PASSAIC ARMS CONDOMINIUM ASSOCIATION, INC v. FELBEE REALTY, LP
Annotate this CaseNOT 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-1377-18
PASSAIC ARMS CONDOMINIUM
ASSOCIATION, INC.,
Plaintiff-Respondent/
Cross-Appellant,
v.
FELBEE REALTY, LP, STEPHEN
FELDMAN, and FELBEE
REALTY, LLC,
Defendants,
and
NICK TSAPATSARIS
& ASSOCIATES and NICK
TSAPATSARIS
Defendants-Respondents,
and
FELICE FELDMAN and estate of
ROBERT FELDMAN,
Defendants-Appellants/
Cross-Respondents.
_________________________________
Argued October 28, 2021 – Decided December 29, 2021
Before Judges Whipple, Geiger, and Susswein.
On appeal from the Superior Court of New Jersey,
Law Division, Passaic County, Docket No. L-2636-11.
Dominic V. Caruso argued the cause for
appellants/cross-respondents.
Darren C. Barreiro argued the cause for
respondent/cross-appellant (Greenbaum, Rowe, Smith
& Davis, LLP, attorneys; Darren C. Barreiro, of
counsel; Kersten Kortbawi, on the brief).
PER CURIAM
Defendants-appellants, Felice Feldman and the estate of her brother
Robert Feldman (Feldman defendants), appeal a final judgment after a jury
trial and a post-judgment award of attorneys' fees. Plaintiff-respondent,
Passaic Arms Condominium Association (PACA), cross-appeals. We affirm.
In June 2011 and February 2013, PACA filed a complaint and an
amended complaint alleging members who purchased units within the
condominium complex were not made aware of water infiltration problems in
the building. PACA brought claims against defendants: Felice Feldman and
Robert Feldman and his estate (collectively, Robert), the former owners of the
building; Felice and Stephen Feldman, Robert's son; Felbee Realty, LP, the
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entity involved in the sale of the units; Felbee Realty, LLC, the property
manager; Nick Tsapatsaris, the engineer who prepared the engineering survey
used in connection with the conversion of the building to a condominium
complex; and Tsapatsaris's engineering company, Nick Tsapatsaris &
Associates (NTA). Before trial, Robert passed away and his estate was
substituted in as a defendant. The case continued with a jury trial in December
2015 and a new jury trial January 2017.
I.
We glean the following facts from the record. Beginning in 1952, Felice
and her family owned a four-story multi-family residential structure composed
of twenty-nine apartments and one superintendent residence in Passaic and
operated the structure as an apartment building. Since the early 1960's, Felice
managed the building, collected rent, and coordinated building repairs and
maintenance. As the landlord of the apartment complex, Felice had
approximately $200,000 in operating expenses per year.
Before converting the apartment building to a condominium complex,
Felice and Robert formed Felbee Realty, LP, to own and control the building
and to sponsor the building's conversion. The Feldman defendants hired NTA
to prepare the required engineering survey, which set forth the condition of the
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building to potential purchasers. Felice and Robert provided NTA with the
building's historical information and dates repairs were performed. Tsapatsaris
visited the property in 2000 and 2001. Felbee Realty, LP, provided him with
all of the information he requested, and neither Felice nor Robert directed him
to add or remove anything from the engineering survey.
The engineering survey, finalized on August 27, 2001, was written to
identify major defects in the building and to prepare a capital reserve fund.
The survey reported that the windows were in good condition, the building was
repointed in the six months prior to the survey's finalization, "a number of
lintels" needed replacement, and in-progress roofing repairs were to be
completed by November 2001. A partial re-roofing project was completed in
1998. NTA calculated that the entire structure would require approximately
$4.8 million in replacement costs over the next thirty years and that the capital
reserve fund should contain $491,100.
Felbee Realty, LP,1 prepared a public offering statement (POS) for the
conversion. Felice and Robert acted on behalf of Felbee Realty, LP, when
preparing the documents and neither of their sons were involved. The POS
1
Felbee Realty, LP, was dissolved after all the units were sold.
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included information provided by Felice and Robert's attorneys, accountant,
and engineer.
In October 2001, Felice and Robert applied to the New Jersey
Department of Community Affairs (DCA) to register the condominium
complex. Felice executed the registration affidavit attesting that the contents
of the application were true and accurate. The registration application
included NTA's engineering survey.
On March 1, 2002, the DCA approved the POS. The engineering survey
was included with the POS and provided to potential purchasers. Beginning
around 2002, Felice and Robert hired themselves as Felbee Realty, LLC, to
serve as the property manager, but without executing a formal contract.
Between 2002 and 2004, several members of PACA purchased
condominium units, including Nicholas Calamusa, who rented units in the
building prior to buying. The remaining buyers were new to the building. The
majority of the units were sold, and the Feldman defendants kept four units for
themselves.
Before the conversion, Calamusa, and other renters, were concerned
about waterproofing in the structure. Water stains and wet spots, which would
crumble and deteriorate if touched, around his windows indicated that water
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was entering the interior; there were also water stains on his ceiling. Calamusa
and other renters raised their concerns about water proofing and water
infiltration at a May 2, 2001, condominium conversion meeting.
Calamusa and other renters wrote to the Feldman defendants requesting
more information prior to purchasing any units, including, how many lintels
needed repair, the cost of repairs, and a confirmation that the reserve would
cover needed repairs such as lintels, the roof, leaking windows, and bringing
the building up to code. In response, the Feldman defendants' realtor, Prime
Realty, distributed a flyer to the renters representing that a worn section of the
roof would be replaced by January 2002 and that "all pointing, parapets, and
lintels repairs and replacement" work was being carried out. Finally, the flyer
stated that the repair and replacement work would keep the building "u p to
code."
