JOSEPH R. LUPO VS. KENNETH M. THIMMEL (L-0604-14, SOMERSET COUNTY AND STATEWIDE) ( 2018 )

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court."
Although it is posted on the internet, this opinion is binding only on the
parties in the case and its use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-1732-16T2
JOSEPH R. LUPO,
Plaintiff-Appellant,
v.
KENNETH M. THIMMEL,
Defendant,
and
ALBERT H. WUNSCH, III, ESQ.,
Defendant-Respondent.
____________________________
Argued April 30, 2018 – Decided July 20, 2018
Before Judges O'Connor and Vernoia.
On appeal from Superior Court of New Jersey,
Law Division, Somerset County, Docket No. L-
0604-14.
Peter A. Ouda argued the cause for appellant.
Albert H. Wunsch, III, argued the cause pro
se (Paul A. Krauss, on the brief).
PER CURIAM
Plaintiff Joseph R. Lupo appeals from a May 2, 2016 order
denying his motion to compel an inspection of defendant Albert H.
Wunsch, III's firm's computer hard drive, and a July 22, 2016
order granting defendant's motion for summary judgment and denying
plaintiff's cross-motion for partial summary judgment. Plaintiff
asserts the trial court abused its discretion in denying his motion
to inspect the hard drive because it "was of enormous importance,"
erred by granting defendant's summary judgment because the court
erroneously "found facts based on disputed evidence submitted and
rejected expert testimony," and erred by denying plaintiff's
cross-motion for summary judgment because the record shows
defendant breached his fiduciary duty to plaintiff. We disagree
and affirm.
Plaintiff is a certified public accountant. He was co-
defendant Kenneth M. Thimmel's accountant and, in 2007, supplied
Thimmel with monies for an interest in a sports memorabilia
business, Classic Sports Collectibles, LLC (CSC), in which Thimmel
was also a member. In 2007, Thimmel entered into a sale and
leaseback transaction on his Franklin Lakes home. Defendant and
his law firm represented Thimmel in the transaction.
Plaintiff alleges the transaction was undertaken to protect
Thimmel's equity in the home, and was intended to secure monies
plaintiff would later advance to Thimmel and CSC. In a
2 A-1732-16T2
certification to the court, plaintiff states that Thimmel entered
into the sale and leaseback transaction because he had financial
issues and wanted to induce plaintiff "to invest more monies with
him, which [he] did in the amount of approximately $308,047."1
Plaintiff further certified he extended additional credit to
Thimmel following the sale and leaseback transaction because
Thimmel represented "there would be substantial equity in the home
to secure the additional monies" and Thimmel "constantly assur[ed]
[him]" the sale and leaseback "would guarantee that."
Thimmel later declared bankruptcy and identified plaintiff
as a creditor. The Bankruptcy Trustee initiated an adversarial
proceeding on Thimmel's behalf against the purchaser of the
property, the mortgage company and the respective attorneys,
including defendant, who represented the participants in the
transaction. The complaint in the adversarial proceeding claimed
the transaction was fraudulent and should be voided, and alleged
the defendants acted to defraud Thimmel. The complaint also
asserted a malpractice claim against defendant. The complaint was
subsequently dismissed by stipulation without prejudice against
defendant without any disposition on the merits.
1
Plaintiff certifies that his claims in this action are limited
to the monies he invested with Thimmel following the 2007 sale and
leaseback transaction.
3 A-1732-16T2
In May 2014, plaintiff filed a Law Division complaint alleging
causes of action for fraud, breach of fiduciary duty, and forgery
against Thimmel, and a claim of legal malpractice against
defendant. By leave granted, plaintiff filed an amended complaint
adding a cause of action for breach of fiduciary duty against
defendant, alleging defendant represented Thimmel in the sale and
leaseback transaction, and "knew or should have known that Thimmel
participated in the sale[]/leaseback so that he could continue to
. . . engage in a business relationship with" plaintiff. Plaintiff
alleged that defendant should have known the sale and leaseback
transaction was fraudulent as to him, as Thimmel's future creditor,
and breached his duty to him "by participating in a transaction
that was fraudulent."
