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Cripps v. di Gregorio

June 13, 2003

H. RALPH CRIPPS, INDIVIDUALLY, AND AS A SHAREHOLDER OF INTER-LINK FINANCIAL, INC., AND H.R. CRIPPS & ASSOCIATES, PLAINTIFFS-RESPONDENTS,
v.
BEN DI GREGORIO, INTER-LINK FINANCIAL, INC., MICHAEL W. HOLDEN, INDIVIDUALLY, MICHAEL W. HOLDEN, C.P.A., P.C., AND ON-LINE MORTGAGE, INC., DEFENDANTS-APPELLANTS, AND THEODORE F. KURILKO, JR., DEFENDANT.



On appeal from the Superior Court of New Jersey, Law Division, Bergen County, L-448-96.

Before Judges King, Wecker and Lisa.

The opinion of the court was delivered by: Wecker, J.A.D.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued August 7, 2002

Reargued April 9, 2003

In this appeal we address the availability of counsel fees and costs under R. 4:58-3 in a multi-defendant, multi-count case in which plaintiff failed to accept separate offers of judgment conveyed by all defendants on the same date. We hold that Schettino v. Roizman Development, Inc., 158 N.J. 476 (1999), controls on the facts before us. We affirm summary judgment dismissing the counsel fee application filed on behalf of those defendants who together submitted one of two offers of judgment.

Rule 4:58-3, as it read when Schettino was decided and at all times relevant here,*fn1 provided in pertinent part:

If the offer of a party other than the claimant is not accepted and the determination is at least as favorable to the offeror as the offer, the offeror shall be allowed, in addition to costs of suit, a reasonable attorney's fee, for such subsequent services as are compelled by the non-acceptance, which shall belong to the client and constitute a prior charge upon the judgment. In an action for negligence or other unliquidated damages, however, no attorney's fee shall be allowed to such offeror unless the amount awarded to the claimant is in excess of $750.00 and is less than 80 per cent of the offer.

The judgment against all defendants in this case totaled $19,194.

Plaintiff received two offers of $15,000 each. If both had been accepted, the offers, totaling $30,000, would have exceeded the total judgment. Had this been a single defendant case, or had there been a single offer of judgment in the amount of $30,000 on behalf of all defendants, a fee award would have been allowable under R. 4:58-3.

Only the procedural posture and history of this lawsuit are relevant to this appeal, and not the substance of the underlying disputes among the several parties. Inter-Link Financial, Inc. (Inter-Link), which operated a brokerage business, was dissolved as a result of serious disputes among its shareholders. Plaintiff, H. Ralph Cripps, and defendants Bernard DiGregorio and Theodore F. Kurilko, Jr., were shareholders in Inter-Link. Cripps filed what he described as a shareholder derivative action against DiGregorio and Kurilko, alleging joint and several liability for breach of fiduciary duty, violation of New Jersey RICO, N.J.S.A. 2C:41-1 to -6.2, misappropriation, conversion, and embezzlement. In an amended complaint, Cripps added H.R. Cripps & Associates (Associates) as a plaintiff,*fn2 joined Inter-Link as a defendant, and asserted additional claims against Kurilko alone, arising out of his separate business relationship with Kurilko in Associates. The first amended complaint added counts including fraud, oppressed shareholder rights, federal racketeering, breach of contract, and breach of an implied covenant of good faith and fair dealing. Finally, in a second amended complaint, Cripps added as defendants Michael W. Holden, Michael W. Holden, C.P.A., P.C. (collectively Holden), and On-Line Mortgage, Inc. (On-Line). Cripps' second amended complaint alleged that Holden and On-Line were jointly and severally liable, along with DiGregorio and Kurilko, for several of the earlier-filed charges against DiGregorio and Kurilko. The second amended complaint also alleged negligence, gross negligence, breach of contract, and breach of fiduciary duty against Holden in his role as the accountant for Inter-Link.

Cripps' liquidated claims against Kurilko alone, arising out of their separate business venture, were for $32,461.03 representing half the claimed capital expenses of the business, plus $21,846.85 representing loans or advances to Kurilko. The jury awarded Cripps $12,695 on these claims against Kurilko.

Cripps' liquidated claims against DiGregorio, Kurilko, and Inter-Link, jointly and severally, arising out of the Inter-Link enterprise totaled $27,042.55. In addition, Cripps sought unliquidated and punitive damages against DiGregorio and Kurilko, jointly and severally, for fraud, and similar damages against DiGregorio individually for fraud.

Finally, Cripps sought unliquidated damages against Holden on separate professional negligence and breach of contract causes of action arising out of his accounting services to Inter-link. Cripps claimed, it appears, that Holden's inadequate performance contributed to his damages at his partners' hands. ...


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