DAVID FISHEL VS. AMI ROSEN VS. COLDWELL BANKER (L-0198-17, BERGEN COUNTY AND STATEWIDE)

NOT FOR PUBLICATION WITHOUT THE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-2895-17T4
DAVID FISHEL,
Plaintiff-Respondent,
v.
AMI ROSEN and CARA ROSEN,
Defendants/Third-Party
Plaintiffs-Appellants,
v.
COLDWELL BANKER and STUART
ARONOFF,
Third-Party Defendants-
Respondents.
_________________________________
Submitted September 13, 2018 – Decided September 25, 2018
Before Judges Nugent and Mawla.
On appeal from Superior Court of New Jersey, Law
Division, Bergen County, Docket No. L-0198-17.
Charles I. Epstein, attorney for appellants (Charles I.
Epstein and Christopher J. Koller, on the brief).
Chasan Lamparello Mallon & Cappuzzo, PC, attorneys
for respondent David Fishel (Mitchell L. Pascual, of
counsel and on the brief; Joseph E. Santanasto, on the
brief).
PER CURIAM
This case, at its core, is a Landlord-Tenant dispute. On leave granted,
defendants Ami Rosen and Cara Rosen appeal a Law Division order that denied
their motion to quash three subpoenas. Plaintiff David Fishel served the
subpoenas on out-of-state institutions in an attempt to obtain financial and
employment information concerning defendant Ami Rosen. 1 In terse and
conclusory handwritten notations on the denial order, some of which are
illegible, the trial court ruled the subpoenaed information was relevant to
defendants' counterclaim. Failing to discern how, and unable to determine
whether the trial court decided the motion under the proper standard, we
conclude the court misapplied its discretion. We thus reverse.
The appellate record establishes these facts. Plaintiff owns a house in
Englewood, which he leased to defendants in June or July, 2014 for one year.
1
Plaintiff served the subpoenas on three out-of-state institutions. In their
motion before the trial court, defendants questioned the propriety of plaintiff
issuing New Jersey subpoenas to institutions in other states. Defendants have
not raised the issue on this appeal.
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The parties extended the lease for a second year. They dispute what happened
at the second year's end, plaintiff claiming they verbally agreed to a third one -
year term, defendants claiming they remained in the home as month-to-month
tenants.
In October 2016, a dispute arose over mold. Defendants alleged the house
had mold, a health hazard they learned plaintiff had previously attempted
unsuccessfully to remediate, his efforts only concealing the condition. Plaintiff
alleged no mold existed when defendants first moved into the house. He claimed
the mold developed due to their neglect. Defendants stopped paying rent the
same month. Litigation ensued.
Plaintiff commenced an action in the Special Civil Part, Landlord Tenant
Section, to evict defendants. Defendants assert that when they sought a
habitability hearing, plaintiff responded by filing a Law Division action.
Plaintiff filed the latter action in January 2017. Defendants vacated the home
the following month.
Plaintiff's amended Law Division complaint has thirteen counts. The
counts allege causes of action for breach of contract; breach of the implied
covenant of good faith and fair dealing; waste; negligence; unjust enrichment;
intentional conduct; a book account, tortious interference with prospective
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economic advantage; injurious falsehood & tortious property disparagement;
prima facie tort; and malicious abuse of legal process. Two other counts are
entitled "Attorney's Fees and Costs" and "Punitive Damages."
Defendants' amended responsive pleading includes twelve affirmative
defenses, a seven-count counterclaim, and a third-party complaint. The
counterclaim includes two counts alleging fraudulent concealment and four
counts alleging breach of the warranty of habitability, gross negligence and
reckless and wanton conduct, intentional and knowing misconduct, and
constructive eviction. The counterclaim also alleges a count for "Attorney's
Fees and Costs."
During the course of discovery, plaintiff served subpoenas on three out -
of-state financial institutions, one each in New York, Pennsylvania, and Rhode
Island. Two were subpoenas ad testificandum, the other a subpoena duces
tecum.
Each subpoena ad testificandum directed the institution to produce a
corporate representative "to appear and give testimony" at plaintiff counsel's law
office in New Jersey "in connection" with the institution's employment of
defendant Ami Rosen, "including but not limited to" three enumerated topics.
The topics were salary and other compensation during defendant Ami Rosen's
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employment; complaints made against him in connection with his employment,
"ethical or otherwise, to any oversight commissions or boards"; and, complaints
made against him in connection with his employment, "ethical or otherwise ," to
"any court of law or administrative body." The subpoenas also directed the
recipients to produce a copy of defendant Ami Rosen's resume.
The subpoena duces tecum directed the institution to appear at plaintiff
counsel's office – or mail, but not before the specified date, and not in the event
a motion to quash was filed – documents concerning defendants' mortgage
application and mortgage on a home they purchased.
Defendants moved to quash the subpoenas. They argued the subpoenas
were procedurally defective, sought irrelevant information, and were issued to
further both plaintiff's obvious "vendetta" against defendants and his strategy of
"'scorched earth' litigation, using [p]laintiff's vastly superior financial resources
. . . to cause personal harm," as evidenced by his discovery tactics in general.
Defendants noted plaintiff's non-production of a report from "the actual mold
remediation company who remediated the premises." Defendants sought
attorney's fees and costs.
In response, plaintiff denied defendants' allegations. He claimed he was
seeking the financial information on the theory defendants' failure to pay rent
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"had nothing to do with the condition of the property, but was instead related to
financial difficulty that [d]efendants had in connection with [their] purchase" of
an expensive home. Plaintiff insisted the financial information he sought "is
very much relevant to my defense against their frivolous counterclaim."