When he purchased a unit, Calamusa relied on the POS and the
engineering survey. He hired a home inspector and forwarded the inspector's
report to the Feldman defendants to again raise his concerns about water
infiltration and the condition of the building. In response, the Feldman
defendants' attorney, Jay Pasternack, provided an August 27, 2002 letter, with
attachments attesting to the quality of various elements of the building such as
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the oil tank, the underground storage tank, the windows, and the roof.
Notably, the documents stated that the entire east side of the roof had been
replaced in the eight months prior to August 27, 2002.
Shortly thereafter, Calamusa received a letter NTA sent to Pasternack
dated October 14, 2002, that reported that the majority of the lintels were
adequate and did not need to be replaced. Moreover, the cost of replacing the
lintels that needed repair would be covered by the amount of the reserve
capital. Further, the letter stated that one portion of the roof needed repair, the
remaining areas have a life expectancy of twenty years, and the cost of future
replacement of the roof would be covered by the reserve capital.
On January 29, 2003, Calamusa received a letter from Felice to
Pasternack representing the southwest corner of the roof was repaired in
November 2001 and the northwest quadrant was replaced in March 2002.
According to Calamusa, this letter provided him with the assurances he needed
that all of the windows had been sealed to prevent water leakage because he
lived in the northwest section of the building. Ultimately, Calamusa bought
two units in the building. At closing, Felice and Calamusa toured his units to
confirm repairs made for the water infiltration.
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Hillary Levin purchased a unit after first touring the building with Felice
in 2002. Although Levin noticed water damage, including peeling paint and
flaky plaster, around the bedroom window, Felice assured her that the issue
was minor and that it would be repaired prior to closing. Moreover, after
reviewing documents provided to her about the condition of the building, she
believed that the structure was in "good condition." Further, she read the
engineering survey to mean that the entire building had been repointed in the
six months prior to the finalization of the engineering survey and that the
issues pertaining to damaged lintels were minor. As for the roof, she believed
that one area needed repair and that the work would be completed. Based on
the engineering survey, she thought another portion of the roof was replaced in
1998, but had she known that the actual date was 1989, the information would
have made a difference to her.
By March 4, 2004, all the units in the building were sold. Felice and
Robert made approximately $2.4 million by converting the apartment building
to a condominium complex. Some complaining owners purchased units later.
In August 2005, Tobias Roth purchased his unit as a resale from a third-party
and not from the Feldman defendants. He did not hire a home inspector
because he was satisfied with the information contained in the POS and the
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engineering report. He relied on the fact that the exterior of the building had
been repointed within the six months prior to the issuance of the engineering
survey. Moreover, the engineering report and POS caused him to believe that
he would not experience water infiltration from the roof. Roth moved into his
unit in March 2006. In 2006, Stephen Anger purchased his unit as a resale and
did not review the POS prior to purchase.
Shortly after purchasing their units, several owners, including Calamusa,
Levin, Roth, and Anger, experienced minor water infiltration issues and
notified the Feldman defendants. In response to some complaints, Felice,
acting on behalf of Felbee Realty, LLC, placed the owner's name on a list and
contractors performed spot repairs.
After moving in during March 2006, Roth noticed water stains near the
window ledge in the dining room. When Roth alerted Felice to the problem,
she claimed it was due to a problem with the fire escape. However, several
months later, he experienced water infiltration from the same location.
Moreover, the problem worsened because he soon noticed damage on the
dining room ceiling and in the bathroom.
After moving in in 2006, Anger noticed the walls deteriorating and
crumbling around the windows of his unit. Although he complained to Felice,
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she never came to look at the problem or helped. It was not until his tenure on
PACA's Board of Directors (the Board) between 2008 and 2011 that he
realized that other tenants had similar water infiltration issues.
By 2007, Calamusa, Levin, and several other owners of the
condominium units complained to Felice and Robert that they were
experiencing worsening water infiltration in their units. Moreover , owners
who lived in the southwest portion of the building complained of leaks and, as
a result, the southwest portion of the roof was replaced in 2007. After
Calamusa complained again in 2008, Felice changed the repointing company,
but the water infiltration problem worsened.
In June 2009, Calamusa was elected president of the Board and Roth was
elected treasurer. Felbee Realty, LLC was still the property manager. Later in
2009, Calamusa toured the building with the waterproofing contractor, Joe
Gonda, and was shown a one-half inch gap between the parapet wall and the
roof on the northwest quadrant and Gonda reported to Calamusa that the water
infiltration problems at the building were beyond his ability to repair.
Prior to 2010, Felice did not recommend that the Board hire an engineer
to investigate the water infiltration issue. By June 2010, the Board voted to
change the property management company from Felbee Realty, LLC, to Dovan
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Management Company and Felbee Realty, LLC, was officially dismissed as
the property manager. After the change in the property management company,
Anthony Nardone of Dovan Management Company recommended that the
Board hire an engineering firm and general counsel.
Nardone personally observed the conditions in the building and called
them deplorable. He stated that he saw water penetrating numerous walls and
ceilings. He observed missing sheetrock, missing mortar between bricks,
missing bricks, cracked bricks, missing coping from the roof, and poor -quality
repairs, among other issues. Thereafter, the Board retained Morris
Engineering (Morris) to perform a transition study of the building and retained
new legal counsel.
During Morris's evaluation of the units, Nardone obtained water
infiltration readings reflecting excessively wet conditions. Shortly thereafter,
unit owners removed plaster from their walls to discover water infiltrating
their units from the exterior walls and from around the windows. By February
2011, Morris completed the transition report and submitted it to the Board.
II.
