JED GOLDFARB VS. DAVID SOLIMINE (L-3236-14, ESSEX COUNTY AND STATEWIDE) ( 2019 )

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-3740-16T2
JED GOLDFARB,
Plaintiff-Appellant/ APPROVED FOR PUBLICATION
AS REDACTED
Cross-Respondent, June 26, 2019
APPELLATE DIVISION
v.
DAVID SOLIMINE,
Defendant-Respondent/
Cross-Appellant.
___________________________
Argued December 5, 2018 – Decided June 26, 2019
Before Judges Koblitz, Ostrer and Mayer.
On appeal from the Superior Court of New Jersey,
Law Division, Essex County, Docket No. L-3236-14.
Andrew M. Moskowitz argued the cause for
appellant/cross-respondent (Javerbaum Wurgaft Hicks
Kahn Wikstrom & Sinins, PC, attorneys; Andrew M.
Moskowitz, of counsel and on the briefs).
Carmine A. Iannaccone argued the cause for
respondent/cross-appellant (Epstein Becker & Green,
PC, attorneys; Carmine A. Iannaccone, of counsel and
on the brief; Michael D. Thompson, on the brief).
The opinion of the court was delivered by
OSTRER, J.A.D.
This appeal arises out of defendant's broken promise to hire plaintiff to
manage a portion of defendant's assets and those of his brother and father.
Defendant and plaintiff agreed that plaintiff would receive a salary plus a
percentage of investment gains. In reliance on that promise, but before
receiving a confirming writing, plaintiff quit his job with an investment firm.
Then, defendant reneged. After several months, plaintiff found another job.
For the first year at his new employment, he earned less than the $250,000
annual base salary at the promised job, and he continued to earn less than the
$400,000 average yearly compensation he alleged he earned at his prior job.
Proceeding solely on a theory of promissory estoppel, plaintiff sought
reliance damages consisting of the difference between what he would have
earned had he not quit his job, and what he ultimately earned after securing
substitute employment. He appeals from the judgment, after a jury trial, of
$237,000 minus applicable taxes. Plaintiff contends the trial court (1)
improperly barred his damages expert, who opined on what plaintiff would
have earned had he not quit his job; and (2) erred in limiting his damages to
the difference between the promised $250,000 base salary and his actual
earnings for seventeen months (after which they exceeded $250,000).
Defendant cross-appeals, contending that plaintiff's claim was legally
and equitably barred by regulations under the New Jersey Securities Law that
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require a written contract to provide services as an investment adviser;
Financial Industry Regulatory Authority (FINRA) rules limiting registered
persons from providing services outside their current employment with a
member firm; and the unclean hands doctrine.
Before reaching these issues, we address plaintiff's argument that the
trial judge should have recused herself upon plaintiff's pre-trial motion.
Plaintiff moved for the judge's recusal after learning that a defense attorney, in
an ex parte communication, sought the judge's assignment to the case, and the
judge responded by specifically requesting the assignment from the presiding
judge. We conclude this "judge-shopping" created an appearance of
impropriety. On that basis, we vacate the trial judge's challenged rulings, but
affirm the jury finding of liability. We decide de novo or as a matter of
original jurisdiction that plaintiff was entitled to present evidence of his
reliance damages; his expert should have been permitted to testify; and his
claims were not barred by law or equity. We remand for a new trial on
damages before a different judge. We turn first to the recusal motion.
I.
A.
The judge disclosed the ex parte communication in chambers, and
confirmed it on the record. In summary, one of the judge's former law clerks,
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who was an associate at the defense firm, contacted the judge by text to inquire
if she was available to preside over the trial. The judge apparently had no
prior connection to the case, which involved significant pre-trial motion
practice. The former clerk identified the senior attorney at her firm who would
try the case. The judge understood that the attorney liked to appear before her.
The judge then spoke to the presiding judge and, relying on her seniority,
secured assignment of the case.1
When plaintiff's counsel learned that the judge's assignment of the case
resulted from an ex parte contact with defense counsel, he sought the judge's
recusal. At the outset of the colloquy, the judge reproached plaintiff's counsel
for relying on statements made in chambers:
[PLAINTIFF'S COUNSEL]: Judge, you stated in
chambers that you had received a text message from
[defense counsel's] firm?
THE COURT: No . . . I did not say that. Let me be
very clear about what I said, and let us be very clear
about the following; neither one of you will be in my
chambers for the rest of this trial. I am appalled that
what had been the bedrock of practice, that what a
judge tells you in chambers stays in chambers seems
no longer to be the rule. So let me be very clear about
what I said and I didn't say.
