ATLANTIC CITY SOUVENIR & SNACKS, INC. VS. PARKER MCCAY (L-0086-15, CUMBERLAND 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NOT FOR PUBLICATION WITHOUT THE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-1113-17T4
ATLANTIC CITY SOUVENIR
& SNACKS, INC.,
Plaintiff-Appellant/
Cross-Respondent,
v.
PARKER MCCAY, HOWARD
COHEN, ESQ., KRIS KOLLURI,
ESQ., STEPHEN J. MUSHINSKI,
ESQ. and MICHAEL E.
SULLIVAN, ESQ.,
Defendants-Respondents/
Cross-Appellants.
____________________________
Argued February 6, 2019 – Decided June 13, 2019
Before Judges Fuentes, Accurso and Moynihan.
On appeal from Superior Court of New Jersey, Law
Division, Cumberland County, Docket No. L-0086-15.
Scott B. Piekarsky argued the cause for appellant/cross-
respondent (Piekarsky & Associates, LLC, attorneys;
Scott B. Piekarsky, of counsel and on the brief; Mark
R. Faro, on the brief).
Christopher J. Carey argued the cause for
respondents/cross-appellants (McElroy, Deutsch,
Mulvaney & Carpenter, LLP, attorneys; Christopher J.
Carey, of counsel and on the brief; Jennifer L. Casazza,
on the brief).
PER CURIAM
Parker McCay (Parker) and Howard Cohen and Michael E. Sullivan, two
Parker attorneys, (collectively: defendants), 1 represented plaintiff Atlantic City
Souvenir and Snacks, Inc. (AC Souvenir) in connection with the termination of
AC Souvenir's lease at New Jersey Transit's (NJT) Atlantic City bus terminal
consequent to a redevelopment plan by the Casino Reinvestment Development
Authority (Authority) and Atlantic City Associates (Associates). Unsatisfied
with defendants' representation during litigation related to that termination, AC
Souvenir filed suit against defendants. It appeals from the trial court's
September 25, 2017 order dismissing its complaint with prejudice.2 That order
1
Plaintiff voluntarily withdrew its claims against defendants Kris Kolluri and
Stephen Mushinski. They are not parties to this appeal.
2
Defendants cross-appeal from the trial court's orders of May 30, 2013 and
September 8, 2017 denying their motions for summary judgment and
reconsideration of that denial, respectively. "[A]ppeals are taken from orders
and judgments and not from opinions, oral decisions, informal written decisions,
or reasons given for the ultimate conclusion." Hayes v. Delamotte, 231 N.J.
373, 387 (2018) (quoting Do-Wop Corp. v. City of Rahway, 168 N.J. 191, 199
A-1113-17T4
2
followed a Rule 104 hearing held pursuant to defendants' motions in limine,
after which the court excluded the testimony of AC Souvenir's liability and
damages experts.
AC Souvenir argues the motions in limine were precluded by the law of
the case doctrine in light of the trial court's prior denial of defendants' motion
for summary judgment and motion to reconsider the denial of that motion and
because these motions were in effect, late-filed dispositive summary judgment
motions. According to AC Souvenir, the trial court also erred in precluding the
testimony of its damages expert and its liability expert's opinion that defendants
should have asserted a claim against NJT and Associates based on equitable
estoppel. We reject these arguments and affirm.
AC Souvenir, whose sole shareholders are Russell and Loretta Graddy, 3
operated an ongoing restaurant, newsstand and gift shop in NJT's Atlantic City
bus station pursuant to a March 11, 1991 lease. The lease, in paragraph 21,
provided for NJT's right of termination in the event of a major reconstruction of
(2001)). Defendants, therefore, are not permitted to file a cross-appeal based
only on the way the court decided to adjudicate the case.
3
We refer to Russell Graddy by his first name in order to avoid confusion with
Loretta. We mean no disrespect by such familiarity.
A-1113-17T4
3
the bus terminal that required AC Souvenir's space to be closed or if AC
Souvenir changed its ongoing use.4 AC Souvenir was entitled, under that lease
provision, to continue its operation in "any other [t]erminal space for the
remainder of [the lease] term" and NJT was required to pay it "the unamortized
cost of the initial leasehold improvements and stationary capital equipment
purchases."