On June 6, 2011, PACA filed a thirteen-count complaint alleging
common law fraud, negligent misrepresentation, negligence, breach of
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fiduciary duty, breach of contract, violations of the Consumer Fraud Act
(CFA), N.J.S.A. 56:8-1 to -20, and violations of the Planned Real Estate
Development Full Disclosure Act (PREDFDA), N.J.S.A. 45:22A-21 to -56.
PACA alleged that Felice, Robert, Stephen, Felbee Realty, LP, Tsapatsaris,
and NTA failed to disclose the true condition of the residential condominium
complex and their intention to use the capital reserve to fund various items in
the complex.
On February 4, 2013, PACA filed an amended complaint to add Felbee
Realty, LLC, as a defendant, and alleged breach of contract and that Felbee
Realty, LLC, was negligent in providing and performing property management
services. PACA also sought to add additional claims against Robert and
Stephen because Felbee Realty, LP, was a dissolved partnership.
On September 26, 2013, NTA moved for summary judgment pursuant to
Rule 4:46-2(a) arguing PACA's claims were barred by the statute of limitations
and the statute of repose. On October 10, 2013, the Feldman defendants filed
a cross-motion seeking summary judgment on the basis that the claims against
them were similarly time-barred.
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In November and December 2013, the court heard oral arguments on the
motions and conducted a Lopez2 hearing regarding whether PACA's action was
time-barred. The court, in a January 2014 order, granted NTA's motion for
summary judgment holding that PACA's claims against NTA were time-
barred; but, in a March 2014 order, the court denied the Feldman defendants'
motion concluding that PACA's claims against them were not time-barred.
The first jury trial began on December 1, 2015. At the conclusion of
PACA's case, the Feldman defendants moved under Rule 4:37-2(b), seeking an
involuntary dismissal and arguing, again, that PACA had no right to relief
because the action was time-barred. The court denied the motion, because it
pertained to issues addressed at the time of the Lopez hearing, and thus the
Feldman defendants were required to bring a timely motion for reconsideration
or to file a motion to request more specific findings of fact and conclusions of
law prior to trial. During trial, the court dismissed the Feldman defendants'
counterclaims and granted a motion to dismiss Stephen from the litigation.
On January 25, 2016, the jury rendered its verdict concluding that Felbee
Realty, LP, violated PREDFDA, committed common law fraud, and made
2
Lopez v. Sawyer, 62 N.J. 267, 272-75 (1973) (explaining that a cause of
action will not accrue until an injured party discovers or should have
discovered the basis for an actionable claim).
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negligent misrepresentations, and finding it liable for damages on those
counts. The jury further found that Felbee Realty, LP, had not violated the
CFA and was not liable for the common law fraud claim raised for false
representations of material fact made to the purchasers of the condominium
units.
The jury found neither Felice nor Robert personally liable for Felbee
Realty, LP's, actions. The jury concluded that neither Felbee Realty, LLC, nor
Felice was negligent while acting as the property manager. The jury did find
that Felice and Robert breached their fiduciary duties, but that they were not
the proximate cause of PACA's damages. Finally, the jury concluded that the
NTA defendants' negligence was the proximate cause of PACA's damages, and
that the NTA defendants were liable for eighty percent of PACA's damages.
On February 11, 2016, PACA moved for a new trial pursuant to Rule
4:49-1 and Rule 4:39-2 arguing that the jury's verdict was inconsistent and was
a result of juror confusion. PACA argued that the jury's findings of common
law fraud and negligent misrepresentation, but not a violation of the CFA,
were inconsistent because the CFA violation had fewer elements to satisfy, a
lower burden of proof, and similar elements as the PREDFDA violation. The
court agreed and granted PACA's motion for a new trial, finding juror
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confusion as to the CFA and PREDFDA claims, how the jury calculated
certain damages, and whether the jury understood the ultimate outcome charge.
The second jury trial began on January 11, 2017. At the conclusion of
PACA's case, the Feldman defendants again moved under Rule 4:37-2(b),
asking for an involuntary dismissal of various counts and arguing PACA's
action was time-barred. The court denied the motion, in part, because there
was sufficient evidence for the jury to conclude from the evidence that the
claims of breach of fiduciary duty, common law fraud, and violation of the
CFA were established. However, the court granted the motion, in part, by
dismissing the negligence claims against Felice and Robert as property
managers and Board members, because expert testimony would have been
required to assert those claims. Moreover, the court explained that those
counts also related to Felbee Realty, LLC, and that the entity itself could not
be sued because there were no surviving claims against its members, Felice
and Robert.
On February 10, 2017, the jury rendered its verdict as to Felbee Realty,
LP, Felice, and Robert, which were the only remaining defendants. The
verdict sheet asked the jury to make its liability findings as to each defendant
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as to four different areas of the building: the roof; the exterior (repointing); the
lintels; and the windows.
The jury concluded that Felice and Robert were each liable for the
consumer fraud violation, but only as to the roof and lintels, and the
PREDFDA violation, but only as to the roof and lintels. The jury also found
that Felice engaged in common law fraud about the lintels, but not the roof,
exterior (repointing), and windows. The jury did not find that Robert engaged
in common law fraud. The jury concluded that both Felice and Robert, acting
in bad faith, breached their fiduciary duties by using reserve funds for
maintenance in violation of the by-laws and without Board approval, which
caused damages. As to Felbee Realty, LP, the jury concluded that it engaged
in consumer fraud as to the roof, exterior, and lintels; violated PREDFDA; and
engaged in common law fraud regarding the lintels.
