OAK TREE CASH & CARRY, LLC VS. 1630 OAK TREE, LLC (L-8125-12, MIDDLESEX 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NOT FOR PUBLICATION WITHOUT THE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 hers use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-4380-18T3
OAK TREE CASH & CARRY,
LLC,
Plaintiff/Third-Party
Defendant-Appellant,
v.
1630 OAK TREE, LLC,
SAM DOSHI, HINAXI DOSHI
and JASON DOSHI,
Defendants/Third-Party
Plaintiffs-Respondents,
and
HABIB AMERICAN BANK
and TRILOCKI BATRA,
Third-Party Defendants,
and
CHIRAG BATRA,
Third-Party Defendant-
Appellant.
___________________________
Submitted October 1, 2020 – Decided November 30, 2020
Before Judges Ostrer and Vernoia.
On appeal from the Superior Court of New Jersey, Law
Division, Middlesex County, Docket No. L-8125-12.
Law Offices of Susheela Verma, attorney for appellants
(Nishi Patel and Susheela Verma, on the briefs).
Robbins and Robbins, LLP, attorney for respondents
(Spencer B. Robbins, on the brief).
PER CURIAM
In our prior decision in this matter, Oak Tree Cash & Carry, LLC v. 1630
Oak Tree, LLC, we remanded for the trial court to conduct a proof hearing on the
causes of action asserted in defendants/third-party plaintiffs 1630 Oak Tree LLC's
(1630 Oak Tree), Sam Doshi's, Hinaxi Doshi's, and Jason Doshi's (collectively
"defendants") third-party complaint against Chirag Batra (Batra), and to determine
the appropriate disposition of $39,600 in escrow funds. No. A-5463-14 (App. Div.
Apr. 12, 2018) (slip op. at 29-31). Following the proof hearing, the court entered
an order finding plaintiff Oak Tree Cash & Carry, LLC (C&C) and Batra jointly
and severally liable to defendants for compensatory and punitive damages and for
attorney's fees. The remand court did not directly decide the escrow funds issue.
C&C and Batra appeal from the order, claiming the court exceeded the scope
of our remand order and made erroneous findings of fact and conclusions of law.
A-4380-18T3
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Based on our review of the record in light of the applicable legal principles, we
reverse the court's order finding C&C and Batra liable and awarding defendants
compensatory and punitive damages and attorney's fees. We remand for the court
to consider and decide whether monies held in escrow pursuant to a prior trial court
order should be returned to C&C or defendants.
I.
The facts pertinent to the causes of action asserted in defendants' third-party
complaint against Batra are detailed in our prior opinion and need not be repeated
at length here. See Oak Tree Cash & Carry, LLC, slip op. at 8-10. We restate the
facts only to the extent required to provide context for our discussion of the issues
raised on appeal.
C&C filed an action against defendants for possession of the property that
1630 Oak Tree purchased in July 2012 at a sheriff's sale ordered in a foreclosure
proceeding. The foreclosure proceeding was brought by Habib American Bank
(HAB) against the property's then-owner Om Namoh Shivoy, LLC (ONS). In
its complaint against defendants, C&C alleged it was entitled to possession of the
first floor and basement of a building on the property pursuant to a long-term lease
with ONS. C&C also sought damages based on claims defendants wrongly
deprived it of use of the property following their purchase of the property at the
A-4380-18T3
3
sheriff's sale and damaged or converted C&C's personalty on the premises following
the purchase.
Following the filing of C&C's complaint, the court entered an order allowing
C&C's possession of the property pending the outcome of a hearing on its claimed
entitlement to possession under the purported lease. The court later entered an order
requiring that C&C make $3,300 monthly rent payments to 1630 Oak Tree and pay
$39,600 "for unpaid base rent" for the eleven-month period prior to August 2012.
The court ordered the $39,600 was to be held in defendants' counsel's escrow
account pending further order of the court.
Defendants filed a counterclaim and third-party complaint.1 In the four-count
counterclaim against C&C, defendants alleged: they never entered into a lease with,
or accepted an attornment from, C&C, and C&C maintained unlawful possession
of the property and instituted a fraudulent lawsuit for possession based on a
fraudulent lease (count one); C&C's lawsuit for possession was frivolous (count
two); C&C's actions prevented defendants' use and occupancy of the property
(count three); and C&C caused damage to the property during the pendency of its
lawsuit (count four).