Plaintiff argued defendants' mold claim was "a ruse to recover rent money . . .
because they could not afford the rent to begin with and their need for what
appears to be a [substantial] down payment on the heels of what seems like a
[significant] loss on their last house."
The trial court denied defendants' motion to quash the subpoenas. The
court filed an order on February 2, 2018. The parties do not dispute that the
relevant handwritten explanation on page one of the order states:
Financial records and employment records including
days worked and compensation are relevant as
defendants are counterclaimants. Relevant to
counterclaim [two, three and four].
The handwritten explanation on page two of the order states:
The defendants' financial records regarding
compensation and work history are clearly relevant as
counterclaims are set forth for breach of warranty of
habitability (based on alleged mold hazard), gross
negligence, intentional misconduct, and fraudulent
concealment are claimed. Defendants seek
compensatory, incidental and consequential damages
and as such have placed their financial and work history
subject to discovery as relevant to such claims.
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Pursuant to court rule these records may be redacted for
personal identifiers (social security numbers, bank
account numbers, etc.).
Counsel should consider mediation of this action.
On appeal, defendants argue the trial court abused its discretion by not
granting their motion to quash the subpoenas and issue a protective order. They
also contend the court should have at least arranged to review the information
in camera, and if necessary, limit the scope of disclosure. Defendants also argue
the court erred by denying their application for counsel fees and costs.
Plaintiff responds defendants have failed to overcome the presumption in
favor of discovery. He "maintains that [d]efendants' mold claims were simply a
pretext, designed to mask their inability to afford the rental expense that
accompanied their tenancy . . . and moreover insulate them from damages
running from their breach of the lease." Plaintiff also argues defendants'
financial condition is relevant to his punitive damages claim.
Generally, parties may discover non-privileged information "which is
relevant to the subject matter involved in the pending action." R. 4:10-2(a). If
the discovery requests are "reasonably calculated to lead to the discovery of
admissible evidence," an opponent's objection that the information will be
inadmissible at trial is unavailing. Ibid. Nonetheless, "the scope of discovery
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is not infinite." K.S. v. ABC Prof'l Corp., 330 N.J. Super. 288, 291 (App. Div.
2000). "Discovery is intended to lead to facts supporting or opposing an asserted
legal theory; it is not designed to lead to formulation of a legal theory." Camden
Cty. Energy Recovery Assocs. v. N.J. Dept. of Envtl. Prot., 320 N.J. Super. 59,
64 (App. Div. 1999), aff'd o.b., 170 N.J. 246 (2001).
Our Supreme Court has explained that "[t]empering the normal rule
favoring wide discovery of relevant issues is a regard for the defendant's interest
in maintaining the confidentiality of information about its financial status."
Herman v. Sunshine Chem. Specialties, 133 N.J. 329, 343 (1993). Similarly, we
have held that "[i]f disclosure [of tax returns] will not serve a substantial purpose
it should not be ordered at all." Ullmann v. Hartford Fire Ins. Co., 87 N.J. Super.
409, 415-16 (App. Div. 1965). Moreover, "[i]f ordered, disclosure should be no
greater than justice requires . . . and in all but the clearest cases the return should
be examined by the judge before any disclosure is ordered." Id. at 416; see also
Campione v. Soden, 150 N.J. 163, 189-91 (1997) (discussing the "strong need"
or "good cause" standard for discovery of tax return information).
A trial court should not compel disclosure of financial information merely
because a party has asserted a punitive damages claim. The party asserting a
punitive damage claim must establish "proof of a prima facie case as a condition
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precedent to discovery of a defendant's financial condition[.]" Herman, 133
N.J. at 346.
Here, the trial court did not engage in the "[s]ensitive balancing . . .
essential to the accommodation of a plaintiff's need for discovery and the
defendant's right to maintain the confidentiality of information abo ut its
financial condition." Id. at 344. Plaintiff's subpoenas were not "reasonably
calculated" to lead to relevant evidence. He was attempting to find evidence
that would help him formulate a theory or motive. Stated differently, he was on
a fishing expedition. Plaintiff offered no facts – only unsupported assertions –
for his theory defendants were so financially stressed they fabricated their mold
complaint to avoid paying rent or to have money to put toward a down payment
on an expensive home. In contrast, the record reflects defendants paid their rent
for more than two years until they discovered the mold.
Moreover, we fail to discern how defendants' financial condition makes
more or less likely a fact of consequence to the determination of the action. The
trial court has not explained its decision to the contrary.
The trial court thought defendants' financial condition was somehow
relevant to three counts of their counterclaim, but did not explain how. There
was either mold in the house or there was not, and if defendants' assertion about
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the report plaintiff allegedly withheld is true, there was. Defendants' financial
condition did not affect the existence or non-existence of the mold, plaintiff's
conduct in concealing or not concealing the mold, or defendant's negligence or
willful misconduct. Besides, plaintiff sought more than financial information;
he sought information about defendant's job performance as well as a resume.
Nor is any party currently entitled to discover another's financial
information based on a punitive damage claim. No one has established a prima
facie case for punitive damages.
We find no abuse of discretion in the trial court's decision to deny
defendants counsel fees. Although this record suggests one or mor e parties has
filed unnecessary pleadings and engaged in abusive discovery, we have neither
the trial court's insight nor its feel for the case. For that reason, we reverse the
part of the order denying the motion to quash plaintiff's three subpoenas, but we
affirm the part of the order denying counsel fees.
We recommend the trial court conduct a case management conference to
streamline additional discovery, establish dates for dispositive motions, and if
necessary, enter appropriate protective orders.
Affirmed in part, reversed in part, and remanded for further proceedings
consistent with this opinion. We do not retain jurisdiction.
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