JOHN GIOVANNI GRANATA VS. EDWARD F. BRODERICK, JR., ESQ. (L-3278-07, PASSAIC COUNTY AND STATEWIDE) ( 2019 )


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  •                                 NOT FOR PUBLICATION WITHOUT THE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-3930-17T1
    JOHN GIOVANNI GRANATA,
    Plaintiff,
    v.
    EDWARD F. BRODERICK, JR.,
    ESQ., an Attorney at Law of the
    State of New Jersey, BRODERICK,
    NEWMARK & GRATHER,
    Defendants,
    and
    ROTENBERG, MERIL, SOLOMON,
    BERTIGER & GUTILLA, PC,
    Intervenor,
    and
    ELLIOT H. GOURVITZ, ESQ.,
    Intervenor-Respondent,
    and
    OKS REALTY,
    Intervenor-Appellant.
    _____________________________
    Argued January 23, 2019 – Decided February 6, 2019
    Before Judges Yannotti and Natali.
    On appeal from Superior Court of New Jersey, Law
    Division, Passaic County, Docket No. L-3278-07.
    Kenneth S. Thyne argued the cause for appellant
    (Roper & Thyne, LLC, attorneys; Kenneth S. Thyne,
    on the briefs).
    Ari H. Gourvitz argued the cause for respondent Elliot
    H. Gourvitz (Gourvitz & Gourvitz, LLC, attorneys;
    Ari H. Gourvitz, on the brief).
    PER CURIAM
    Intervenor OKS Realty (OKS) appeals from a March 23, 2018 order
    denying its application for reasonable attorney's fees, interest, and late fees on
    an outstanding lien.    Because the trial court failed to set forth its legal
    conclusions and factual findings in accordance with Rule 1:7-4, we reverse the
    March 23, 2018 order and remand for further proceedings.
    I.
    OKS's appeal is the latest chapter in this protracted litigation related to
    the appropriate priority and distribution of three liens held by intervenors
    OKS, Elliot H. Gourvitz, Esq. (Gourvitz), and accounting firm Rotenberg,
    A-3930-17T1
    2
    Meril, Solomon, Bertiger & Gutilla (Rotenberg).1 The procedural history and
    facts underlying the dispute are fully detailed in our published opinion.
    Granata v. Broderick, 
    446 N.J. Super. 449
    (App. Div. 2016), aff'd, 
    231 N.J. 135
    (2017). We briefly recount that history to provide context for our decision
    and also add additional, pertinent facts from the trial proceedings that led to
    the entry of the March 23, 2018 order.
    Plaintiff John Giovanni Granata filed a complaint against Prudential
    Insurance Company of America (Prudential) alleging he was improperly fired
    in violation of the Conscientious Employee Protection Act, N.J.S.A. 34:19-1 to
    -8.   After the court denied Prudential's application to compel arbitration,
    Prudential appealed, and we reversed. Granata v. Prudential Ins. Co. of Am.,
    No. A-7052-97 (App. Div. Dec. 28, 1998).
    Defendants Edward F. Broderick, Jr., Esq. and Broderick, Newmark &
    Grather, represented plaintiff before the arbitration panel. The panel awarded
    plaintiff $28,000 in compensatory damages but assessed $12,530.50 in fees
    and costs against him.      In 2007, plaintiff retained then-attorney Diane
    1
    We have been advised by the parties that OKS and Rotenberg settled.
    Rotenberg has not participated in this appeal.
    A-3930-17T1
    3
    Acciavatti of Acciavatti, LLC, (Acciavatti) to prosecute a legal malpractice
    action against defendants.
    Following a lengthy trial, a jury awarded plaintiff $910,000 in damages.
    After interest was added to the verdict, plaintiff's judgment totaled $1,597,193.
    Defendants appealed and we reversed and vacated the judgment based on
    the court's failure to provide an "exercise of judgment" charge. Granata v.
    Broderick, No. A-5272-10 (App. Div. July 8, 2013). On remand, the parties
    settled plaintiff's claims for $840,000.
