended complaint was subsequently dismissed as to Rosenberg on the court's motion pursuant to Rule 1:13-7(a), and it was not restored until May 11, 2007. Under Rule 4:42-11(b), the court may suspend pre-judgment interest in exceptional cases. Because the record fails to disclose whether the trial court considered the dismissal of the amended complaint and Rosenberg's late joinder in the case as exceptional circumstances to holding Rosenberg liable for the total amount of pre-judgment interest, we remand the matter to the trial court to reconsider pre-judgment interest as to Rosenberg only. See Allen v. Heritage Court Assoc., 325 N.J. Super. 112, 121 (App. Div. 1999) (suspending pre-judgment interest for the period during which a complaint had been dismissed when plaintiff failed to timely move for confirmation of an arbitration award).

Lastly, defendant argues that the trial court erred by dismissing his cross-claim against Cohen. We agree. In Rosenberg's answer, he asserted a cross-claim for contractual indemnification against Cohen based on the provisions contained in the March 2005 purchase agreement. Although Rosenberg did not testify at trial, the purchase agreement was admitted into evidence and acknowledged by Cohen. Because the trial court did not express its reasons for dismissing Rosenberg's cross-claim, R. 1:7-4(a), we are not able to perform a meaningful review and are left to conjecture as to what the trial court had in mind. See Salch v. Salch, 240 N.J. Super. 441, 443 (App. Div. 1990) ("[M]eaningful appellate review is inhibited unless the judge sets forth the reasons for his or her opinion."). Accordingly, we also remand the issue of Rosenberg's cross-claim for indemnification against Cohen for the trial court to reconsider.

Affirmed in part; reversed in part; and remanded to the trial court for further proceedings consistent with this opinion.

Neptune Senior Health, LLC (NSH) is owned by defendant Cohen. Although NSH was named a direct defendant in the action, the trial court pierced the corporate veil and entered judgment against Cohen individually, along with Rosenberg. On June 23, 2008, Cohen advised this court by letter that NSH was dissolved post-judgment.

An ADHC facility is referenced in the Administrative Code as an "adult day health services facility" and is defined therein as "a facility or a distinct part of a facility which is licensed . . . to provide preventive, diagnostic, therapeutic, and rehabilitative services under medical and nursing supervision to meet the needs of functionally impaired adult participants . . . ." N.J.A.C. 8:43F-1.2. Such facilities "provide services to participants for a period of time, which does not exceed twelve hours during any calendar day." Ibid. Rosenberg cites as an example of the services rendered by an ADHC, the providing of a place for "working people [to place] their elderly parents during the day, so they can go to work and not worry about them."

The term "slot" refers to an ADHC services participant and is analogous to the process by which nursing homes are provided certificates of needs for a certain number of beds.

A copy of the September 27, 2004 purchase agreement is not contained in the appendix.

Premier of Neptune, LLC, although formed by Rosenberg, never operated as a business. Accordingly, Rosenberg does not contend that plaintiff improperly named him personally in the action.

May 11, 2007, is also the day on which the court entered an order restoring the amended complaint under Rule 1:13-7(a) as to Rosenberg. We note that effective September 1, 2008, Rule 4:24-1(c) was amended to provide that on restoration of a complaint under Rule 1:13-7(a), "the court shall enter an order extending discovery and specifying the date by which discovery shall be completed. The extension order may describe the discovery to be completed and such other terms and conditions as may be appropriate."

(continued)

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A-3772-07T1

February 27, 2009