1
The original third-party complaint was amended. We summarize the
allegations in the amended third-party complaint.
A-4380-18T3
4
In the third-party complaint, defendants asserted four claims against Batra
that mirrored the claims they asserted against C&C in the counterclaim.2
Defendants alleged: Batra is "the individual owner" of C&C, he executed a
fraudulent lease to interfere with defendants' use of the property, he maintained
unlawful possession of the property, and he instituted a "fraudulent lawsuit" for
possession of the property (count two); Batra brought a frivolous lawsuit for
possession of the property (count three); Batra's actions deprived defendants of use
and occupancy of the property (count four); and Batra caused damage to the
property during the pendency of C&C's lawsuit (count five).
Batra did not file a responsive pleading to the third-party complaint, and
default was entered against him in June 2014. The court later denied Batra's motion
to vacate default, entered a default judgment in defendants' favor against Batra, and
ordered the scheduling of a proof hearing. The court subsequently denied Batra's
motion for reconsideration.
2
The third-party complaint included a cause of action (count one) against HAB.
HAB financed the purchase of the property by its former owner, ONS, and, as
noted, was the plaintiff in the foreclosure action that resulted in the sheriff's sale
of the property to 1630 Oak Tree. In count one of the third-party complaint
against HAB, defendants alleged that prior to the sheriff's sale HAB falsely
represented there were no leases on the property. The disposition of count one
of the third-party complaint against HAB is not at issue on appeal.
A-4380-18T3
5
The Special Civil Part held a trial on plaintiff's cause of action for possession,
and entered a May 2, 2013 order finding C&C's 2009 lease "was terminated by the
[f]inal [j]udgment in [f]oreclosure," and that no "attornment [of the lease] was ever
created between" HAB and C&C. The court also determined C&C "lost its right to
possession of" the property and 1630 Oak Tree was entitled to possession. The
court ordered C&C to vacate the property and remove its belongings within thirty
days. C&C's damage claims and defendants' counterclaim and third-party
complaint were transferred to the Civil Part for trial. The court's order did not make
any provision for the disbursement of the $39,600 it previously directed be paid by
C&C and held in escrow for back rent.
Following the parties' opening statements at the subsequent bench trial on the
parties' respective damage claims, the court dismissed C&C's claims against
defendants, defendants' counterclaims against C&C, and defendants' third-party
claims against Batra. Defendants appealed from the dismissal of the counterclaims
and third-party complaint, and C&C cross-appealed from the dismissal of its
complaint. Batra appealed from the orders denying his motions to vacate default
and for reconsideration.
We affirmed the court's dismissal of C&C's complaint against defendants.
Oak Tree Cash & Carry, LLC, slip op. at 13-18. We also affirmed the dismissal of
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the four causes of action in defendants' counterclaims against C&C. Id. at 18-25.
We observed the "counterclaims alleged C&C instituted a fraudulent and frivolous
lawsuit based on a non-existent, sham lease, which caused them damages and legal
fees," id. at 18, and we concluded the representations in defendants' opening
statement and in the proffers made to the court did not demonstrate defendants could
"show[] [Batra] or C&C had acted in bad faith," id. at 25.
We rejected Batra's claim the court erred by denying his motions to vacate
default and for reconsideration. Id. at 29. We explained the third-party complaint
against Batra alleged he "executed 'a fraudulent lease' to interfere with defendants'
possession of the [p]roperty, and that [Batra] instituted a fraudulent lawsuit against
[defendants] based on 'a non-existent lease that was a sham.'"3 Ibid.
We also observed Batra raised "procedural issues" for the first time on appeal.
Id. at 30. More particularly, we noted Batra claimed he was not a party to the
lawsuit C&C brought against defendants, and defendants did not name him in their
Rule 1:4-8(b) demand for withdrawal of C&C's complaint. Ibid. We further found
Batra did not offer any reason for his failure to raise the procedural issues in either
3
The third-party complaint also named Batra's father, Trilocki Batra, as a
defendant and asserted the same claims against him that were alleged against
Batra. The claims against Trilocki Batra were dismissed without prejudice after
he filed for bankruptcy. Id. at 3 n.1.