    After the settlement, OKS, Gourvitz, and Rotenberg asserted liens upon
    Acciavatti's legal fees. We previously detailed the intervenors' lien interests as
    follows:
    On October 27, 2010, following the $1.5 million jury
    verdict, but before our decision vacating that verdict,
    Acciavatti, LLC obtained a loan from OKS which
    Acciavatti guaranteed.     On that date, a security
    agreement, a promissory note, and a guaranty of
    payment were all executed and signed by Acciavatti
    on behalf of Acciavatti, LLC. On December 2, 2010,
    OKS filed a UCC–1 financing statement, listing as
    debtors both Acciavatti, LLC and Acciavatti as
    guarantor of the loan. The statement identified the
    collateral as legal fees due to Acciavatti in the
    litigation, Granata v. Broderick, and noted that
    judgment was entered on August 23, 2010.
    Gourvitz is a lien creditor. On September 9, 2011, a
    consent judgment was entered in Gourvitz v.
    A-3930-17T1
    4
    Colfax, whereby Acciavatti assumed responsibility for
    a debt obligation to Gourvitz as a result of a March 5,
    2010 summary judgment order entered against
    Acciavatti's client, Colfax, for collection of unpaid
    legal fees.     On August 19, 2011, even though
    Acciavatti had not yet assumed responsibility for the
    debt, the trial judge entered an order declaring that
    Gourvitz had a lien on any attorney's fees awarded to
    Acciavatti in this case. On November 4, 2011,
    Gourvitz's judgment was recorded as a lien, and a writ
    of execution was filed on August 19, 2013.
    Rotenberg is also a lien creditor. Acciavatti assumed
    a debt obligation to Rotenberg pursuant to a March 21,
    2011 settlement agreement.        On that same day,
    Acciavatti entered into a consent judgment with
    Rotenberg, which was recorded as a lien on January
    24, 2013. A writ of execution was filed in January
    2014.
    [Granata, 446 N.J. Super at 473.]
    At a January 9, 2015 hearing to address OKS's, Gourvitz's, and
    Rotenberg's lien interests, the court asked the intervenors' attorneys to confirm
    the amount of each lien. The judge specifically asked counsel to "tell me [if]
    this is right or this is wrong. I've got [OKS] in at one hundred and nineteen
    thousand," to which OKS's counsel replied, "[c]orrect." Gourvitz's counsel
    stated the amount owed to its client was $82,045.74 "as of [January 9, 2015],"
    and Rotenberg's counsel informed the court that his client was owed
    $133,652.42.
    A-3930-17T1
    5
    The court entered an order on January 15, 2015, which awarded
    Acciavatti $279,720 in attorney's fees to be paid out of the $840,000
    settlement. On January 26, 2015, the court entered two orders, one of which
    denied Granata's motion for reconsideration. The other January 26, 2015 order
    established the distribution of Acciavatti's counsel fees as follows: 1) $40,000
    to Granata's substituted attorneys pursuant to a previously executed agreement;
    2) $9597.56 to the trustee holding the funds; 3) $83,284.97 to Gourvitz; 4)
    $133,652.42 to Rotenberg; and 5) the remaining $13,185.05 to OKS.
    Granata appealed from the January 15, 2015 order awarding Acciavatti
    counsel fees and the January 26, 2015 order that denied reconsideration . OKS
    appealed from the January 26, 2015 order designating it last in the priority of
    Acciavatti's creditors.
    We affirmed the two orders from which Granata appealed, but vacated
    the January 26, 2015 order to the extent it prioritized Gourvitz's and
    Rotenberg's lien interests ahead of OKS's, and remanded the matter for further
    proceedings. The Supreme Court granted Gourvitz's and Rotenberg's petition
    for certification, and subsequently affirmed our decision.          Granata v.
    Broderick, 
    231 N.J. 135
    (2017).
    A-3930-17T1
    6
    During the remanded proceedings, OKS filed a motion to intervene on
    December 15, 2017. The trial court denied OKS's motion on January 23, 2018,
    concluding that "a post judgment motion would suffice" and "[t]here is nothing
    to intervene into." 2
    OKS then filed a motion seeking an order "establishing the current lien"
    and "compelling the payment of monies disbursed" to Gourvitz and Rotenberg.
    Specifically, OKS sought $224,029.49, comprised of the asserted outstanding
    principal of $125,000, $89,719.45 in interest, $5383.17 in late fees, $956.92
    for the costs related to the appeal, and $16,155 in attorney's fees .        OKS
    acknowledged receipt of the $13,185.05 disbursed pursuant to the January 26,
    2015 order, and subtracted that sum from the amount requested.