1
Both the trial judge and presiding judge are now retired. There is no
indication in the record that the presiding judge knew that a former clerk's ex
parte communication prompted the judge's request.
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4
The judge then summarized what she had disclosed in chambers about
the assignment request:
[Defense counsel's] firm had hired a prior law clerk of
mine . . . I think that was five years ago . . . I told
both counsel that [she] had texted me this morning
saying that [defense counsel] was waiting around for a
judge and I said well I'll be in and I'd love to take the
case.
In the course of the on-the-record colloquy, the judge later added that she
requested the assignment from the presiding judge:
I'll go further. I stopped in this morning and said,
"You got a case around here, because I'm a senior
Judge, I don't like doing car accident cases." So in
some ways I get my pick. . . . Because that's what 25
years on the bench will get you.
Once informed of the trial attorney's name, the judge said she understood he
preferred to try the case before her. "I got a text from a former law clerk that
said [defense counsel] has a case, are you there? Yeah, he likes appearing
before me."
Plaintiff's counsel argued that the ex parte contact amounted to "judge
shopping, because they like you and they want you to hear the case."
The judge rejected the argument, stating that it was common practice for
attorneys to inquire about a judge's availability to take their case.
Counsel . . . do you have any idea how many lawyers
stop in my chambers on a weekly basis and say, Judge
where you at, are you open? No, not today. Well
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when will you be open? Probably by Wednesday if
you can get [the presiding judge] to wait that long.
The judge added that her former law clerks "do it all the time . . . hey Judge,
the partner's coming, are you open? Yeah, I'm open." The judge concluded,
"There is nothing untoward about a judge telling a lawyer, I'm going to be
open . . . bring your case my way." The judge stated that she believed
attorneys sought her assignment because of her experience and her reputation,
and she challenged plaintiff's counsel to cite instances of bias or favoritism.
At trial, plaintiff contended that defendant promised him a base salary of
$250,000 to $275,000, plus a fifteen- to twenty-percent share of gains
generated on a portfolio of $75-100 million. Mid-trial, the judge barred
plaintiff's damages expert. The judge also limited plaintiff's form of damages.
As a result, plaintiff was prevented from claiming damages equal to the
difference between what he would have earned had he not quit his job in
reliance on defendant's promise, and his actual earnings after defendant
reneged.2 The court utilized the low end of the base salary for its instruction
on damages.
2
Plaintiff was also barred from any damages related to defendant's investment
gains based on the advice plaintiff gave him before he left his prior employer.
Plaintiff does not contest that ruling. Also, he dismissed his claims for
quantum meruit, based on defendant's subsequent investment gains, and for
breach of contract.
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The jury found that defendant made a sufficiently clear and definite
promise of employment, such that a reasonable person would rely on it;
defendant expected plaintiff to rely on the promise; and plaintiff quit his job in
reliance on the promise of employment. It awarded damages based on the
difference between his actual earnings and the base $250,000 salary defendant
promised.
On appeal, plaintiff contends the court erred in denying his recusal
motion. Plaintiff does not expressly ask us to reverse the judgment on the
basis of this error, but he asks us to consider it in reviewing the court's
challenged rulings on expert testimony and damages. In his reply brief,
plaintiff further contends that the court's actions reflected actual partiality
toward defendant. Defendant responds that the judge did not err in denying
the recusal motion, and that the former law clerk's ex parte contact was a
permissible inquiry about scheduling.
B.
In addressing the recusal issue, we are guided by several fundamental
principles. Generally, recusal motions are "entrusted to the sound discretion of
the judge and are subject to review for abuse of discretion." State v. McCabe,
201 N.J. 34, 45 (2010). However, we review de novo whether the judge
applied the proper legal standard. Ibid.A-3740-16T2
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A judge must act in a way that "promotes public confidence in the
independence, integrity and impartiality of the judiciary, and shall avoid
impropriety and the appearance of impropriety." Code of Judicial Conduct
Rule 2.1; see also In re Reddin, 221 N.J. 221, 227 (2015) (noting "the 'bedrock
principle' that a judge should uphold the integrity and independence of the
Judiciary" (quoting DeNike v. Cupo, 196 N.J. 502, 514 (2008))); In re
Advisory Letter No. 7-11 of Supreme Court Advisory Comm. on Extrajudicial
Activities, 213 N.J. 63, 75 (2013) (stating "[t]he purpose of our judicial
disqualification provisions 'is to maintain public confidence in the integrity of
the judicial process, which in turn depends on a belief in the impersonality of
judicial decision making'" (quoting United States v. Nobel, 696 F.2d 231, 235
(3d Cir. 1982))).