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"a properly filed answer" or in his motions challenging the entry of default against
him. Ibid.
We found the court had failed to hold the proof hearing it had ordered when
the default judgment was entered against Batra. Ibid. We remanded for the court
to conduct a proof hearing on defendants' third-party claims against Batra. Ibid.
We explained we did not express any opinion on whether defendants' claims against
Batra "replicate[d]" defendants' causes of action against C&C or whether the claims
against Batra "implicate[d] the procedural issues" under Rule 1:4-8 that he raised
for the first time on appeal. Id. at 31. Those issues were left to the remand court's
discretion to consider either at the proof hearing or in a Rule 4:50-1(f) motion. Ibid.
We also directed that the remand court address whether the $39,600 being held in
escrow, which the Special Civil Part judge ordered C&C to pay for back rent, should
be disbursed to defendants or returned to C&C. Ibid.
At the proof hearing held pursuant to our remand order, Jason Doshi testified
as defendants' sole witness. He explained 1630 Oak Tree was formed to purchase
the property as the new location for a business he owned. Shortly after 1630 Oak
Tree purchased the property at the sheriff's sale, C&C filed the civil action for
possession and damages against defendants.
A-4380-18T3
8
Jason Doshi explained C&C's civil claims were founded on an alleged lease
that "[didn't] make sense" financially and was false. He testified the mortgage
payment, taxes, and carrying costs for the property greatly exceeded the rent
charged under the purported lease and, as a result, the lease was not financially
feasible. He testified the law firm of Rajan & Rajan, LLP, first represented
defendants in C&C's civil suit, and then the firm of Robbins & Robbins, LLP,
represented defendants in the matter.
Jason Doshi also testified Batra filed criminal complaint-summonses alleging
theft and criminal mischief offenses against him, Sam Doshi, and Hinaxi Doshi
(collectively the "Doshis").4 The complaint-summonses were later dismissed.
Jason Doshi testified the Doshis retained Andrew Maze as their attorney to defend
the criminal complaint-summonses Batra filed against them.
During the proof hearing, defendants voluntarily dismissed count five of the
third-party complaint, which alleged C&C damaged the property while in
possession during the pendency of C&C's lawsuit. Following the proof hearing, the
4
The criminal complaint-summonses alleged that following 1630 Oak Tree's
purchase of the property, the Doshis entered the premises leased by C&C and
damaged and stole C&C's property.
A-4380-18T3
9
court issued a written opinion on the three remaining claims against Batra—those
contained in counts two, three, and four of the third-party complaint.
In its opinion, the court recognized our remand required a proof hearing "as
to [Batra] only" on the causes of action against him in the third-party complaint.
Nonetheless, the court found defendants were "entitled to judgment against C&C
for legal fees incurred in defending against the suit for personal property and the
criminal complaint" because "both" actions were "frivolous."
With regards to the three claims remaining against Batra, the court
determined the third count of the complaint asserted a cause of action under the
frivolous claims statute, N.J.S.A. 2A:15-59.1(b). The court dismissed the claim
against Batra based on its finding defendants failed to provide the requisite notice
of the claim pursuant to Rule 1:4-8.
The court construed the remaining counts of the third-party complaint—
counts two and four—as asserting causes of action for common law fraud against
Batra. The court then detailed a series of actions taken by Batra that the court
determined constituted material misrepresentations made to defendants. For
example, the court found Batra: sought to enforce a lease against defendants that
"made no economic sense"; committed to pay a security deposit and rent to ONS
and the rent receiver but failed to do so; claimed in C&C's lawsuit he did not
A-4380-18T3
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abandon the property "when he clearly had done so"; and argued defendants were
bound to accept the "nominal rent" set forth in the purported lease. The court further
found Batra made the misrepresentations to the Doshis "with the intent that they
rely upon them."