Plaintiff filed a November 16, 2015 certification of merit
and expert report from attorney Barry E. Levine, Esq. Levine
stated it was his "opinion that [defendant] deviated from accepted
standards of practice and otherwise breached his fiduciary duty
to" plaintiff. Levine stated there were "numerous [E][-]mails"
from defendant's office showing defendant represented plaintiff
and Thimmel "together at the same time," and although defendant
and plaintiff were not parties to a retainer agreement, "the
correspondence and circumstances support the conclusion that
[plaintiff] believed that [defendant] was representing him."
4 A-1732-16T2
Levine further opined that defendant "was engaged in a concurrent
conflict of interest" in violation of Rule of Professional Conduct
(R.P.C.) 1.7, because he represented plaintiff and Thimmel despite
their ongoing business relationship, and defendant failed to make
necessary disclosures to plaintiff. Levine stated defendant
failed to warn plaintiff of the "risks of the transaction," and
"[a]n attorney who conformed to the standard of care would not
have counseled [plaintiff] to base his investment on the
sale/leaseback transaction."
Levine further stated that even if there was no attorney-
client relationship between plaintiff and defendant, defendant
owed a fiduciary duty to plaintiff. Levine opined that defendant
breached his fiduciary duty to plaintiff because although
defendant "apparently advised Thimmel against the [sale and
leaseback] transaction, he didn't advise [Thimmel] that [he] was
engaging in a fraud."
Defendant testified at his deposition that he advised Thimmel
against entering into the sale and leaseback transaction because
it was "a deal that [he] found to be a mistake." He also testified
that a few days before the closing, he drafted a "Waiver and
Acknowledgement of Risk"2 stating he "clearly and unequivocally
2
The parties refer to the waiver as a "letter."
5 A-1732-16T2
advised [Thimmel] against" the sale and leaseback transaction.
Thimmel signed the document, and his signature was notarized by a
duly licensed notary public on June 25, 2007, three days before
the sale and leaseback transaction.
In April 2016, plaintiff filed a motion to compel discovery
seeking an order permitting him to inspect defendant's law firm's
computer hard drive. In his certification in support of the
motion, plaintiff asserted "he doubt[ed] the legitimacy of the
date" of the "self-serving" waiver, and inspecting the hard drive
would permit plaintiff to establish when it was drafted.
Judge Thomas C. Miller entered a May 2, 2016 order and written
statement of reasons denying the request and finding plaintiff
failed to demonstrate "how whether this [waiver] currently exists
is relevant to any of his claims against" defendant. The judge
further found plaintiff's certification failed to provide a
factual basis supporting his "allegation that the [waiver] was not
created on the date stated," noting there must be more than a
showing that plaintiff had a "suspicion or feeling that the
document is not genuine before [it would] authorize an intrusion
into . . . [d]efendant's hard drive."
Defendant subsequently moved for summary judgment, and
plaintiff cross-moved for partial summary judgment on his
fiduciary duty claim against defendant. In response to defendant's
6 A-1732-16T2
motion, plaintiff admitted he never had a retainer agreement with
defendant, asked defendant for any legal advice or paid defendant
to render any legal advice, and that CSC neither had a retainer
agreement with defendant nor paid him any legal fees. Plaintiff
also admitted he was Thimmel's accountant and financial advisor,
partners with Thimmel in CSC, and "knew full well about . . .
Thimmel's desperate financial situation." Plaintiff admitted he
introduced Thimmel to the finance company that arranged the sale
and leaseback of Thimmel's home, and knew Thimmel sold his house
in 2007 pursuant to the sale and leaseback transaction.
In opposition to defendant's summary judgment motion and in
support of his cross-motion, plaintiff submitted a certification
and relied on a supplemental certification of merit and expert
report from Levine. Plaintiff asserted defendant retained a five
percent ownership in CSC, and that "there was a wealth of evidence
showing . . . [plaintiff] was reasonably relying on [defendant's]
office to protect" his interests. Plaintiff certified that "two
ex[-]employees of CSC . . . will state that [defendant] was the
attorney for the company and received tickets to events and
merchandise for his legal services."3 Plaintiff further certified
that had defendant advised him that the sale and leaseback
3
Plaintiff never provided competent evidence to the court from
the two employees confirming his assertion.
7 A-1732-16T2
transaction was fraudulent, he would not have "extended further
credit to Thimmel" following the transaction.