A dispute between NJT and AC Souvenir – during which Parker 5
represented AC Souvenir – involving the relocation of the bus terminal resulted
in an April 1998 settlement whereby the March 1991 lease was continued for
ten years, retroactive to September 1, 1997, for space in the "new" bus terminal
with two automatic five-year extensions.
The Authority later entered into an agreement with Associates that
included the redevelopment of the "new" bus terminal property and the
relocation of the bus terminal to yet another site, subject to the Authority's
4
The same paragraph also provided for NJT's right of termination if the bus
terminal was sold or developed, requiring AC Souvenir to vacate its space.
Paragraph 22 of the lease provided for termination of the lease in the event of a
condemnation from the date title vested in the condemnor.
5
The firm was previously known as Parker, McCay & Criscuolo, PA.
A-1113-17T4
4
acquisition of the "new" bus terminal from NJT. In furtherance of that plan,
NJT sent AC Souvenir a notice dated December 22, 2003 terminating the lease.
AC Souvenir contends it engaged Parker to initiate discussions with NJT
about the impending relocation and its concerns of having to again bear the costs
of same as it was still paying a loan it took to pay for the costs of moving to the
"new" bus terminal less than seven years prior. Parker sent a proposed
settlement agreement to counsel for NJT and Associates on September 29, 2004.
Russell claims that the settlement with NJT in connection with the first
relocation was successful because he retained the keys to the leased premises,
and that he told Parker that he wished to follow the same tack during this
litigation in order to foster a favorable resolution. Russell also claims
defendants "worked out a tentative 2004 settlement" to which AC Souvenir
agreed and that Cohen "falsely told that [Associates] promised a 'seamless
transfer' and that [Associates] and NJT would pay for the move" to its third bus
terminal location. He asserts he "later learned . . . defendants failed to ensure
NJT's agreement to the terms" of the settlement but in reliance on Cohen's
misrepresentations, "Cohen forced me to turn over my keys to NJT, without a
signed agreement in place." Defendants' advice also caused AC Souvenir to
"continue[] to pay rent to NJT in accord with the terms of the [1998 settlement
A-1113-17T4
5
agreement] even though it was no longer operating a restaurant in either
terminal." According to Russell, he was forced out after NJT received the keys,
and Associates "refused to facilitate a 'seamless transfer'" because AC
Souvenir's space was free for a new tenant. Although Russell maintains that
defendants filed suit against NJT "in or about early 2005" after negotiations
failed, Parker filed a complaint on behalf of AC Souvenir and the Graddys
against NJT, Associates and the Authority during the first week of December
2004. AC Souvenir contends its litigation-goals were to: (1) secure payment
for relocation expenses; (2) require defendants to cover its lost profits due to the
relocation; and (3) credit it with the lease payments made to defendants after
cessation of its business operations.
After further proceedings, suspended settlement negotiations and the
scheduling of trial for February 2007, the parties reached a settlement, the terms
of which were placed on the record in court on February 1, 2007 in Russell's
presence: AC Souvenir was to be paid $183,000 to be held in escrow by Parker
and released pursuant to a building schedule for the fit-out of the new 3000
square foot space that AC Souvenir was to occupy in the third bus terminal; AC
Souvenir was to bear all fit-out costs, including approved signage; AC Souvenir
was to pay rent for November and December 2006, January 2007 and thereafter
A-1113-17T4
6
in accordance with the existing lease which was to remain in effect as amended;
AC Souvenir would comply with security measures implemented by NJT; and
the equipment from AC Souvenir's location at the "new" bus terminal would be
available to it for removal from storage at its own cost. Russell was then
questioned by one of Parker's lawyers and the judge:
[PARKER ATTORNEY:] Otherwise, I think the terms
are correct, is that correct, Mr. Graddy?
MR. GRADDY: That's correct, yeah.
[PARKER ATTORNEY:] So acceptable to you, sir,
and –
MR. GRADDY: Yes, it is.
[PARKER ATTORNEY:] Thank you, sir.
THE COURT: Okay, Mr. Graddy, you're satisfied with
what we worked out here?
MR. GRADDY: Yes, sir.