    OKS maintained that it was entitled to attorney's fees, interest, and late
    fees under the October 27, 2010 promissory note between it and Acciavatti.
    The note provided that Acciavatti would be in default by, among other events,
    failing to make any required payment under the note within thirty days after
    2
    It is unclear from the record the basis for the trial court's ruling denying
    intervention as we had already concluded that "each of the creditors was
    entitled to intervene as of right . . . pursuant to Rule 4:33-1." See 
    Granata, 446 N.J. Super. at 473
    . Accordingly, on remand, OKS and Gourvitz shall be
    deemed intervenors as of right.
    A-3930-17T1
    7
    the payment became due.          Further, the note stipulated that "upon the
    occurrence of an event of default hereunder, . . . [OKS] shall be entitled to
    recover all costs and expenses incurred by [OKS], including a reasonable
    allowance for attorneys' fees, to obtain or enforce payment of any sums owing
    hereunder or to enforce other obligations of [Acciavatti] to [OKS]."              In
    addition, the note stated that "[n]o delay on the part of [OKS] in the exercise
    of any right, rights or options hereunder . . . and no failure to declare a default
    with respect to any one item of default shall constitute a waiver thereof or
    impair in any respect the rights of . . . [OKS] . . . to take any action provided
    herein."
    Rotenberg opposed OKS's application on the basis that the UCC-1
    financing statement that established OKS as a secured party lapsed and had not
    been renewed. In addition to joining Rotenberg's claim that OKS was no
    longer a secured party, Gourvitz alternatively relied on various estoppel-based
    theories in asserting that OKS's recovery should be limited to the $119,000
    that counsel previously represented to the court, and it should not be permitted
    to recover late fees, interest, and counsel fees.
    On March 23, 2018, the court heard oral arguments and issued an oral
    opinion in which the judge stated:
    A-3930-17T1
    8
    So I understand your position. I am going to order
    [OKS] gets paid one nineteen, no interest, no
    attorney's fees. Gourvitz gets the same [$83,284.97],
    and the accounting firm [Rotenberg] gets
    [$37,435.03].
    The court entered an order that same day that valued OKS's lien at
    $119,000, and ordered Rotenberg to pay OKS $105,814.95 "for the reasons set
    forth on the record" at the March 23, 2018 hearing. 3 This appeal followed.
    II.
    On appeal, OKS argues that it was entitled to an award of interest,
    reasonable attorney's fees, and late fees and was not estopped from seeking
    those sums. OKS also claims the court's "naked conclusion" that it was "going
    to order [OKS] gets paid one nineteen, no interest, no attorney's fees," did not
    comply with Rule 1:7-4. Alternatively, OKS requests that we invoke original
    jurisdiction pursuant to Rule 2:10-5 and "find that OKS is entitled to payment
    of the $83,284.97 erroneously awarded to Gourvitz . . . with interest."
    Gourvitz maintains that OKS is not entitled to interest, attorney's fees or
    late fees and, to the extent the October 27, 2010 promissory note authorized
    those costs, OKS waived its right to collect those sums due to its counsel's
    3
    The $105,814.95 figure equals OKS's counsel's $119,000 representation
    minus the $13,185.05 that OKS received pursuant to the January 26, 2015
    order.
    A-3930-17T1
    9
    affirmative statement in which she sought only $119,000 and also because
    OKS delayed in seeking relief to Gourvitz's detriment.
    As it did in the trial court, Gourvitz relies on various equitable doctrines
    in support of its waiver argument, including collateral, judicial, and equitable
    estoppel as well as the doctrines of invited error and laches. Finally, Gourvitz
    opposes OKS's request that we invoke original jurisdiction, and maintains that
    any necessary factual findings should be made by the trial court in accordance
    with Rule 1:7-4.
    We conclude that the court's March 23, 2018 oral decision failed to
    comply with Rule 1:7-4. Further, we reject OKS's request that we invoke
    original jurisdiction.
    Rule 1:7-4(a) provides that the court "shall . . . find the facts and state its
    conclusions of law thereon . . . on every motion decided by a written order that
    is appealable as of right . . . ." "Meaningful appellate review is inhibited
    unless the judge sets forth the reasons for his or her opinion. In the absence of
    reasons, we are left to conjecture as to what the judge may have had in mind."