"[A]n appearance of impropriety is created when a reasonable, fully
informed person observing the judge's conduct would have doubts about the
judge's impartiality." Code of Judicial Conduct, cmt. 3 on Rule 2.1 (2016);
DeNike, 196 N.J. at 517 (enunciating the standard). 3 Judges must step aside
from "proceedings in which their impartiality or the appearance of their
3
This standard applies to a judge's judicial conduct. "To assess whether a
judge's personal behavior creates an appearance of impropriety" the standard
is: "Would an individual who observes the judge's personal conduct have a
reasonable basis to doubt the judge's integrity and impartiality?" In re Reddin,
221 N.J. at 233.
A-3740-16T2
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impartiality might reasonably be questioned." Code of Judicial Conduct Rule
3.17(B). A judge must also do so if "there is any other reason which might
preclude a fair and unbiased hearing and judgment, or which might reasonably
lead counsel or the parties to believe so." R. 1:12-1(g).
A movant need not show actual prejudice; "potential bias" will suffice.
State v. Marshall, 148 N.J. 89, 276 (1997) (quoting State v. Flowers, 109 N.J.
Super. 309, 312 (App. Div. 1970)); see also Panitch v. Panitch, 339 N.J. Super.
63, 67 (App. Div. 2001). "In other words, judges must avoid acting in a biased
way or in a manner that may be perceived as partial." DeNike, 196 N.J. at
514.
In particular, a judge may not "initiate or consider ex parte or other
communications concerning a pending or impending proceeding." Code of
Judicial Conduct Rule. 3.8. However, "[i]n general . . . discussions regarding
scheduling . . . are not considered to constitute ex parte communications in
violation of [the] rule." Code of Judicial Conduct, cmt. 4 on Rule 3.8.
Judges may not "err on the side of caution and recuse themselves unless
there is a true basis that requires disqualification." Johnson v. Johnson, 204
N.J. 529, 551 (2010). A judge's duty to sit where appropriate is as strong as
the duty to disqualify oneself where sitting is inappropriate. Ibid.; Hundred E.
Credit Corp. v. Eric Schuster Corp., 212 N.J. Super. 350, 358 (App. Div. 1986)
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("It is not only unnecessary for a judge to withdraw from a case upon a mere
suggestion that he is disqualified: it is improper for him to do so unless the
alleged cause of recusal is known by him to exist or is shown to be true in
fact.").
Judge-shopping – an attorney's attempt to have a particular judge try his
or her case – may undermine public confidence in the impartial administration
of justice. See United States v. Phillips, 59 F. Supp. 2d 1178, 1180 (D. Utah
1999) (stating that a random case assignment system was designed to "prevent
judge shopping by any party, thereby enhancing public confidence in the
assignment process" (quoting United States v. Mavroules, 798 F. Supp. 61, 61
(D. Mass. 1992))). Judge-shopping is problematic for two reasons. First,
"judge-shopping by one party can influence case outcomes in a way that is
unfair to the non-shopping party. Second, judge-shopping creates a perception
of partiality that undermines the legitimacy and credibility of the courts."
Alex Botoman, Note, Divisional Judge-Shopping, 49 Colum. Hum. Rts. L.
Rev. 297, 321 (2018). "[W]hen the public begins to believe that atto rneys
have the power to select judges . . . its belief in the impartiality of the judicial
system is eroded." Theresa Rusnak, Related Case Rules and Judge-Shopping:
A Resolvable Problem? 28 Geo. J. Legal Ethics 913, 913 (2015).
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Our Supreme Court has expressed its disapproval of defendants'
manipulation of the system to secure the removal of a judge they dislike. See,
e.g., State v. Dalal, 221 N.J. 601, 607-08 (2015). It is just as damaging to the
integrity of the judicial process when parties secure, without the opposition's
knowledge or consent, the assignment of a judge they prefer. When the judge
affirmatively facilitates his or her selection by that one party, public
confidence and the appearance of impartiality are further undermined.
C.
Applying these principles, we are persuaded that the trial judge abused
her discretion in denying the recusal motion. Contrary to Code of Judicial
Conduct Rule 3.8, the judge here considered and responded to an inappropriate
ex parte communication from her former law clerk. The contact was not about
scheduling, such as when the trial would occur. It was about judicial
assignment – that is, who would preside.