On February 22, 2017, a punitive damages trial was conducted before
the same jury, resulting in a verdict of no cause. The only parties on the
verdict sheet were Felbee Realty, LP, Felice, and Robert. Regarding punitive
damages on the common law fraud claim, the jury concluded that Felbee
Realty, LP's, and Felice's fraudulent acts or omissions regarding the lintels
were not made with actual malice or, alternatively, a wanton or willful
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disregard to PACA's rights. Regarding punitive damages on the breach of
fiduciary duty claim, the jury determined that PACA suffered harm because of
Felice's and Robert's breaches of their fiduciary duties; however, it concluded
that the breaches were not made with actual malice or accompanied with
wanton and willful disregard to PACA's rights.
On May 19, 2017, the court denied PACA's motion for judgment
notwithstanding the verdict pursuant to Rule 4:40-2. On October 23, 2018, the
court: granted PACA's opposed motion for attorneys' fees, costs, and interest;
issued an opinion pertaining to that motion decision; and entered a final
judgment. It entered judgment against Felbee Realty, LP, in the amount of
$1,578,000 plus attorneys' fees and costs in the amount of $1,034,592, plus
pre-judgment interest of $79,962.79 for a total judgment of $2,692,554.47. It
entered judgment against Felice and Robert, jointly and severally, in the
amount of $403,000 plus attorneys' fees and costs of $1,034,592, plus pre -
judgment interest of $35,425.86 for a total judgment of $1,473,017.80.
The Feldman defendants' appeal followed, arguing the claims should
have been dismissed due to the statute of limitations. In a cross-appeal, PACA
contends that the court erred when it denied its motion for judgment
notwithstanding the verdict (JNOV) after the second trial.
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III.
The Feldman defendants contend that the court erred when it failed to
dismiss PACA's claims of common law fraud, common law negligent
misrepresentation, and violation of the CFA due to the expiration of the statute
of limitations for each claim. We disagree. We review this question under a
de novo standard because determining whether a claim is time-barred is a
question of law. Catena v. Raytheon Co., 447 N.J. Super. 43, 52 (App. Div.
2016).
PACA filed its complaint on June 11, 2011. At the Lopez hearing in
2014, the court considered whether PACA knew that the Feldman defendants
made material misrepresentations or omissions in the POS for at least six years
prior to the filing of PACA's fraud claims. During the hearing, PACA
presented testimony from six of the unit owners, describing how the Feldman
defendants addressed or ignored initial and ongoing complaints about the
conditions. The court ultimately held that PACA proved problems with the
structure of which it was not made aware until after the statutory time frame;
thus, the cause of action could proceed. The court rendered a brief oral
decision after the Lopez hearing but did not issue a full written decision.
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Based on our review of the findings, we discern no error in the court's
conclusion that PACA's action could proceed against Felice and Robert.
A statute of limitations clock begins running when an action accrues ,
Palisades Fort Lee Condo. Ass'n v. 100 Old Palisades, LLC, 230 N.J. 427, 442
(2017), and action accrues on the date of "discovery" when "the facts
presented would alert a reasonable person, exercising ordinary diligence that
he or she was injured due to the fault of another," Caravaggio v. D'Agostini,
166 N.J. 237, 246 (2001). Thus, the date of "discovery" is when a plaintiff
learns or should learn about the existence of facts that create a cause of action,
Burd v. N.J. Tel. Co., 76 N.J. 284, 291 (1978), so the "[t]he standard is
basically . . . objective," Caravaggio, 166 N.J. at 246.
There is a six-year statute of limitations for common law fraud,
negligent misrepresentation related to property, and a violation of the CFA.
N.J.S.A. 2A:14-1; see Catena, 447 N.J. Super. at 52. Under the discovery rule
in cases involving fraud or deceit, the statute of limitations does not commence
"until the fraud was discovered, or through reasonable diligence should have
been discovered." Catena, 447 N.J. Super. at 53-54. This prevents a
wrongdoer from benefiting from his or her victim's lack of awareness of the
fraud. Id. at 52. In essence, the discovery rule is a rule of equity, id. at 53,
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that courts apply to avoid a "mechanical application of a statute of limitations"
with the discovery rule. Vispisiano v. Ashland Chem. Co., 107 N.J. 416, 426
(1987),
Here, the record provided ample support for the court to conclude that
PACA's fraud claims did not accrue until 2011 when Morris's transition report
was issued, which showed PACA suffered an ascertainable loss. Specifically,
the court heard testimony from unit owners and Board members that
demonstrated that PACA was not aware of the ascertainable loss until the
transition report revealed the nature, extent, and scope of the water infiltration
problem.
During her time on the Board, serving as its president from 2003 to June
2009, Felice did not disclose that unit owners had been complaining about
water infiltration. Calamusa said Felice did not disclose the June 2005
waterproofing repairs to the Board until September 2005. Felice did not make
any further disclosures in the November 2005 meeting among unit owners.
From Calamusa's initial perspective, the repairs only seemed to be
maintenance-related and were not evidence of a systemic problem. As to
repairs, Felice was the contact person who interfaced with contractors and
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other vendors. Felice did not provide estimates or invoices to the Board for
repair work conducted on the building.
Critically, it was not until Felice left the Board entirely in 2010 that the
Board was informed that an engineer was needed to evaluate the building. In
fact, Morris's 2011 transition report was the Board's first notification that the
building suffered from significant water infiltration and that the information
presented in the POS and the accompanying engineering survey was
inaccurate.
The court accepted as credible the unit owners' testimony that they did
not know about other owners' water infiltration problems and that Felice and
Robert downplayed the problems by providing assurances that any water
infiltration issues had been remedied. The court found that Felice, who
controlled the checkbook and financial records as PACA's president, admitted
that she had not provided written documentation of waterproofing repairs or
financial records. The court, after the Lopez hearing, held that PACA proved
problems with the structure of which it was not made aware until after the
statutory time frame, so the cause of action could proceed.