    Salch v. Salch, 
    240 N.J. Super. 441
    , 443 (App. Div. 1990); see also Estate of
    Doerfler v. Fed. Ins. Co., 
    454 N.J. Super. 298
    , 301 (App. Div. 2018).
    A-3930-17T1
    10
    Although in some instances, a court may, by reference, rely on a
    litigant's reasons in reaching its decision, Vartenissian v. Food Haulers, Inc.,
    
    193 N.J. Super. 603
    (App. Div. 1984), "[t]he court should, however, make the
    fact of such reliance explicit, and its failure to do so is tantamount to making
    no findings at all." Pressler & Verniero, Current N.J. Court Rules, cmt. 1 on
    R. 1:7-4 (2019) (citing Allstate Ins. Co. v. Fisher, 
    408 N.J. Super. 289
    , 301
    (App. Div. 2009)).
    Here, the judge in his March 23, 2018 oral opinion summarily concluded
    that it would award OKS $119,000, "no interest, no attorney's fees" and failed
    to explain its reasoning in denying OKS's request for attorney's fees and
    interest expressly permitted by the October 27, 2010 promissory note. Nor did
    the court analyze Gourvitz's various estoppel-based theories, or its claim that
    OKS, at the time of the November 23, 2018 hearing, no longer had a viable
    lien due to its failure to renew its UCC-1 filing.
    We do not pass upon the merits of the parties' claims or defenses, but
    identify them solely to illustrate that by failing to provide any reasons for its
    decision, we, along with the litigants "are left to conjecture as to what the
    judge may have had in mind." See 
    Salch, 240 N.J. Super. at 443
    . Because
    "our function as an appellate court is to review the decision of the trial court,
    A-3930-17T1
    11
    not to decide the motion tabula rasa[,]" 
    Doerfler, 454 N.J. Super. at 302
    , the
    absence of appropriate factual findings and legal conclusions prevents this
    Court from meaningfully performing our function.
    We also decline to exercise original jurisdiction. Rule 2:10-5 provides
    that "[t]he appellate court may exercise such original jurisdiction as is
    necessary to the complete determination of any matter on review." See also
    N.J. Const. art. VI, § 5, ¶ 3. "However, [this Court's] 'original factfinding
    authority must be exercised only with great frugality and in none but a clear
    case free of doubt.'"   
    Fisher, 408 N.J. Super. at 301
    (quoting Tomaino v.
    Burman, 
    364 N.J. Super. 224
    , 234–35 (App. Div. 2003)). "In determining
    whether to exercise original jurisdiction, an appellate court not only must
    weigh considerations of efficiency and the public interest that militate in favor
    of bringing a dispute to a conclusion, but also must evaluate whether the
    record is adequate to permit the court to conduct its review." Price v. Himeji,
    LLC, 
    214 N.J. 263
    , 295 (2013).
    An appellate court may "exercise original jurisdiction to eliminate
    unnecessary further litigation," but it is "discourage[d] . . . if factfinding is
    involved." 
    Id. at 294
    (quoting State v. Santos, 
    210 N.J. 129
    , 142 (2012)). We
    do not "'weigh[] evidence anew and mak[e] independent factual findings;
    A-3930-17T1
    12
    rather, our function is to determine whether there is adequate evidence to
    support the judgment rendered' by the trial court." 
    Fisher, 408 N.J. Super. at 302
    (quoting Cannuscio v. Claridge Hotel & Casino, 
    319 N.J. Super. 342
    , 347
    (App. Div. 1999)).
    Based on the record before us, it is clear that additional factfinding is
    necessary rendering it inappropriate for us to exercise original jurisdiction.
    Among the unresolved issues are the reasonableness of OKS' attorney's fees,
    whether OKS's UCC-1 filing lapsed and the significance, if any, of that event.
    Further, we cannot conclude from the record if Gourvitz relied in good faith on
    OKS's former counsel's representation that OKS was owed $119,000. 4
    Reversed and remanded. We do not retain jurisdiction.
    4
    We do not intend this to be an exhaustive list of the unresolved factual
    issues.
    A-3930-17T1
    13