The court also determined that although Batra's actions were taken on behalf
of C&C, it was appropriate to pierce the corporate veil and hold Batra liable
individually for his actions. The court found that "[w]hen fraud is committed in a
corporate name by a person having the right to speak for the corporation for his
personal gain and benefit, that person must answer personally for their wrongful
acts." The court concluded that Batra's "fraudulent intent and bad faith have been
shown by clear and convincing evidence" and that he is personally liable to
defendants under counts two and four of the third-party complaint.
The court found C&C and Batra jointly and severally liable for $53,700 in
damages for defendants' eight-month loss of possession of the property during the
pendency of the civil lawsuit and for costs to restore the utilities following C&C's
abandonment of the property.5 The court also found C&C and Batra jointly and
severally liable to defendants for punitive damages in the amount of $40,000.
5
The court calculated the damages as follows: $48,000 for the loss of the use
of the property based on damages of $6,000 per month for eight months; and
$5,700 for the costs to restore the utilities.
A-4380-18T3
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The court found defendants were not entitled to an award of attorney's fees
against Batra under Rule 4:42-9 for the services provided to them by Andrew Maze
and Rajan & Rajan, LLP. The court, however, ordered that C&C pay defendants
$10,000 for attorney's fees they previously paid for those counsels' services. The
court apparently found defendants were entitled to recoup their attorney's fees from
C&C under the frivolous claims statute, N.J.S.A. 2A:15-59.1(b).6
The court found the firm of Robbins & Robbins, LLP, was entitled to an
attorney's fees award under Rule 4:42-9 because its actions resulted in the creation
of a fund in court—the $39,600 the court ordered that C&C deposit in escrow for
past due rent. See R. 4:42-9(a)(2) (allowing an award of attorney's fees, in the
court's discretion, "[o]ut of a fund in court"). The court considered the affidavit of
services provided, determined the reasonableness of the time entries, and
determined the reasonable hourly rate for the services provided. The court
6
The court did not make any findings directly supporting its award of $10,000
in attorney's fees for the services Andrew Maze and Rajan & Rajan, LLP,
provided to defendants. In its finding C&C's claims against defendants were
frivolous, the court stated defendants are entitled to a judgment for attorney's
fees and that the "quantum of fees" would be addressed later in its opinion.
However, other than finding defendants are entitled to "$10,000" in attorney's
fees from C&C, the court did not detail its calculation of the amount of that fee.
A-4380-18T3
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determined the firm was entitled to $25,500 and found C&C and Batra jointly and
severally liable for its payment.7
The court also directed the disbursement of the $39,600 in back rent the
Special Civil Part had ordered to be held in escrow. The court directed the escrow
funds should first be disbursed to satisfy the $25,500 in legal fees awarded to
Robbins & Robbins, LLP, and then to satisfy $10,000 in legal fees awarded to
Andrew Maze and Rajan & Rajan, LLP. The court ordered that the remaining
balance of the escrow funds, $4,100, be applied to the $53,700 in damages owed to
defendants, leaving a $49,600 balance owed to defendants for the compensatory
damages awarded against C&C and Batra.8
7
The court's opinion states, "$25,500 is awarded to [Robbins & Robbins, LLP]
as a legal fee as against C&C and [Batra] . . . ." The court's order, however,
provides only that the law firm "is awarded $25,500 for a legal fee" and does
not specify which party must pay the fee.
8
The court's opinion and corresponding order include a mathematical error.
The court awarded $53,700 in compensatory damages to defendants. The court
directed the disbursement of $25,500 in fees to Robbins & Robbins, LLP, and
$10,000 to Andrew Maze and Rajan & Rajan, LLP, from the $39,600 in escrow
funds. After payment of those fees, the balance in the escrow account that could
be applied to satisfy the damages award is $4,100, not the $4,150 stated in the
court's opinion and order, and the amount that remained due to defendants for
compensatory damages was $49,600 and not the $49,550 stated in the order.
A-4380-18T3
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The court entered an order reflecting the decision set forth in its written
opinion. The court subsequently denied C&C's and Batra's motion for
reconsideration of the order. This appeal followed.
II.
C&C and Batra argue the court erred by exceeding the scope of our remand
order. They contend the remand was limited to a determination of defendants'
claims against Batra and that the remand court erred by admitting evidence against
C&C, making determinations concerning C&C, and finding C&C liable for
compensatory and punitive damages and attorney's fees. They also contend our
remand required only a determination of defendants' frivolous litigation claim
against Batra and that the court erred by considering and assessing damages on the
other causes of action in the third-party complaint. Defendants assert the court
complied with our order and properly awarded damages based on its findings.
