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Walder, Sondak, Berkeley & Brogan v. Lipari

April 22, 1997


On appeal from the Superior Court of New Jersey, Law Division, Essex County.

Approved for Publication April 22, 1997.

Before Judges Petrella, Landau, and Wallace. The opinion of the court was delivered by Wallace, Jr., J.A.D.

The opinion of the court was delivered by: Wallace

The opinion of the court was delivered by WALLACE, JR., J.A.D.

Plaintiff Walder, Sondak, Berkeley & Brogan, a law firm, sued Joseph Lipari, its former client, and two corporations, defendants Top Grade Sausage, Inc. (Top Grade) and Forist Distributors, Inc. (Forist) for legal fees in connection with a federal criminal indictment and trial. The jury returned a verdict in favor of plaintiff in the amount of $500,000. Defendants' motion for judgment notwithstanding the verdict or for a new trial was denied. On appeal, defendants *fn1 contend in varying arguments that the alleged oral agreement that they would guarantee the legal fees was not valid and that the vote by six-to-two on two of the jury findings was invalid under the New Jersey Constitution. We affirm.


The salient proofs introduced at trial are as follows. Lipari, the former Mayor of Passaic, is the founder of Top Grade and Forist. In 1991, he became the subject of a federal investigation. He hired plaintiff to represent him in that investigation. On July 25, 1991 Lipari executed a written retainer agreement with plaintiff and paid a retainer fee of $35,000.

The investigation encompassed various activities of Lipari, his children and defendants. Plaintiff handled pre-indictment legal issues, and responded to grand jury subpoenas for various documents and testimony regarding defendants and Lipari's children.

By 1992 Lipari had gifted most of his shares in defendants to his children. Nevertheless, Lipari continued to retain dominant management and operational control over both corporations. He received a weekly salary of $5,000 from each corporation. Two of Lipari's children worked for defendants. Marilyn Manganello, Lipari's daughter, was vice president and secretary of defendants. She started working for them in 1985 when she was seventeen and became vice president that year or the following year. She did the bookkeeping and handled the accounts payable and receivable. Marilyn's responsibilities increased as Lipari became more involved with his mayoral duties. In 1990 and 1991 she dealt with customers, negotiated prices, inspected incoming meat for acceptability, and dealt with health inspectors.

James Lipari, Lipari's son, was president of both corporations. He started working for them in 1980, at the age of seventeen and just out of high school. By 1990 he ran the manufacturing plant and hired and supervised employees. In 1991 he owned sixty percent of the shares of both corporations, Marilyn owned thirty percent, and Lipari owned ten percent. James's and Marilyn's shares had been "gifted" to them by Lipari.

Marilyn received a salary of $2,000 per week and James a salary of $3,000 per week. Defendants acknowledged in their interrogatory answers that Lipari, on behalf of defendants, "signed numerous documents, including letters, checks and forms," and "in some instances" may have "acted on behalf of the corporation[s]" when entering into "contractual agreements" with third parties. Marilyn could not recall an objection by her or James to any action or decision Lipari made concerning defendants' business before his conviction.

Lipari was the primary contact for one of Top Grade's larger accounts. In addition, in the year preceding his indictment, Lipari negotiated a commission arrangement with one of defendants' meat suppliers. At the time of his federal trial Lipari was solely responsible for Forist's only account, but he was not principally responsible for generating the majority of Top Grade's accounts.

Justin Walder was a partner in plaintiff. According to Walder, in their first meeting in 1991, Lipari told him about a federal investigation that related to his position as mayor and had "some relationship" to defendants. Lipari was concerned about protecting defendants because two of his children were working very hard for them. Defendants were identified with him personally, and adverse publicity about defendants might scare away the large public companies that were a major part of defendants' business. A written retainer letter was executed, and $35,000 was paid.

In March 1992, Lipari was indicted by a federal grand jury. He entered into a second retainer agreement with plaintiff dated March 17, 1992. The terms were substantially identical to those in the first retainer letter, except that the retainer was $175,000. Lipari signed the retainer agreement and paid the $175,000.

Marilyn, James, and defendants were not indicted. Plaintiff responded in answers to interrogatories that in 1992 Lipari indicated to Walder "that he and [defendants] would make payment for all legal services rendered to [him]" by plaintiff, and that the services rendered to him were for defendants' benefit as well.

Marilyn acknowledged speaking with Walder before each of her two grand jury appearances, during which she testified concerning her work for defendants. She also acknowledged in her deposition testimony that she had said she understood that Walder was representing defendants and her as well as Lipari.

In November 1992 the federal prosecution of Lipari ended in conviction. The sentence included a prison term and a $186,000 fine.

Plaintiff never sent bills to either defendant at its business address. However, from July 1991 through November 1992, plaintiff received twenty-five checks from Top Grade totalling $421,271.01 and six checks from Forist totaling $73,927.48. During that period plaintiff also received two checks from Lipari totalling $20,000 and one cashier's check for $30,000. Plaintiff admitted that no written agreement existed between it and either corporation "other than the checks submitted by defendants," which were "consistent with . . . Lipari's promises and agreements" for defendants to pay his bills.

Other correspondence between plaintiff and defendants, plus correspondence between plaintiff, defendants' accountants, banks, and suppliers confirmed that plaintiff performed at least some services for defendants in connection with the federal grand jury proceedings, including defendants' production of subpoenaed documents. Walder testified that "Lipari clearly asked me and authorized that I handle" that matter. He added that he was authorized to accept service of all the federal subpoenas for Lipari's children, and he helped them prepare to ...

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