[ASSOCIATES/NJT'S ATTORNEY:] Your honor, is
the witness sworn? I –
[PARKER ATTORNEY:] No, no, no. There is no need
for that. Otherwise, I wouldn’t ask his – his client to
do that. I think if –
THE COURT: Okay, well, I think I can solve that real
quick. Mr. Graddy, you're telling us the truth, right?
MR. GRADDY: Yes, sir.
A-1113-17T4
7
THE COURT: Okay, and you want to enter into this
settlement agreement freely and voluntarily?
MR. GRADDY: Yes, sir.
THE COURT: Nobody is forcing you to do this, sir.
MR. GRADDY: No, sir.
THE COURT: And you understand that there's nothing
that you need explained at this point?
MR. GRADDY: That's correct, Your Honor.
THE COURT: And you're satisfied that this [c]ourt
will retain jurisdiction in the event that there's a dispute
in the future.
MR. GRADDY: Yes.
THE COURT: Okay.
[PARKER ATTORNEY:] I would like to ask the
[c]ourt to satisfy myself, of course, just as counsel did
that his client understands the same things, the [c]ourt
ask the same questions.
THE COURT: Absolutely. Okay, your name for the
record, please.
MS. GILL: Bernadette Gill.
THE COURT: Okay, Ms. Gill, and you understand the
terms of the settlement agreement, correct?
MS. GILL: That's correct.
A-1113-17T4
8
THE COURT: All right, and you realize that you could
have a trial today rather than settling this case, but if
you settle it you're going to give up your rights to a trial,
do you understand all that?
MS. GILL: Yes, I do, Your Honor.
THE COURT: Okay, nobody is forcing you to enter
into this agreement, right?
MS. GILL: That's correct, Your Honor.
THE COURT: Do you understand it all?
MS. GILL: Yes, I understand it all, Your Honor.
AC Souvenir argues defendants "misrepresented the legal meaning of the
settlement terms . . . to induce it to enter into its agreement" as set forth on the
record. Specifically, it alleges it relied on defendants' representations that the
agreement included:
the allocation of the fit[-]out and relocation costs to
[Associates]; the installation of new equipment of
equivalent or superior quality to [AC Souvenir's]
equipment at [Associates'] expense; a seamless transfer
with no loss of business for [AC Souvenir]; and
compensation [for] any loss of business due to the
relocation.
AC Souvenir asserts it sought to clarify the settlement terms on February 1,
2007, but defendants advised it "that it could not raise comments in court
A-1113-17T4
9
regarding any of the outstanding details and that they would be resolved before
the settlement was final."
AC Souvenir refused to execute the prepared written settlement
agreement. NJT and Associates filed a motion to compel enforcement of the
settlement which was granted. Thereafter, the court denied AC Souvenir's
motion to vacate that order.
AC Souvenir filed suit against defendants and retained William H.
Michelson and June M. Toth as experts. Michelson opined defendants
committed legal malpractice by failing to bring what AC Souvenir describes in
its merits brief as "two viable claims": an inverse condemnation action against
Associates for the taking of its leasehold interest and that "equitable estoppel
could have been successfully invoked against both NJT and [Associates]." Toth
authored her opinion as to damages in a written report.
AC Souvenir argues defendants' motions in limine should have been
denied because: the motions in limine "were in reality summary judgment
motions filed for reconsideration on the day of trial"; defendants' prior motion
for summary judgment was denied, as was their motion to reconsider that denial,
and the law of the case doctrine precluded the motions in limine; Toth's
testimony should not have been precluded because she did not offer a net
A-1113-17T4
10
opinion; and Michelson's testimony that defendants should have asserted an
equitable estoppel claim should not have been precluded as a net opinion.
The trial court's September 8, 2017 order granted only defendants' motions
in limine to hold a Rule 104 hearing "to determine the admissibility of [AC
Souvenir's] liability expert" – Michelson – and to limit damages to those
sustained by AC Souvenir and not Russell, who was not a named plaintiff in the
suit against defendants. The court reserved on the other motions in limine to
bar: the testimony of Michelson, Toth and other witnesses, and certain claims
for damages; the court denied defendants' motion to bifurcate.