The prohibition of ex parte communications by attorneys does not bar
"routine and customary" scheduling communications, but it "does apply to
communications for the purpose of having a matter assigned to a particular
court or judge." Restatement (Third) of the Law Governing Lawyers § 113
cmt. c (Am. Law Inst. 2000). The reason is apparent. "The prohibition applies
to communications about the merits of the cause and to communications about
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a procedural matter the resolution of which will provide the party making the
communication substantial tactical or strategic advantage." Ibid. As set forth
above, judge-shopping communications, by securing a desired assignment, can
affect the court's decisions and undermine public confidence in its impartiality.
Just as lawyers are prohibited from making such ex parte communications,
judges may not consider them. 4
In this case, the judge's consideration of the ex parte communication,
and her active participation in ensuring the case was assigned to her,
compounded the usual concerns of judge-shopping and tainted the proceedings
with the appearance of partiality. The source and manner of the ex parte
communication – a text message from a former law clerk to the judge's cell
phone – exacerbated the improper appearance that one party had exploited a
prior relationship with the judge. A reasonable person, informed of these
facts, would have doubts about the judge's impartiality. Therefore, it is
4
We add that even in the case of scheduling matters, a court should not
consider an ex parte communication if a party would gain an unfair advantage
as a result; and if it does consider such a communication, the other parties
should have an opportunity to respond. See Model Code of Judicial Conduct
Rule 2.9(A)(1) (Am. Bar Ass'n 2011) (stating that a court may consider an ex
parte non-substantive scheduling communication only if "the judge reasonably
believes that no party will gain a procedural, substantive, or tactical advantage
as a result . . . and . . . makes provision promptly to notify all other parties o f
the substance of the ex parte communication, and gives the parties an
opportunity to respond").
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unnecessary to reach plaintiff's argument that the judge in fact favored
defendant in the course of her rulings and conduct of the case.
The record does not disclose whether, as the trial judge contends, it is
common in her vicinage for attorneys to inquire directly of judges about their
availability. We withhold comment on such a practice, noting there is a
significant difference between ascertaining whether a judge will be available
and inquiring whether the judge would agree to preside over a particular case.
See Restatement § 113 cmt. c. Exacerbating the situation here, the judge
affirmatively responded to such an ex parte communication and secured the
case assignment.
In sum, having created an appearance of impropriety and partiality
through her response to an inappropriate ex parte communication, the judge
was obliged to step aside. Code of Judicial Conduct Rule 3.17(B); R. 1:12-
1(g). We turn next to the question of remedy.
D.
When a trial judge's actual or apparent impartiality "might reasonably be
questioned," Code of Judicial Conduct Rule 3.17(B), and the trial judge fails to
step aside, the reviewing court must fashion a remedy "to restore public
confidence in the integrity and impartiality of the proceedings, to resolve the
dispute in particular, and to promote generally the administration of justice."
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DeNike, 196 N.J. at 519. The appropriate relief depends on the facts and
circumstances.5
In DeNike, the trial judge commenced negotiations about post-retirement
employment with the plaintiff's law firm after the judge rendered a bench-trial
verdict, but while substantive issues regarding the form of the judgment
remained pending. The Supreme Court held that "a knowledgeable, objective
observer" could reasonably conclude that the negotiations "infected all that
occurred beforehand." Therefore, the Court held that the appearance of
impropriety required vacating the judgment and ordering a new trial before a
new judge. Id. at 518-19.
In Chandok v. Chandok, 406 N.J. Super. 595, 606-07 (App. Div. 2009),
we required retrial of a matrimonial case where, two months before trial,
defendant retained the judge's former law partner, with whom the judge had an
earlier acrimonious relationship. We considered, but found inadequate, the
option of remanding to a new judge to decide the divorce case based on the
5
We are also informed by the United States Supreme Court's holding that, in
determining whether to vacate a judgment for a trial judge's failure to recuse in
a "proceeding in which [the judge's] impartiality might reasonably be
questioned" under 28 U.S.C. § 455(a), the court should consider "the risk of
injustice to the parties in the particular case, the risk that the denial of relief
will produce injustice in other cases, and the risk of undermining the public's
confidence in the judicial process." Liljeberg v. Health Servs. Acquisition
Corp., 486 U.S. 847, 863 (1988).
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record and to reconsider the rulings that the first judge had issued after his
former partner entered the case. We noted that a judge confined to reviewing
the cold record would be unable to make credibility determinations essential to
resolving the case. Id. at 607. For the same reason, we declined to exercise
original jurisdiction and decide the case ourselves. Ibid.
However, a new trial is not invariably required to achieve the goals
identified in DeNike. Unlike the defendant in DeNike, plaintiff here does not
demand a complete retrial. Rather, he asks us to consider the trial judge's
failure to recuse herself in the course of resolving the other issues on appeal.