A trial court is required to comply with an appellate court's directives and
must, on remand, "obey the mandate of the appellate tribunal precisely as it is
written," Triffin v. Automatic Data Processing, Inc., 411 N.J. Super. 292, 306 (App.
Div. 2010) (quoting Tomaino v. Burman, 364 N.J. Super. 224, 233 (App. Div.
2003)), even if it disagrees with the appellate court's decision, Tomaino, 364 N.J.
Super. at 233.
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Our decision in Oak Tree Cash & Carry, LLC clearly stated the parameters
of the remand. Slip op. at 30-31. We explained it did not appear that the court had
held the proof hearing that was ordered when default was entered on defendants'
third-party claims against Batra, and we remanded for the court to conduct that
hearing. Id. at 30. We also directed that the court "address whether the escrowed
funds should be released to C&C or defendants." Id. at 31.
As we plainly explained in our prior decision, we affirmed the dismissal with
prejudice of defendants' claims against C&C. Id. at 3, 18-25. We did not remand
for the court to revive or reconsider the claims, decide them, or award compensatory
and punitive damages and attorney fees against C&C based on them. Indeed, it
would have been illogical to affirm the dismissal with prejudice of defendants'
claims against C&C following a trial and, in the same opinion, remand for the court
to reconsider the claims against C&C at a proof hearing. The court exceeded the
scope of our remand in finding C&C was liable to defendants and by awarding
compensatory and punitive damages and attorney's fees against C&C. See
Tomaino, 364 N.J. Super. at 233. We reverse the court's order finding C&C liable
and awarding defendants damages, attorneys fees, and any other relief against C&C.
We are not persuaded by Batra's claim the court exceeded the scope of the
remand by considering and deciding all the claims asserted by defendants against
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him in the third-party complaint. Batra argues the remand was limited to a
consideration of only defendants' frivolous litigation claim. He is incorrect because
we expressly remanded for the proof hearing the court ordered when default was
entered, Oak Tree Cash & Carry, LLC, slip op. at 30, and there was no limitation
imposed on the scope of the proof hearing when the court first ordered it.
Additionally, in our prior decision we did not limit the scope of the proof
hearing to a particular claim in defendants' third-party complaint. We stated we did
not express an opinion as to whether the third-party complaint replicated defendants'
complaint against C&C, id. at 31, but that statement did not limit our remand for a
proof hearing based on Batra's default on the claims asserted in the third-party
complaint. The court did not exceed the scope of our remand order by considering
each of the causes of action asserted against Batra in the third-party complaint.
III.
As noted, the court dismissed count five of the third-party complaint against
Batra, and defendants do not appeal from that dismissal. The court also dismissed
count three, which it characterized as a frivolous litigation claim, see N.J.S.A.
2A:15-59.1(b), because defendants failed to serve Batra with the requisite Rule
1:4-8 notice. Defendants do not cross-appeal from the dismissal of count three. We
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therefore consider Batra's argument the court erred by finding him liable under
counts two and four of the third-party complaint.
"The scope of appellate review of a trial court's fact-finding function is
limited." Cesare v. Cesare, 154 N.J. 394, 411 (1998). "Findings by the trial judge
are considered binding on appeal when supported by adequate, substantial and
credible evidence." Rova Farms Resort, Inc. v. Invs. Ins. Co. of Am., 65 N.J. 474,
484 (1974). "Therefore, an appellate court should not disturb the 'factual findings
and legal conclusions of the trial judge unless [it is] convinced that they are so
manifestly unsupported by or inconsistent with the competent, relevant and
reasonably credible evidence as to offend the interests of justice.'" Cesare, 154 N.J.
at 412 (alteration in original) (quoting Rova Farms, 65 N.J. at 484). In contrast, "[a]
trial court's interpretation of the law and the legal consequences that flow from
established facts are not entitled to any special deference." Manalapan Realty, LP
v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995).
Here, we consider the court's determinations relating to a defaulting party.