Levine's supplemental certification of merit and expert
report concluded defendant "was the gatekeeper for [the sale and
leaseback] transaction and if there were any risks to Thimmel his
attorney[, defendant,] should have advised him." Levine stated
that defendant's testimony that he did not represent CSC "was
contradicted by the [E][-]mail correspondence," but did not cite
to any E-mails supporting his assertion. Levine further stated
"there [was] no denying that the HUD was fraudulent," and that
defendant "should have known that the transaction was fraudulent
on many levels," and defendant's participation in the closing
amounted to a deviation "from accepted standards [of] practice
and" otherwise constituted a breach of his fiduciary duty to
plaintiff.
Judge Miller granted defendant's summary judgment motion and
denied plaintiff's cross-motion for partial summary judgment. In
a detailed and well-reasoned written statement of reasons, Judge
Miller determined plaintiff did not establish defendant committed
legal malpractice, because the "uncontradicted evidence" showed
plaintiff was not defendant's client and that, contrary to
plaintiff's claim, plaintiff failed to present evidence showing
defendant served as plaintiff and Thimmel's attorney "with regards
8 A-1732-16T2
to CSC." The court noted that plaintiff admitted during his
deposition that he never retained defendant as his attorney or
sought legal advice from him, and plaintiff failed to produce any
evidence showing defendant served as CSC's counsel.
The judge rejected plaintiff's reliance on Levine's
conclusion that plaintiff and defendant had an attorney-client
relationship because it was founded on purported E-mails Levine
never identified. Judge Miller determined Levine's supplemental
report failed to precisely indicate which E-mails or records
supported his opinion, and plaintiff failed to present any "direct
evidence to indicate that [defendant] received or even reviewed
the [E][-]mails."
Judge Miller also found plaintiff failed to produce "any
documentation showing that [d]efendant acted as CSC's attorney or
. . . had an ownership interest in the company aside from an
[E][-]mail originated by . . . Thimmel stating that [defendant]
'should get [five percent] of CSC.'" The judge noted that
plaintiff admitted defendant was never copied on the E-mail, did
not provide any evidence showing defendant "was aware of any such
ownership interest," and Thimmel testified defendant declined his
offer for a five percent interest in CSC. Thus, Judge Miller
determined plaintiff failed to present any competent evidence
defendant had an ownership interest in CSC.
9 A-1732-16T2
Judge Miller granted defendant's summary judgment motion and
dismissed the legal malpractice claim because plaintiff failed to
present any competent evidence showing there was an attorney-
client relationship between plaintiff and defendant.4 The court
concluded that the "uncontradicted evidence supports the
proposition that [plaintiff] was not a client of" defendant, and
there was "no credible evidence to support a proposition that
[defendant] represented both [plaintiff] and . . . Thimmel with
regards to CSC."
Judge Miller also determined that based on the evidence and
circumstances presented, defendant did not have a fiduciary duty
to advise plaintiff that, following the sale and leaseback
transaction, there was insufficient equity in Thimmel's interest
in his home to secure the future loans plaintiff made to him.5 The
judge determined plaintiff failed to present evidence establishing
4
Judge Miller also rejected plaintiff's claim defendant violated
R.P.C. 1.7, which prohibits an attorney from representing a client
with whom he has a concurrent conflict of interest, because
plaintiff did not present evidence establishing he was defendant's
client. The judge found Levine's conclusion that defendant
violated R.P.C. 1.7 by creating a conflict of interest amounted
to "nothing but the expert's bare conclusions, unsupported by
factual evidence or other data," and was thus an inadmissible net
opinion.
5
As noted, plaintiff's claims against defendant are based on
monies he loaned to Thimmel following the sale and leaseback
transaction.
10 A-1732-16T2
that defendant "had a duty to advise [plaintiff] that . . . Thimmel
no longer had an interest in his real estate holding . . . to
secure the loan transactions that [plaintiff] continued to make
with . . . Thimmel" following the sale and leaseback transaction.
Judge Miller observed the evidence showed plaintiff knew
about the sale and leaseback transaction, and "understood he could
not secure any further loans by a lien on Thimmel's former
property," because plaintiff received an almost $200,000 payoff
from the transaction for monies he had previously loaned Thimmel,
and then discharged a mortgage he had on Thimmel's property
securing those loans. Judge Miller found plaintiff introduced
Thimmel to the buyer's finance company, "arranged for the
transaction, was the primary beneficiary of the transaction, and
. . . admit[ted] that he understood the nature and ramifications
of the transaction." Judge Miller concluded "no duty can be
imposed upon [defendant] to advise [plaintiff] of facts and
circumstances that [plaintiff] knew or should have known existed."