Although defendants challenged that order because it also denied their
motion for reconsideration of the order denying their motion for summary
judgment,6 AC Souvenir did not appeal from that order; that order is not listed
in its notice of appeal or in the civil case information statement. We have made
clear "it is only the judgment or orders designated in the notice of appeal which
are subject to the appeal process and review." 1266 Apartment Corp. v. New
Horizon Deli, Inc., 368 N.J. Super. 456, 459 (App. Div. 2004). We will not
consider an order if the appellant "did not indicate in his notice of appeal or case
6
The September 8, 2017 order provides the date of the order denying summary
judgment was March 21, 2013; the order denying summary judgment provided
in the record is dated May 30, 2013.
A-1113-17T4
11
information statement that he was appealing from the order." Fusco v. Bd. of
Educ. of City of Newark, 349 N.J. Super. 455, 460-61, 461 n.1 (App. Div. 2002).
We recognize that the September 25, 2017 order from which AC Souvenir
did appeal reflected the court's rulings on issues on which it reserved. We will
consider those rulings barring AC Souvenir's experts. Although the procedural
issues now raised by AC Souvenir were the subject of the court's September 8
order from which it did not take an appeal, we nonetheless reject its procedural
arguments.
The trial court properly exercised its discretion in ordering a hearing under
Rule 104(a) which provides, "[w]hen the . . . admissibility of evidence . . . is in
issue, that issue is to be determined by the judge. . . . [who] may hear and
determine such matters out of the presence or hearing of the jury." As our
Supreme Court held in Townsend v. Pierre, 221 N.J. 36, 53-54 n.5 (2015):
"When it decides a motion to strike an expert report, a trial court may conduct a
hearing under N.J.R.E. 104(a). N.J.R.E. 104(a) prescribes a procedure by which
a trial court may 'assess the soundness of [an expert's] proffered methodology
and the qualifications of the expert.'" (quoting Rubanick v. Witco Chem. Corp.,
125 N.J. 421, 454 (1991)).
The Rule 104 hearing allows the court to assess whether
the expert's opinion is based on scientifically sound
A-1113-17T4
12
reasoning or unsubstantiated personal beliefs . . . . In
the course of the Rule 104 hearing, an expert must be
able to identify the factual basis for his conclusion,
explain his methodology, and demonstrate that both the
factual basis and underlying methodology are
scientifically reliable.
[Kemp v. State, 174 N.J. 412, 427 (2002).]
We note that during proceedings on the motions in limine, AC Souvenir's
counsel stated, "We would agree that [a] 104 [h]earing would be appropriate at
this point after the argument and colloquy that we've had."
The procedure employed by the trial court allowed it to hear Michelson's
testimony regarding his written report and deposition testimony, about which
the court "was troubled" because of "the language used by [the] expert." The
court professed difficulty in understanding some of Michelson's opinions and
was concerned that portions of his trial testimony might not be appropriately
presented to a jury because they were based on speculation. The trial court
explained that the Rule 104 hearing would allow it "to be fair to every[one],
[and] when the expert appear[ed] before [the court] and showed . . . what he
[was] going to show the jury, then [the court was able to] make a better decision"
about which portions, if any, were admissible. We agree.
"Qualified expert testimony is admissible to assist the jury but there must
be a factual and scientific basis for an expert's opinion. An opinion lacking in
A-1113-17T4
13
foundation is worthless." Jimenez v. GNOC, Corp., 286 N.J. Super. 533, 540
(App. Div. 1996) (citations omitted). The trial court prudently used the Rule
104 hearing to determine the admissibility of the expert's opinions.
We disagree with AC Souvenir's argument that our holding in Cho v.
Trinitas Regional Medical Center, 443 N.J. Super. 461 (App. Div. 2015),
precluded defendants from moving in limine to bar its experts' opinions because
the motions were dispositive. In Cho, defendant's motions in limine were filed
the day after the trial call. Id. at 467-68. Here, defendants filed the notice of
motions in limine on August 30, 2016. The trial court granted the motion to
hold a Rule 104 hearing on September 8, 2017, well in advance of the October
2, 2017 scheduled trial date. Thus defendants did not "misuse . . . the motion in
limine" as "a summary judgment motion that happen[ed] to be filed on the eve
of trial." Id. at 471. AC Souvenir had ample notice of the motions, responded
to same, participated in the hearing in which Michelson testified and argued
against the motions thus obviating any of the due process concerns we voiced in
Cho, 443 N.J. Super. at 473-75. And, as we determined, the hearing allowed the
judge to fulfill his gatekeeper function. See In re Accutane Litig., 234 N.J. 340,
347-48, 386 (2018).