On remand, the court exercised its discretion and required that defendants present
evidence establishing Batra's liability. See Douglas v. Harris, 35 N.J. 270, 276-77
(1961); Heimbach v. Mueller, 229 N.J. Super. 17, 21 (App. Div. 1988). "When a
trial court exercises its discretion to require proof of liability as a prerequisite to
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entering judgment against a defendant who has defaulted, what is required . . . is
that the plaintiff adduce [a prima facie case.]" Heimbach, 229 N.J. Super. at 23.
The court does not "weigh[] evidence or find[] facts," it determines only if the party
prosecuting the claim has presented the "bare sufficiency" of proofs required to
satisfy the "prima facie standard" for its claims. Kolczycki v. City of E. Orange,
317 N.J. Super. 505, 514 (App. Div. 1999). A court may properly dismiss a claim
at a proof hearing where a party fails to present evidence establishing a prima facie
case of liability against a defaulting party, or where the "claim [is] barred by some
rule of law whose applicability was evident either from the pleadings or from the
proofs presented." Heimbach, 229 N.J. Super. at 23-24.
The remand court interpreted the causes of action asserted in counts two and
four of the third-party complaint as alleging common law fraud. Defendants do not
challenge the court's interpretation of their pleading, and, in fact, they argue on
appeal the evidence established a prima facie cause of action for common law fraud
under counts two and four. Batra argues the court erred by finding him liable for
common law fraud because counts two and four of the third-party complaint do not
allege fraud with the requisite specificity, see R. 4:5-8(a), and defendants did not
present evidence establishing a prima facie fraud claim. We therefore consider
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whether the evidence presented at the proof hearing established a prima facie claim
of common law fraud against Batra.
"To establish common-law fraud, a plaintiff must prove: '(1) a material
misrepresentation of a presently existing or past fact; (2) knowledge or belief by the
defendant of its falsity; (3) an intention that the other person rely on it; (4)
reasonable reliance thereon by the other person; and (5) resulting damages.'" Walid
v. Yolanda for Irene Couture, Inc., 425 N.J. Super. 171, 180 (App. Div. 2012)
(quoting Banco Popular N. Am. v. Gandi, 184 N.J. 161, 172-73 (2005)); see also
Allstate N.J. Ins. Co. v. Lajara, 222 N.J. 129, 147 (2015). "Reliance is an essential
element of common law fraud." Byrne v. Weichert Realtors, 290 N.J. Super. 126,
137 (App. Div. 1996) (citing Axelrod v. CBS Publ'ns Inc., 185 N.J. Super. 359, 372
(App. Div. 1982)). Consequently, "[w]ithout reasonable reliance on a material
misrepresentation, an action in fraud must fail." Triffin v. Automatic Data
Processing, Inc. (Triffin I), 394 N.J. Super. 237, 249 (App. Div. 2007).
The court's determination Batra is liable for common law fraud is premised
on its finding Batra made false statements related to the property and lease. The
court found Batra falsely informed ONS he would provide a security deposit and
pay rent, falsely advised the rent receiver he would pay rent, and misrepresented to
HAB there was no tenant in possession of the property. The court also found Batra
A-4380-18T3
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"committed to the [rent] receiver and to the court that he intended to continue to
operate his market [on the property] when his conduct was tantamount to an
abandonment." There is no evidence, however, Batra made any of those
representations to defendants, and, as a result, defendants could not have, and did
not, reasonably rely on them.
The remaining false statements the court found established the common law
fraud claims consist of assertions and claims Batra made during the various
litigations involving the property and defendants. The court found that in the civil
litigation Batra "resisted the claim that he abandoned the premises when he clearly
had done so" and that he asserted "he occupied the premises in 2011 when he last
paid a water bill in June[] 2010." The court also found that in the criminal cases
filed against the Doshis, Batra falsely claimed that personalty was owned by him
and that the Doshis sold the personalty.
Those false statements do not support the common law fraud claims against
Batra because defendants never relied on them. To the contrary, defendants
contested Batra's false assertions during the various proceedings. See, e.g., Triffin
I, 394 N.J. Super. at 249 (finding no reliance on the plaintiff's misrepresentation the
defendant needed to pay him based on counterfeit checks when the defendant chose
to litigate a claim rather than settle it).