The court's finding was proper because this evidence sufficiently showed
that the Feldman defendants prevented PACA from discovering the severe and
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pervasive nature of the water infiltration. See Catena, 447 N.J. Super. at 54
(stating that defendant should not benefit from using his or her fraudulent
conduct to delay plaintiff in timely prosecuting claims). As a result, the record
supported the court's conclusion that the statute of limitations clock did not
begin to run, at the earliest, until 2011 when PACA was first made aware that
it suffered an ascertainable loss.
IV.
The Feldman defendants contend that the court erred in declining to
dismiss PACA's PREDFDA claims because a statute of repose applied. We
disagree because PREDFDA was equitably tolled. Thus, the PREDFDA
claims were not time-barred.
During the Lopez hearing, the court considered whether the Feldman
defendants prevented PACA from discovering the basis for its claims or
induced PACA to let the PREDFDA time limitation expire. We review this
question under a de novo standard because determining whether a claim is
time-barred is a question of law. Catena, 447 N.J. Super. at 52.
The relevant section of the PREDFDA, N.J.S.A. 45:22A-37, pertains to
untruths, omissions or misleading statements by a developer; liability; persons
liable; and the invalidity of an agreement by a purchaser. N.J.S.A. 45:22A-
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37(d) provides that "[a] person may not recover under this section in actions
commenced more than [six] years after his first payment of money to the
developer in the contested transaction." The statute itself does not define this
timeframe as either a statute of limitations or a statute of repose.
We do not rule on whether N.J.S.A. 45:22A-37(d) is a statute of repose
or a statute of limitations because it is unnecessary to do so here. We note
courts have analyzed the time limitations contained within the PREDFDA as a
statute of limitations. See, e.g., Nobrega v. Edison Glen Assocs., 167 N.J.
520, 549 (2001); Flinn v. Amboy Nat'l Bank, 436 N.J. Super. 274, 284 (App.
Div. 2014); Enfield v. FWL, Inc., 256 N.J. Super. 502, 523 (Ch. Div. 1991),
aff'd, 256 N.J. Super. 466 (App. Div. 1992). We do, however, provide the
relevant analysis for our finding that PREDFDA was equitably tolled.
The R.A.C. Court explained that a statute of repose is often "equated"
with a statute of limitations, but they are distinct concepts. R.A.C. v. P.J.S.,
Jr., 192 N.J. 81, 100 (2007). A statute of limitations sets forth an end date at
which the pursuit of a claim is foreclosed, whereas a statute of repose provides
a "fixed beginning and end to the time period a party has to file a complaint."
Id. at 96. After the expiration of the statutory time period in a statute of
repose, a cause of action "literally ceases to exist." Ibid. (quoting Cyktor v.
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Aspen Manor Condo. Ass'n, 359 N.J. Super. 459, 473 (App. Div. 2003)). A
period of repose is not related to when the injury occurs or when the cause of
action accrues. Ibid. Instead, when the repose period ends, a defendant is
granted immunity from suit. Id. at 96-97. In general, courts do not expand the
period of repose unless the Legislature intended a tolling period for
extraordinary circumstances. Id. at 97, 101. The Court in Nobrega, observed
that PREDFDA does not include a tolling provision. 167 N.J. at 549.
But, the tolling of a statute of repose or a statute of limitations is
permissible on equitable grounds when the strict application of the statute
would conflict with the legislative purpose of the statute and would inflict
harm on the plaintiffs. Price v. N.J. Mfrs. Ins. Co., 182 N.J. 519, 525 (2005).
Subsequent to our Supreme Court's decision in R.A.C., the Supreme
Court of the United States considered whether Section 13 of the Securities Act
permitted an individual to file a complaint more than three years – with tolling
– after the securities offering, in Cal. Pub. Emps.' Ret. Sys. v. ANZ Sec., Inc.,
___ U.S. ___, 137 S. Ct. 2042, 2048 (2017). The comparison is illuminative.
The Securities Act of 1933 § 13, 15 U.S.C. § 77m, in pertinent part,
provides that "[i]n no event shall any such action be brought to enforce a
liability created under section 77k [11] or section 77l(a)(1) [12(a)(1)] more
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than three years after the security was bona fide offered to the public, or under
section 77l(a)(2) [12(a)(2)] more than three years after the sale." The Court
considered how the provision "in no event" does not provide exceptions to the
time bar, Cal. Pub. Emps.' Ret. Sys., 137 S. Ct. at 2049, and how legislative
history showed that Congress amended the Securities Act to shorten the time
during which defendants could be held liable after defendants' last culpable
act, id. at 2050. Thus, the Court concluded the provision was a statute of
repose and that the three-year time bar reflected the legislative objective to
give a defendant a complete defense to any suit after a certain period. Id. at
2049.
On tolling, the Court stated that "[t]olling is permissible only where
there is a particular indication that the legislature did not intend the statute to
provide complete repose but instead anticipated the extension of the statutory
period under certain circumstances." Id. at 2050. Where a provision does not
provide an express exception but another provision provides general tolling,
courts must "analyze the nature and relation of the legislative purpose of each
provision" to determine whether tolling applies to a particular provision. See
id.
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25
Returning to PREDFDA, N.J.S.A. 45:22A-37(d), in pertinent part,
provides: "A person may not recover under this section in actions commenced
more than [six] years after his first payment of money to the developer in the
contested transaction." PREDFDA, unlike § 13, does not contain an express
constraint like "in no event." 3 Thus, we look to the statute's legislative history
to determine whether the legislature "anticipated the extension of the statutory
period under certain circumstances" through tolling. Cal. Pub. Emps.' Ret.