A-1113-17T4
14
We also reject AC Souvenir's contention that the prior decisions denying
defendants' motions for summary judgment and reconsideration of that denial
constituted the law of the case regarding the experts' testimony. A careful
review of the transcript of proceedings reveals that AC Souvenir's law-of-the-
case arguments were raised in connection with defendants' motion for
reconsideration of the summary judgment denial. In that some of the motion in
limine issues were intermixed with the reconsideration issues during argument,
we consider the law-of-the-case argument as it relates to the in limine motions.
As we observed in Jacoby v. Jacoby, 427 N.J. Super. 109, 117-18 (2012):
The doctrine is not an absolute rule as "'the court is
never irrevocably bound by its prior interlocutory
ruling[.]'" In fact, it is well-accepted that "[a] hallmark
of the law of the case doctrine is its discretionary
nature, calling upon the deciding judge to balance the
value of judicial deference for the rulings of a
coordinate judge against those 'factors that bear on the
pursuit of justice and, particularly, the search for
truth.'" Further, the doctrine is to "be applied flexibly
to serve the interests of justice."
[(Alterations in original) (Citations omitted).]
The trial court did not abuse its discretion in hearing the motions in limine.
The court reviewed the experts' reports and deposition testimony and,
notwithstanding the prior denial of summary judgment, had questions as to the
admissibility of the opinions. The lack of clarity in the record before the trial
A-1113-17T4
15
court that necessitated Michelson's testimony – new evidence that was not
before the court during the summary judgment motion – informed the trial
judge's evidentiary ruling on the expert testimony. In balancing those
considerations against the deference that was due the prior summary judgment
decision, we do not discern that the trial judge was bound to follow that decision.
Gonzalez v. Ideal Tile Importing Co., Inc., 371 N.J. Super. 349, 356 (App. Div.
2004), aff'd, 184 N.J. 415 (2005). As was the case in Gonzalez, "an order
denying summary judgment is not subject to the law of the case doctrine because
it decides nothing and merely reserves issues for future disposition." Ibid. The
issue reserved here was the admissibility of the expert opinions.
We address AC Souvenir's arguments regarding the admissibility of its
experts' opinions. Substantively, AC Souvenir argues its damages expert, Toth,
should have been allowed "to testify because her report was not a net opinion"
and its liability expert, Michelson should have been allowed to testify as to its
equitable estoppel claim. Contrary to AC Souvenir's contention, the trial court
did not dismiss its complaint based on its findings regarding Michelson's
equitable estoppel theory "applying the summary judgment standard." The
court's decisions regarding the experts' opinions were based on its appraisal of
the admissibility of that evidence.
A-1113-17T4
16
"[T]he decision to admit or exclude evidence is one firmly entrusted to the
trial court's discretion." State v. Scott, 229 N.J. 469, 479 (2017) (alteration in
original) (quoting Estate of Hanges v. Metro. Prop. & Cas. Ins. Co., 202 N.J.
369, 383-84 (2010)). We "apply a deferential standard in reviewing a trial
court's evidentiary rulings and uphold its determinations 'absent . . . an abuse of
discretion.'" Id. at 479 (quoting State v. Perry, 225 N.J. 222, 233 (2016)). An
abuse of discretion may only be shown if there is a clear error in judgment or a
ruling that would result in a manifest denial of justice. Ibid.Turning first to Michelson's opinion that "equitable estoppel could have
been successfully invoked against both NJT and [Associates]," we recognize our
Supreme Court's
description of equitable estoppel:
Conduct amounting to a misrepresentation
or concealment of material facts, known to
the party allegedly estopped and unknown
to the party claiming estoppel, done with
the intention or expectation that it will be
acted upon by the other party and on which
the other party does in fact rely in such a
manner as to change his position for the
worse gives rise to an equitable estoppel.
[Carlsen v. Masters, Mates & Pilots
Pension Plan Tr., 80 N.J. 334, 339 (1979).]
A-1113-17T4
17
As that description recognizes, essential to a finding of
estoppel is a misrepresentation of material fact by one
party and an unawareness of the true facts by the party
seeking an estoppel.