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In the court's otherwise detailed decision, it does not make any findings on
the reasonable reliance element of a common law fraud claim, and with good reason.
The record is bereft of evidence establishing defendants relied on any of the false
statements the court found Batra made concerning the property and the lease.
Without such evidence, defendants' common law fraud claim "must fail," ibid., and
we are constrained to conclude the court erred by finding defendants sustained their
burden of establishing a prima facie common law fraud claim against Batra. We
therefore reverse the court's order finding Batra liable to defendants on those claims
in the third-party complaint.9
The remand court's award of compensatory and punitive damages and
attorney's fees to defendants is founded on its determination Batra is liable to
defendants on the common law fraud claims contained in counts two and four of the
third-party complaint. As a result, we also reverse the court's order awarding
compensatory and punitive damages to defendants and requiring that Batra pay
defendants' attorney's fees.
9
Our determination renders it unnecessary to address Batra's claim the remand
court should have dismissed counts two and four of the third-party complaint
because they did not allege common law fraud with sufficient specificity, see R.
4:5-8, and his claim the court erred by piercing the corporate veil as a basis for
finding him liable for the common law fraud claims. It is also unnecessary to
address his arguments concerning the court's award of compensatory and
punitive damages and attorney's fees.
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In our prior decision, we also remanded for the court to address whether the
$39,600 held in escrow "should be released to C&C or defendants." Oak Tree Cash
& Carry, LLC, slip op. at 31. The remand court did not address the issue directly.
It did not make any findings of fact or conclusions of law supporting a determination
whether the funds in escrow should be released to C&C or defendants. See R. 1:7-4.
Instead, the court considered the escrow monies as a "fund in court" defendants
"create[ed] and maintain[ed]," and it ordered the funds to be used to satisfy the
attorney's fees awards and partially satisfy the compensatory damages award to
defendants, as directed in its written opinion.
It might be argued the court's order requiring the escrow funds be used to
satisfy the attorney's fees and compensatory damages the court found C&C
obligated to pay reflects an implicit determination the funds should have otherwise
been released to C&C. It would be illogical for the court to order that the escrow
funds be used to satisfy C&C's obligations to defendants unless the court also
determined the funds otherwise belonged to C&C. Due to the lack of any factual
findings or conclusions of law on the issue, we cannot find and will not assume the
court actually considered the issue or made such a determination. The court's
allocation of the funds to pay C&C's obligations to defendants is just as easily
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explained as an erroneous determination the escrow monies constituted a fund in
court that simply should be paid to the prevailing party in the lawsuit.
The absence of any findings addressing the issue, and the parties' failure to
address the issue in their briefs on appeal, permit only speculation as to whether the
court actually considered and decided the issue, or decided it correctly or
incorrectly. See, e.g., Gormley v. Gormley, 462 N.J. Super. 433, 449 (App. Div.
2019) (explaining "we must be provided with adequate reasons for the [court's]
determinations" to conduct appropriate appellate review). We are therefore
without an adequate record to determine whether the court actually considered and
decided the issue we directed it to address on remand: whether the escrow funds
should be released to C&C or defendants. See Oak Tree Cash & Carry, LLC, slip
op. at 31. The court must determine based on the entirety of the record whether the
$39,600 the court ordered on November 27, 2012, be deposited in escrow for back
rent for the twelve months prior to August 2012 should be returned to C&C or
disbursed to defendants.
We again remand for the court to address the issue in the first instance in
accordance with our prior decision in this matter. See ibid.; see also Gormley, 462
N.J. Super. at 449 (explaining a trial court's "omission of critical factual
findings, . . . impedes our review" and necessitates a remand (alteration in
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original) (quoting Elrom v. Elrom, 439 N.J. Super. 424, 443 (App. Div. 2015))).
On remand, the court shall conduct such additional proceedings it deems necessary
to address and decide the issue, and its decision shall be supported by findings of
fact and conclusions of law. See R. 1:7-4. Nothing in this opinion shall be
construed as a decision on the merits of the issue.
Reversed. The matter is remanded for the court to conduct further
proceedings in accordance with this opinion. We do not retain jurisdiction.
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