Sys., ___ U.S. ___, 137 S. Ct. at 2050.
We have said the legislative intent of the PREDFDA is to ensure
"honesty, public understanding and trust in the sale of complex interest s."
Tung v. Briant Park Homes, Inc., 287 N.J. Super. 232, 237 (App. Div. 1996);
see also Cybul v. Atrium Palace Syndicate, 272 N.J. Super. 330, 335 (App.
Div. 1994) (stating that intent of PREDFDA was to provide consumers with
remedies and not curtail opportunities to redress fraud). Additionally,
PREDFDA is consumer-oriented and remedial in nature. Tung, 287 N.J.
3
PREDFDA also does not share the same language as other New Jersey
statutes that we have said are clearly statutes of repose, such as N.J.S.A. 25:2- -
31, for extinguishment of a claim for relief under the Uniform Voidable
Transactions Act, and N.J.S.A. 2A:14.1-1, for protecting designers and
builders.
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26 Super. at 238. Thus, PREDFDA should be read expansively and liberally in
favor of protecting consumers, rather than read narrowly. Ibid.
Further, equitable tolling is permitted when a plaintiff was induced or
tricked into missing a filing deadline. Price, 182 N.J. at 525-27. We have
cautioned against allowing a defendant to use a statute of limitations or repose
"as a sword rather than a shield" to prevent a plaintiff from filing despite the
defendant's poor conduct. Dunn v. Borough of Mountainside, 301 N.J. Super.
262, 280 (App. Div. 1997).
We agree with the trial court's finding that there was substantial
evidence in the record for the court to conclude that the Feldman defendants
used their positions as Board members to induce the unit owners into believing
that there were no serious issues with significant water infiltration. Moreover,
the record supports the court's conclusion that the Feldman defendants
prevented PACA from obtaining information that would lead it to conclude
that it needed to file the PREDFDA claim within the limitation period.
Specifically, Felice and Robert controlled the information pertaining to repairs,
water infiltration, and the budget, which prevented the unit owners f rom
realizing the scope of the water infiltration problem. For those reasons, we
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27
discern no error in the trial court's conclusion PACA was not time-barred from
bringing its PREDFDA claim.
V.
The Feldman defendants argue as plain error that the court erred in
granting PACA's motion for a new trial on all issues at the conclusion of the
first trial. They contend that the court erred in failing to identify the discrete
issues affected by the tainted verdict, that there was only support for the grant
of a partial new trial, and that the court should have upheld the portion of the
verdict that exonerated them from personal liability. We reject these
arguments.
During deliberations in the first trial, the court received questions from
the jury that were unrelated to the law as instructed. One question pertained to
the weight of the claims against the Feldman defendants. Another question
pertained to compounding damages under "each of the law[s]" such as the
CFA, PREDFDA, and common law fraud. The court explained to the jury that
it does not compound the damages and re-read its instructions, which included
an ultimate outcome charge that informed the jury that certain damage awards
may be doubled or tripled depending on the applicable statute.
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28
Ultimately, the jury concluded that PACA proved by clear and
convincing evidence that Felbee Realty, LP, but not Felice nor Robert,
engaged in common law fraud by intentionally and knowingly failing to
disclose material facts it was obligated to disclose to purchasers. It awarded
$70,000 in damages to PACA. The jury also found that PACA proved by a
preponderance of the evidence that Felbee Realty, LP, violated the PREDFDA
by making an untrue statement of material fact, an omission of a material fact,
or a misleading statement of material fact in the POS or application to convert
the building to a condominium. It awarded $116,000 in damages to PACA.
Further, the jury found that PACA had proven by a preponderance of the
evidence that Felbee Realty, LP, negligently made a false misrepresentation of
material fact to unit purchasers. It awarded $70,000 in damages to PACA.
However, the jury concluded that PACA had not proven by a preponderance of
the evidence that Felbee Realty, LP, violated the CFA by intentionally
omitting, knowingly concealing, or suppressing any material fact in connection
with the sale of the units. After the verdict was returned, the court questioned
the jury and concluded that the jury did not understand the interplay of the
damage awards.
A-1377-18
29
The court heard argument on PACA's motion for a new trial on April 22,
2016, and determined that a verdict was likely the product of jury mistake or
confusion and could not stand, specifically, the jury's conclusion that Felbee
Realty, LP, committed common law fraud because the unit owners relied on
false statements and awarded $70,000, yet that neither Felice nor Robert
committed common law fraud. Moreover, the jury determined that there was
no CFA violation by Felbee Realty, LP, despite the standard to prove fraud is
by clear and convincing evidence whereas the standard under the CFA is by a
preponderance of the evidence, which is lower.
As to PREDFDA, the jury found Felbee Realty, LP, made an untrue
statement of material fact, omitted a material fact, or made a misleading
statement of material fact in a POS or application to register a condominium
conversion. The jury determined that the safe harbor provision 4 did not apply,
but still concluded that neither Felice nor Robert had personal liability under
PREDFDA. Moreover, the verdict sheet's description of personal liability
under the PREDFDA was inconsistent with the language of the statute.
4
PREDFDA contains a "safe harbor" provision, N.J.S.A. 45:22A-37(a), which
prevents liability if a principal did not know and in the exercise of reasonable
care could not have known about any untruth, omission, or misleading
statement.
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30
There was confusion over the award of $70,000 and what the jury
intended with respect to that award. The jury foreman stated that the $70,000
was not included in the $116,000, but also stated that the awards were not
compounded. Finally, the court's attempts to have the parties agree to mold
the verdict failed.