[Horsemen's Benevolent & Protective Ass'n v. Atl. City
Racing Ass'n, 98 N.J. 445, 456 (1985).]
"It is a doctrine designed to prevent a party's disavowal of previous conduct if
such repudiation 'would not be responsive to the demands of justice and good
conscience.'" Carlsen, 80 N.J. at 339 (quoting W. Jersey Title & Guar. Co. v.
Indus. Tr. Co., 27 N.J. 144, 153 (1958)).
Citing to our decision in Williams Scotsman, Inc. v. Garfield Board of
Education, 379 N.J. Super. 51 (App. Div. 2005), Michelson noted that "equitable
estoppel has been applied against government entities to prevent 'manifest
injustice.'" He continued,
I think equitable estoppel could have been successfully
invoked against both NJT and [Associates], to prevent
the manifest injustice that I see here. It simply offends
justice that they were taking a store containing [ten]-
year-old fixtures and equipment, and thereby requiring
[AC Souvenir] to absorb the cost of all-new equipment
and materials, if it wanted to stay in business.
The trial court did not find the elements of equitable estoppel present under the
facts of the case because, despite settlement negotiations, there was never a
A-1113-17T4
18
meeting of the minds as to final terms because of the unmet demands of AC
Souvenir.
Michelson did not delineate any misrepresentations or concealment of
facts by NJT or Associates. Nor does he point to any term that AC Souvenir
relied upon or could have relied upon to its detriment. Although it argues in its
merits brief that it relied on Associates' representations during settlement
discussions, AC Souvenir did not have the right to rely on terms discussed
during an unsettled negotiation. See Weichert Co. Realtors v. Ryan, 128 N.J.
427, 435 (1992) ("Where the parties do not agree to one or more essential terms
. . . courts generally hold that the agreement is unenforceable.").
Our Rules of Evidence require that an expert's opinion be based upon
"facts or data . . . perceived by or made known to the expert . . . before the
hearing." N.J.R.E. 703. "An expert's conclusion is considered to be a 'net
opinion,' and thereby inadmissible, when it is a bare conclusion unsupported by
factual evidence. In other words, an expert must '"give the why and wherefore"
of his or her opinion, rather than a mere conclusion.'" Creanga v. Jardal, 185
N.J. 345, 360 (2005) (citations omitted). The Townsend Court warned against
the admission of
unsubstantiated expert testimony [because it] cannot
provide to the factfinder the benefit that N.J.R.E. 702
A-1113-17T4
19
envisions: a qualified specialist's reliable analysis of
an issue "beyond the ken of the average juror." Given
the weight that a jury may accord to expert testimony,
a trial court must ensure that an expert is not permitted
to express speculative opinions or personal views that
are unfounded in the record.
[221 N.J. at 55 (citations omitted).]
Michelson failed to connect any facts in the record involving NJT's or
Associates' conduct to an industry standard related to the equitable estoppel
doctrine; he offered only his personal opinion about the hardship alleged
suffered by AC Souvenir. We do not perceive any abuse of discretion in the
trial court's preclusion of Michelson's testimony regarding equitable estoppel.
Although the trial court ruled that Michelson could testify as to AC
Souvenir's inverse condemnation claim, it found Toth's opinion was "inadequate
to represent damages in an inverse condemnation case since it dealt with
expenses incurred by [AC Souvenir and Russell] related to forced relocation."
The court noted Toth admitted in her report that she "was asked to prepare
calculations on economic damages as a result of the actions and inactions of
[defendants] for purposes of settlement discussions. . . . 'But [she] was not asked
to perform a loss profit analysis or perform a business evaluation. '" The court
found Toth based her opinion on depreciation schedules, corporate returns and
A-1113-17T4
20
compilation reports prepared by AC Souvenir's accounts and prepared a report
that
summarizes the shareholder loans and gives schedules
for capitalized assets, schedule of expenses from 2004
corporate return, and a summary of the damages and the
report under the shareholder loan activity, and it lists
$513,074.94 for the period of January 1st, 2005 to April
10, 2010, and also lists $506,253.71 as accounting,
legal, and professional fees related to litigation and
$55,000 for rent location. In the, under capital – in the
capitalized assets the report indicates a total of
$928,517.18, including furniture, fixtures,
improvement, machinery and equipment and vehicles
with associated useful lives, the largest useful life being
the life expectancy of 39 years, and values that at
$575,739.32. The report then sets out depreciation of
approximately $500,000, and results in a net book value
of $428,975.52. The report also indicates professional
accounting expenses of $128,707. The report then adds
direct costs from 2005 to 2010 and direct cost from
2004 arrives at $634,906.71 as the total damages.
