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Kessler v. Richardson Industrial Contractors


December 11, 2007


On appeal from the Superior Court of New Jersey, Law Division, Passaic County, L-3759-02.

Per curiam.


Argued October 15, 2007

Before Judges Stern and A. A. Rodríguez.

Defendant Harry Richardson (hereinafter "Richardson" or "defendant") appeals from a judgment entered on October 6, 2003, against Richardson Industrial Contractors, Inc. ("RICI") and himself "personally," in favor of plaintiffs Arnone in the amount of $150,000 together with interest, costs and attorney fees,*fn1 and in favor of plaintiff Larry Blumenstyk granting him certain rights under an assignment by defendant RICI with conditions in the event of an aggregate recovery exceeding $450,000. Richardson also appeals from subsequent orders of April 15, 2005, setting the amounts of the judgment and approving payment from the Superior Court Trust Fund to the Arnones' attorney, and from pre- and post-judgment orders denying applications filed by defendant, including a May 9, 2003 order to withdraw funds from the Trust Fund in order to prosecute litigation on behalf of RICI in the United States District Court for the Eastern District of New York.*fn2 As a result of one of the April 15, 2005 orders, Richardson is "personally" obligated to the Arnones in the amount of $170,000 plus post-judgment interest from October 6, 2003.

Richardson argues that the trial court "failed to enforce the best evidence rule" at the trial, abused its discretion in denying RICI's motion to withdraw funds to retain counsel for the litigation in the Eastern District, improperly awarded counsel fees "to Arnones' conflicted attorney Tobia," and failed to substitute "the estate of Robert Kessler" for Kessler after his death in November 2004.

We will assume that all orders under contest on this appeal are before us because the appeal was timely filed following the award of counsel fees and costs on April 15, 2005, see Joseph Shimm v. Toys From the Attic, Inc., 375 N.J. Super. 300 (App. Div. 2005), and that defendant's motion for reconsideration tolled the entry of final judgment until his motion for reconsideration was denied.*fn3

We nevertheless affirm the judgment. Based on our review of the abbreviated record that is before us,*fn4 there was no objection, on best evidence rule grounds, to the documents that were introduced at trial after a fire at the home of plaintiffs Arnone. Nor is there any contest to the fact that the Arnones made loans to plaintiff; only the amount of the loans and the accounts from which they were made is the subject of the contest. Based on the abbreviated record before us, we have no basis for concluding that the trial judge abused his discretion in admitting the documents.

Richardson further claims that he should have been permitted to withdraw monies placed from an escrow account into the Superior Court Trust Fund in order to retain counsel to prosecute the claim in the Eastern District of New York for monies owed RICI as a result of work performed for the Federal Bureau of Prisons, and that, if he had been able to do so, RICI would have remained solvent and would have been able to repay the loans by plaintiffs. We reject this contention for a number of reasons. Firstly, RICI is not an appellant on this case. However, we consider the claim because of the personal guarantee of Richardson, and because of his claim that the RICI trustee has a conflict. On the other hand, the assertion of conflict must be asserted in a different forum.

In any event, the Bankruptcy Court approved the appointment of counsel to act as trustee for RICI in collecting the debt, and we are advised that the settlement was approved both by the judge before whom the litigation was ongoing in the Eastern District of New York and the judge in the New Jersey Bankruptcy Court handling the RICI case. We know, for certain, that the Third Circuit has concluded that Richardson did not have standing to appeal from the District Court's dismissal of the appeal of the Bankruptcy Court's approval of the "consent order requiring the Superior Court to proceed on the Arnones' motion to turn over all funds except $150,000 . . . ." In re Richardson Industrial Contractors, Inc., 189 Fed. Appx. 91, 92 (3d Cir. 2006).

Richardson further notes that there is ongoing litigation concerning approval of the settlement of the federal litigation in the Eastern District of New York by virtue of an alleged conflict of interest because plaintiffs Arnones' counsel was appointed as trustee. However, we cannot review that dispute pending in federal court, and Richardson acknowledges that, at present, the settlement of the Eastern District litigation and approval of it by the Bankruptcy Court remains undisturbed. Moreover, Richardson may not personally have standing to pursue the issue. See In re Richardson Industrial Contractors, Inc., supra.*fn5

Finally, Richardson claims that the post-judgment motion to substitute the Estate of Robert Kessler for plaintiff Kessler should have been granted so Richardson could process the counterclaim relating to Kessler's interference with RICI's case. The motion, however, was made post-judgment after the death of Kessler in November 2004, and Richardson acknowledges that if we affirm the other orders under review, this claim is moot. We also note again that RICI is not an appellant in this case.

In sum, we find no merit to the appeal and, to the extent that Richardson presses the appeal to protect himself with respect to the personal guarantees that he gave, we find that the claims he advances are in essence those that only RICI could pursue in terms of pressing the litigation in the Eastern District of New York, challenging the appointment of the trustee in bankruptcy and entering the settlement and obtaining approval thereof, as well as the individual claims against Mr. Kessler. It may be that RICI had valid claims concerning the Metropolitan Detention Center project and the handling of the litigation, and it may be that defendant should have standing to assert some of them personally. However, the action before us relates to obligations under notes and assignments of claims, and is not the forum by which those claims may be asserted.

The judgment is affirmed.

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