Pursuant to Rule 4:49-1(a), a new trial may be granted "to all or any of
the parties and as to all or part of the issues" on the filing of a motion to the
trial court. Moreover, the trial judge "shall grant the motion if, having given
due regard to the opportunity of the jury to pass upon the credibility of the
witnesses, it clearly and convincingly appears that there was a miscarriage of
justice on the law." R. 4:49-1(a). If an error is confined to certain issues, then
a court should grant a partial new trial; if the error tainted the entire verdict,
then a court should order a new trial on all the issues. See Negron v.
Melchiorre, Inc., 389 N.J. Super. 70, 84-85 (App. Div. 2006); see also Bell
Atl. Network Servs., Inc. v. P.M. Video Corp., 322 N.J. Super. 74, 111 (App.
Div. 1999) (stating that a new trial on damages can be ordered if the issue is
"distinct and separable from the issue of liability") (quoting Juliano v. Abeles,
114 N.J.L. 510, 512 (1935)).
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31
The standard governing our review of a trial court's decision on a motion
for a new trial is "essentially" the same as that of the trial judge. Dolson v.
Anastasia, 55 N.J. 2, 7 (1969). The standard of review for a motion for a new
trial is whether there was a miscarriage of justice under the law. Id. at 6-8.
We agree with the trial court that the verdict was inconsistent.
Furthermore, pursuant to Rule 4:39-2, when the answers to the jury's
interrogatories are "inconsistent with each other and one or more is
inconsistent with the general verdict, the court shall not direct the entry of
judgment but may return the jury for further consideration of its answers and
verdict or may order a new trial." Thus, when the jury's answers to the jury
interrogatories are inconsistent, the trial court has two options. Neither the
trial court nor reviewing court can mold the verdict to the court's perception of
what the jury intended, so the court is generally bound to the decision in
determining a need for a new trial, especially once the jury is discharged. See
Kassick v. Milwaukee Elec. Tool Corp., 120 N.J. 130, 135 (1990); see also
Love v. Nat'l R.R. Passenger Corp., 366 N.J. Super. 525, 533 (App. Div.
2004).
Here, the court tried, but failed to have the parties agree to mold the
verdict. The jury had been dismissed without the court reconciling the
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32
inconsistencies in the verdict. As a result, the court's only option was to order
a new trial.
VI.
The Feldman defendants assert that the court erred when it determined
the quantum of attorneys' fees awarded to PACA after the second trial.
Specifically, they contend that PACA only had limited success throughout the
litigation, which should have resulted in a lower award of attorneys' fees. We
reject their argument.
After the second trial, the jury determined that Felbee Realty, LP, was
liable for violations of the CFA and PREDFDA; awarded $56,000 in damages
for the roof, $425,000 for the exterior (repointing), and $45,000 for the lintels
for the CFA claim; and awarded the same amounts for the PREDFDA claim.
Felice and Robert were found personally liable for CFA violations as to the
roof in the amount of $56,000 and lintels in the amount of $45,000 and for
PREDFDA violations as to the roof and lintels, with the same damages.
As to the common law fraud claims, the jury determined that Felbee
Realty, LP, and Felice were liable only with respect to the lintels, each causing
$45,000 of damages. The jury concluded that Felice and Robert were liable
for $100,000 in damages for their breaches of fiduciary duties by willfully
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33
using reserve funds for maintenance in violation of the by-laws; the jury
found, however, that they did not willfully recommend and implement
historically inadequate repairs. In a separate punitive damages trial, the jury
would not award punitive damages for common law fraud and breach of
fiduciary duty because the jury found no actual malice or willful and wanton
disregard for PACA's rights.
Thus, the total damage award from the second trial against Felbee
Realty, LP was $526,000, which was trebled to $1,578,000. The total damage
award against Felice and Robert was $101,000, which was trebled to $303,000,
plus the $100,000 for the breach of fiduciary duty claim, for a total of
$403,000. On October 23, 2018, the court issued a written opinion regarding
PACA's fee application and identifying these amounts. The court noted that
PREDFDA and CFA violations both provide for the award of attorneys' fees,
so the court considered the application.
When evaluating the fee application, the court considered the
qualifications of PACA's attorneys and their billing rates, along with the
qualifications and rates of one paralegal and concluded that the rates charged
were reasonable hourly rates. As to the reasonableness of the hours expended,
the court reduced the hourly rate of Richard Hertzberg from $415 an hour to
A-1377-18
34
$300 an hour because he was one of two experienced trial attorneys that served
as co-counsel for PACA. As a result, the court reduced the requested fees by
$46,839.50 and it reduced the attorneys' fees sum by $45,000 because it
determined that the trial preparation by PACA's attorneys was excessive.
The court also determined that PACA was entitled to legal fees in
connection with the first trial because the problems caused at the conclusion of
the first trial were due to an irreconcilably inconsistent jury verdict.
As to the second trial, the court explained that it could not conclude if
PACA's success was limited or partial because there need not be
proportionality between the damages recovered and the attorney fee award.
The verdict against Felbee Realty, LP exceeded $1.5 million and the verdict
against Felice and Robert totaled $403,000. The court further held that the
apportionment of attorneys' fees under the CFA was not permissible and that
the provision of fees was mandatory.
Next, the court considered whether fees should be apportioned between
claims where fee shifting was permitted, such as the CFA violation, versus
claims where fee shifting was not permitted, such as fraud and breach of
fiduciary duties. It explained that when claims involve common core facts and
are based on related legal theories, the claims cannot be viewed as discrete
A-1377-18
35
claims. The court noted, however, that the breach of fiduciary duty claims
were entirely different and distinct from the CFA and PREDFDA claims, so
there were no common core facts. Thus, the court could not shift fees.