The trial court, however, recognized that the proper measure of damages
for the taking of a leasehold was the value of the leasehold interest and that Toth
did not calculate that amount. The court also found Toth "simply [took the]
depreciated value of [AC Souvenir's] undifferentiated equipment and [its]
balance sheet" but did not set forth the value of each item nor calculate the
amount by which the leasehold was increased by any equipment. The court
observed Toth did not explain "where these numbers should be utilized. They're
A-1113-17T4
21
just numbers from the . . . books and records of the corporation, which may be
a start [of an] evaluation"; as such, the court ruled Toth's opinion inadmissible.
The trial court did not abuse its discretion in so ruling. In an eminent
domain case, we held that a
tenant's recoverable damage, if any, is ascertained and
determined fundamentally by a comparison of the fair
value of the leasehold interest and the rent reserved.
The burden descends upon the tenant to disclose by a
fair preponderance of the evidence that the fair market
value of his lease was greater than the rent reserved.
[New Jersey Highway Auth. v. J. & F. Holding Co., 40
N.J. Super. 309, 316 (App. Div. 1956) (citation
omitted).]
Eight years later, our Supreme Court held:
"If the [leased] premises are condemned prior to the
expiration of the lease, the lessee suffers no added
expense on account of removing the personal property,
and, since he is awarded the fair market value of the
unexpired portion of his term, he is made whole without
reimbursement for removal damages."
[State ex rel. State Highway Comm'r v. Gallant, 42 N.J.
583, 588 (1964).]
In J. & F. Holding, we said, "a tenant may not claim from the award
damages for his loss of business, profits, good will, fixtures, cost of removal and
the like." 40 N.J. Super. at 316. The Gallant Court, likewise held, as a general
rule, "damages incidental to the taking, such as loss to or destruction of good
A-1113-17T4
22
will, expense of moving to a new location, profits lost because of business
interruption, or inability to relocate" are ordinarily excluded from recovery. 42
N.J. at 587. "Denial of such alleged losses has been judicially justified upon the
reasoning that they are too difficult, remote and uncertain to measure accurately
and their allowance might well result in unfounded and exaggerated awards
which could exceed the constitutionally established norm." Ibid. The Court
added, fee owners are "generally not entitled to compensation for personalty
abandoned in the condemned premises nor for the expenses of removing
personalty." Ibid. The Court specifically recognized prior decisions, including
J. & F. Holding, that ruled "[m]oving expenses in connection with condemnation
of leasehold interests have . . . been disallowed." Id. at 588.
Since Toth's calculation of damages did not relate to any legal standard,
the trial court properly excluded her opinion.
"[I]n nearly all malpractice cases, plaintiff need[s] to produce an expert
regarding deviation from the appropriate standard." Garcia v. Kozlov, 179 N.J.
343, 362 (2004). "As 'the duties a lawyer owes to his client are not known by
the average juror,' expert testimony must necessarily set forth that duty and
explain the breach." Buchanan v. Leonard, 428 N.J. Super. 277, 288 (App. Div.
2012) (quoting Carbis Sales, Inc. v. Eisenberg, 397 N.J. Super. 64, 78 (App.
A-1113-17T4
23
Div. 2007)). Where the standard of care that should guide an attorney in the
situation presented would not be readily apparent to persons of average
intelligence and ordinary experience, the assistance of an expert opinion is
required. See id. at 289.
Absent Michelson's testimony on liability under the equitable estoppel
doctrine and Toth's testimony about damages under the inverse condemnation
claim, AC Souvenir could not prove its case. See Innes v. Marzano-Lesnevich,
435 N.J. Super. 198, 212 (App. Div. 2014), (recognizing a plaintiff's failure to
produce expert testimony in legal malpractice claims is often fatal), aff'd as
modified, 224 N.J. 584 (2016). We determine the trial court's holdings were
correct.
Affirmed.
A-1113-17T4
24