In addition, there was no direct evidence showing defendant was
actually aware plaintiff continued to loan money to Thimmel
following the transaction, and defendant denied having such
knowledge.
Judge Miller also determined that even if defendant had such
a duty, "no reasonable jury could determine" that defendant's
11 A-1732-16T2
failure to warn plaintiff caused plaintiff harm, because
plaintiff's own actions following the transaction constituted an
intervening cause of harm.6 The judge found the evidence showed
plaintiff never sought or received advice from defendant
concerning the post-transaction loans, plaintiff made the loans
without investigating the status of Thimmel's ownership of, or
equity in, his home, plaintiff never sought post-transaction liens
on the home when the loans were made, and the loans made by
plaintiff to Thimmel constituted separate and independent
transactions that superseded any action or inaction on defendant's
part concerning the sale and leaseback transaction. The court
determined that no reasonable jury could conclude that plaintiff's
alleged damages resulting from Thimmel's default on the post-sale
and leaseback loans were a result of defendant's purported breach
of any alleged duty.
Following the court's entry of the order granting defendant's
summary judgment motion and denying plaintiff's cross-motion, the
court conducted a bench trial on plaintiff's claims against Thimmel
6
We note that although the trial court granted defendant's
summary judgment motion and dismissed all claims against him with
prejudice, the court also denied defendant's motion for summary
judgment on statute of limitations grounds without prejudice. This
determination is of no moment here because we affirm the court's
dismissal of the complaint with prejudice on the merits.
12 A-1732-16T2
and entered final judgment against him in the amount of
$245,473.77. This appeal followed.
Plaintiff presents the following arguments for our
consideration on appeal:
POINT I
THE COURT ABUSED ITS DISCRETION IN DENYING THE
MOTION TO INSPECT THE HARD DRIVE.
POINT II
SUMMARY JUDGMENT SHOULD NOT HAVE BEEN GRANTED
TO [] DEFENDANT.
POINT III
THE COURT SHOULD NOT HAVE DENIED PLAINTIFF'S
MOTION FOR SUMMARY JUDGMENT BASED ON
[DEFENDANT'S] FIRM[']S BREACH OF ITS FIDUCIARY
DUTY.
When reviewing an order granting or denying summary judgment,
we apply the same standard as the trial court. State v. Perini
Corp., 221 N.J. 412, 425 (2015) (citing Town of Kearny v. Brandt,
214 N.J. 76, 91 (2013); Liberty Surplus Ins. Corp. v. Nowell
Amoroso, P.A., 189 N.J. 436, 445-46 (2007)). In considering a
motion for summary judgment, "both trial and appellate courts must
view the facts in the light most favorable to the non-moving party,
which in this case is plaintiff." Bauer v. Nesbitt, 198 N.J. 601,
605 n.1 (2009) (citing R. 4:46-2(c); Brill v. Guardian Life Ins.
Co. of Am., 142 N.J. 520, 540 (1995)).
13 A-1732-16T2
Summary judgment is proper if the record demonstrates "no
genuine issue as to any material fact challenged and that the
moving party is entitled to a judgment . . . as a matter of law."
Burnett v. Gloucester Cty. Bd. of Chosen Freeholders, 409 N.J.
Super. 219, 228 (App. Div. 2009). Issues of law are subject to
the de novo standard of review, and thus the trial court's
determination of such issues is accorded no deference. Kaye v.
Rosefielde, 223 N.J. 218, 229 (2015) (citations omitted).
We have carefully considered the record and plaintiff's
arguments supporting his contention the court erred by granting
defendant's summary judgment motion and denying his cross-motion,
find they are without merit sufficient to warrant discussion in a
written opinion, R. 2:11-3(e)(1)(E), and affirm the court's order
substantially for the reasons set forth in Judge Miller's detailed
and well-reasoned written decision.
Because we have determined the court correctly granted
defendant's summary judgment motion, it is unnecessary to
determine whether the court erred by denying plaintiff's request
for inspection of defendant's law firm's computer hard drive.
Plaintiff claims he was entitled to the inspection because it may
have shown the notarized waiver signed by Thimmel was prepared at
a time later than defendant contended, but makes no showing
14 A-1732-16T2
resolution of that issue is material to the court's disposition
of the summary judgment motions.
Affirmed.
15 A-1732-16T2