As a result, the court concluded that there would be an equitable
allocation of the legal fees: 80% to the CFA and PREDFDA claims; and 20%
to the non-fee shifting claims for fraud and breach of fiduciary duties. The
court further determined that a contingent fee enhancement limited to 5% was
appropriate, rejecting PACA's request of 20%. The court also reduced the fees
sought by PACA with respect to preparing the fee application from $55,637 to
$35,000 but awarded the full amount of costs. Thus, the total amount of fees
awarded was $998,864.72 plus costs of $35,727.31, which totaled $1,034,592 .5
The court may exercise its discretion to award attorneys' fees when such
fees are authorized by statute. Rendine v. Pantzer, 141 N.J. 292, 322 (1995).
A reviewing court applies an abuse of discretion standard to a trial court's
decision to award attorneys' fees. Diamond Beach, LLC v. March Assocs.,
5
The total fee award was $1,239,297.50 less $46,839.50 (reduction in
Hertzberg's time) less $45,000 (excessive trial preparation), for a total of
$1,147,458. $1,147,458 was then multiplied by 80%, the amount allocated for
the fee shifting claims, to reach $917,966.40. $917,966.40 was then multiplied
by 1.05% for the fee enhancement for a total of $963,864.72. Next, the court
added $35,000 for the allowed fees for the preparation of the fee application
and added $35,727.31 for allowed costs. The resulting total was $1,034,592.
A-1377-18
36
Inc., 457 N.J. Super. 265, 285 (App. Div. 2018); Masone v. Levine, 382 N.J.
Super. 181, 193 (App. Div. 2005) (explaining that abuse of discretion occurs
when a decision "based upon consideration of irrelevant or inappropriate
factors or amounts to a clear error of judgment").
While the amount of damages that a plaintiff recovers is relevant to the
amount of attorneys' fees to be awarded, there is no requirement that these
amounts be equal or that the award of attorneys' fees be less than the damage
award. Chattin v. Cape May Greene, Inc., 243 N.J. Super. 590, 616 (App. Div.
1990). Here, the court carefully distinguished between the successful claims
and whether they were fee shifting or non-fee shifting. The court correctly
recognized that there was no requirement that the amount that PACA
recovered needed to be equal or that the attorneys' fees needed to be less than
the damage award.
Next, the court must determine whether the "lodestar amount" of
attorneys' fees awarded were reasonable under R.P.C. 1.5(a), which states that
the court may consider:
(1) the time and labor required, the novelty and
difficulty of the questions involved, and the skill
requisite to perform the legal service properly;
A-1377-18
37
(2) the likelihood, if apparent to the client, that the
acceptance of the particular employment will preclude
other employment by the lawyer;
(3) the fee customarily charged in the locality for
similar legal services;
(4) the amount involved and the results obtained;
(5) the time limitations imposed by the client or by the
circumstances;
(6) the nature and length of the professional
relationship with the client;
(7) the experience, reputation, and ability of the
lawyer or lawyers performing the services; [and]
(8) whether the fee is fixed or contingent.
[Furst v. Einstein Moomjy, Inc., 182 N.J. 1, 22
(2004).]
Here, the lodestar amount was reasonable because an application of
R.P.C. 1.5(a) does not suggest any further reductions. Further, the matter was
complex in terms of the engineering elements, the need for discovery, the
extensive motion practice, the Lopez hearing, and two trials with multiple
witnesses. Additionally, post-verdict motions followed both trials.
In sum, the court did not abuse its discretion when it awarded attorneys'
fees to PACA. Rather, the court grounded its conclusions in a proper analysis
of the facts as applied to the relevant case law.
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38
VII.
In its cross-appeal, PACA contends that the court erred in denying
PACA's motion for a judgment notwithstanding the verdict pursuant to Rule
4:40-2. Specifically, PACA alleges that the jury's conclusion that the
individual defendants were not liable for the exterior misrepresentation was
against the weight of the evidence. PACA argues that the motion should be
granted and the verdict molded to impose personal liability against Felice and
Robert for the CFA and PREDFDA violations concerning the repointing.
Finally, PACA complains that the trial court did not identify how the record
supported the exoneration of Felice and Robert as to repointing. On appeal,
PACA does not seek a new trial, but rather asks that we impose joint and
several liability against Felice and Robert's estate in the amount of $425,000,
which represents the damages imposed upon Felbee Realty, LP, for the
repointing of the exterior.
We reject PACA's arguments. A reasonable jury could have concluded
that neither Felice nor Robert was personally liable for the CFA and
PREDFDA claims related to the exterior.
The purpose of Rule 4:40-2 is to allow the court to correct "clear error or
mistake" by the jury. Dolson, 55 N.J. at 6. The court should not substitute its
A-1377-18
39
own judgment for that of the jury just because it would have reached a
different conclusion. Ibid. Importantly, the jury's verdict is entitled to great
deference. Est. of Roach v. TRW, Inc., 164 N.J. 598, 612 (2000). The jury's
verdict will only be disturbed when the court concludes that a reasonable jury
could not have reached such a verdict. Ibid.
As a threshold matter, PACA's argument fails that the court did not
identify how the record supported the exoneration of the individual defendants
as to exterior. The record reflects that the court considered PACA's arguments
as to both the CFA and the PREDFDA. It analyzed the evidence and examined
the jury sheet in each instance as it related to both Felice and Robert. It
discussed how the evidence presented could have reasonably led to the jury's
ultimate conclusions. We discern no error in the court's conclusions.
In sum, the court did not err when it denied PACA's motion for
judgment notwithstanding the verdict. The record reflects that reasonable
minds could differ as to the inferences and deductions based on the evidence.
Affirmed.
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40
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