To promote economy in the administration of justice, we should endeavor to
avoid a retrial that would further burden the party most aggrieved by the trial
judge's refusal to step aside. A more surgically crafted form of relief may
restore public confidence in the integrity of judicial proceedings while fairly
and efficiently resolving the particular dispute.
We note that federal courts have held that a retrial is unnecessary where
the appellate court's de novo review would suffice to cure any taint at the trial
level. For example, in In re Continental Airlines, 981 F.2d 1450, 1463 (5th
Cir. 1993), the Court of Appeals held that the trial judge's failure to recuse did
not necessitate a remand on a motion for summary judgment because appellate
review of the decision was de novo. "[N]othing would be gained by vacating
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and remanding . . . when [the appellate court] . . . utilized the same criteria as
the courts below in ruling on the summary judgment issue." Ibid.; see also In
re Sch. Asbestos Litig., 977 F.2d 764, 787 (3d Cir. 1992) (stating that vacatur
of summary judgment rulings would burden heavily the parties and the court
"with little corresponding gain," as those rulings are "subject to plenary review
upon final judgment").
On the other hand, federal courts have found it appropriate to vacate, in
whole or in part, those trial decisions that it would otherwise review for an
abuse of discretion, and to remand for reconsideration by a new judge. Cont'l
Airlines, 981 F.2d at 1463 (stating that "[t]he risk of injustice to the parties is
much greater when a court lacks broad powers of review" because "the parties
may remain subject to an order entered by a judge who has violated 28 U.S.C.
455(a), yet has not abused his discretion in entering the order"); Sch. Asbestos
Litig., 977 F.2d at 787 (stating that "[d]eferential review . . . might not cure
any prejudice").
We conclude that public confidence will be restored by our leaving in
place the jury's findings; vacating the trial judge's rulings challenged on appeal
and cross-appeal; deciding those issues de novo or in the exercise of original
jurisdiction; and remanding for a new trial on damages. In contrast to both
DeNike and Chandok, the fact-finder in this case was a jury, not a judge who
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was so tainted by the appearance of impropriety as to require a retrial. We see
no need to retry the jury's factual findings of liability – unchallenged on cross-
appeal – that defendant made a sufficiently clear and definite promise of
employment such that a reasonable person would rely on it; defendant
expected plaintiff to rely; and plaintiff did, quitting his job. Retrial of those
findings would disserve the party aggrieved by the trial judge's refusal to
recuse herself, undermine public confidence in the judicial process, complicate
resolution of the dispute, and burden the administration of justice.
Additionally, remanding the Securities Act and FINRA issues that defendant
raises on cross-appeal, which we would normally review de novo as questions
of law, see Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J.
366, 378 (1995), would also disserve the efficient administration of justice and
undermine public confidence.
Absent an abuse of discretion, we would normally defer to the trial
judge's rulings on the admissibility of expert opinion, see Townsend v. Pierre,
221 N.J. 36, 52 (2015); and the applicability of the unclean hands doctrine, see
Untermann v. Untermann, 19 N.J. 507, 517-18 (1955). However, that
deference is inappropriate with respect to discretionary rulings tainted by the
appearance of impropriety. Yet, unlike the federal courts, we need not remand
such discretionary determinations to a new trial judge. Rather, we may
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exercise original jurisdiction and decide those issues. See R. 2:10-5 (stating
that "[t]he appellate court may exercise such original jurisdiction as is
necessary to the complete determination of any matter on review"). The record
here is sufficient to enable us to do so, and, unlike in Chandok, no essential
questions of credibility impede our decision.
We recognize that original jurisdiction "should not be exercised in the
absence of imperative necessity." City of Newark v. W. Milford Twp., 9 N.J.
295, 301 (1952). However, "it will be invoked in those situations where the
sound administration of justice calls for appellate 'intervention and
correction.'" State v. Yough, 49 N.J. 587, 596 (1967) (quoting State v.
Johnson, 42 N.J. 146, 162 (1964)). This case presents such a situation.
II.
[At the direction of the court, the published version
of this opinion omits Part II, addressing issues
pertaining to the trial court's challenged rulings on
damages, expert testimony, the Securities Law,
FINRA and unclean hands. See R. 1:36-3.]
III.
In summary, the trial judge should have recused herself because she
created an appearance of impropriety by affirmatively responding to an ex
parte communication inquiring whether she would preside over the trial.
Having vacated the judge's challenged rulings, we conclude plaintiff was
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entitled to present claims for reliance damages, supported by his expert's
opinion and unrestrained by the Securities Law, FINRA, or the unclean hands
doctrine.
Reversed in part, affirmed in part, and remanded for a new trial on
damages. We do not retain jurisdiction.
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