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Feliciano v. Ciman


May 19, 2008


On appeal from the Superior Court of New Jersey, Chancery Division, General Equity Part, Middlesex County, Docket No. C-223-05.

Per curiam.


Argued October 22, 2007

Before Judges Stern and A. A. Rodríguez.

Evelyn Ciman (Ciman) and her daughter Venus Vado (Vado), also known as Venus Banguela, appeal from the August 8, 2006 judgment in favor of Miguel A. Feliciano (Feliciano) for $320,000 in compensatory and $25,000 in punitive damages. The judgment also provided that Ciman should receive a credit against the judgment in the amount of $30,000 plus "all property taxes paid." We affirm the judgment except for the award of punitive damages, which is reversed.

In October 1989, Feliciano and his then-wife purchased a condominium unit in South Brunswick. Following his divorce, Feliciano continued to reside in the home and held sole title to the property. However, without his former wife's income, he was unable to meet his mortgage obligations. In 1999, the mortgagee, GMAC, initiated foreclosure proceedings.

During this period, Feliciano started his own business, Maritima Auto Freightways, Inc. (Maritima). Feliciano hired Ciman as one of his sales representatives. Some time later, they became romantically involved. Feliciano discussed the foreclosure action with Ciman. Prior to her employment with Maritima, Ciman worked many years in the mortgage industry and had studied to obtain a real estate license. According to Feliciano, Ciman advised him to declare bankruptcy in order to delay a potential foreclosure judgment on the property.

Feliciano took Ciman's advice and declared bankruptcy four times in order to avoid paying the mortgage. Eventually, GMAC obtained a foreclosure judgment. At a sheriff's sale, GMAC was the winning bidder at $77,100.

Feliciano then contacted GMAC to discuss purchasing the property. They agreed on a purchase price of $110,000 in an all cash transaction. Ciman cautioned Feliciano against purchasing the property in his own name because she believed that GMAC would be reluctant to give Feliciano title. Ciman recommended that her daughter, Vado, hold title to the property.

Thereafter, Feliciano and Ciman met with Mitch Berger, GMAC's counsel, to facilitate the purchase of the property. After this meeting, Feliciano issued several bank checks from his account totaling $125,000. Ciman delivered these checks to Berger's law office. The funds were deposited in an escrow account.

According to Feliciano, Ciman had recovered $80,000 from an auto accident. She had given this money to him to deposit into his safe deposit box in cash form. Ciman claimed that from this fund, she contributed $55,000 in cash towards the purchase of the property. Feliciano contributed the other $55,000.

Feliciano, however, testified that Ciman did not contribute any money towards the purchase price of the property. Rather, he alleges that in February 2000, he borrowed approximately $30,000 from Ciman to pay off debt owed to his business vendors.

The closing took place on January 19, 2000. According to the closing documents, Vado purchased the property in her name for $112,711.06. The balance in the escrow account was refunded to Feliciano.

At trial, Vado testified that the only reason she agreed to become involved in this transaction was because Feliciano agreed to pay her rent equal to one-half of the full rental value of the property. Because Feliciano failed to deliver on this promise, Vado conveyed the property to Ciman on May 2, 2002. Vado did not receive any consideration for this transfer despite the fact that the instrument recites receipt of $110,000. Feliciano was never made aware of this transfer.

In 2003, Feliciano and Ciman ended their professional and personal relationship. Feliciano continued in possession of the unit. At this point, Ciman entered into negotiations with Feliciano to recover the $55,000 she allegedly contributed towards the purchase of the property. Feliciano refused and tried to negotiate a figure on the money she was allegedly owed.

In March 2004, Ciman refinanced the property without Feliciano's knowledge. In her application, Ciman did not reveal that Feliciano had an interest in the property. The mortgage company approved a loan in the amount of $150,000. From this amount, $15,000 was used to pay condominium association fees and back taxes.

In August 2004, Ciman brought a landlord-tenant action to recover unpaid rent, which she claims accumulated over the course of several years in violation of an agreement between the parties. The judge in the landlord-tenant action found that a tenancy existed between Feliciano and Ciman. The judge entered a judgment of possession for the non-payment of rent against Feliciano.

On October 1, 2004, Feliciano sued Ciman and Vado, seeking the declaration of a resulting trust and an order compelling transfer of the property free of any encumbrances. In the complaint, Feliciano also sought punitive damages and attorney fees and costs of suit.

Ciman answered and counterclaimed alleging breach of contract and breach of the covenant of good faith and fair dealing. She sought compensatory damages in the amount of $59,400 representing unpaid rent, punitive damages, and attorneys fees and costs of suit.

At a bench trial, the judge in this action heard testimony from Feliciano, Ciman and Vado. The judge was presented with two versions of the events. The first was that Feliciano purchased the unit with his funds and was the sole beneficial owner. The other was that Ciman paid half of the consideration and became the beneficial owner of an individual half interest of the property. The judge found that a resulting trust existed between the parties, and that Feliciano was entitled to either compensatory damages in the amount of $320,000, or title to the property free of any liens or encumbrances.*fn1 The judge also found that Ciman was entitled to receive a set-off of $30,000 for the loan made to Feliciano towards the purchase of the property. Finally, the judge awarded Feliciano punitive damages in the amount of $25,000, but denied his request for attorney fees and costs. The judge made no decision with respect to Ciman's counterclaim for $56,400 in unpaid rent.

Ciman appeals, contending that the judge erred by finding that she made a $30,000 loan to Feliciano, rather than a $55,000 investment, towards the purchase of the property. This is essentially a challenge to the trier of facts's assessment of the evidence.

The scope of an appellate court's review requires that "[f]indings by the trial judge are considered binding on appeal when supported by adequate, substantial and credible evidence." Rova Farms Resort, Inc. v. Investors Ins. Co., 65 N.J. 474, 484 (1974) (citing New Jersey Turnpike Auth. v. Sisselman, 106 N.J. Super. 358 (App. Div.), certif. denied, 54 N.J. 565 (1969)). Moreover, credibility is always for the factfinder to determine. Ferdinand v. Agric. Ins. Co., 22 N.J. 482, 494 (1956). Because the trial court had the benefit of listening to and observing a first-hand account of the trial, it is generally in a much better position to evaluate the veracity of witnesses and the sufficiency of the evidence presented. Gallo v. Gallo, 66 N.J. Super. 1, 5 (App. Div. 1961). Thus, it is improper for the Appellate Division to "engage in an independent assessment of the evidence as if it were the court of first instance." State v. Locurto, 157 N.J. 463, 471 (1999). Only if factual determinations are unsupported by sufficient competent evidence, may an appellate court "appraise the record as if [it] were deciding . . . at inception and [making] [its] own findings and conclusions." Pioneer Nat'l Title Ins. Co. v. Lucas, 155 N.J. Super. 332, 338 (App. Div.), aff'd o.b., 78 N.J. 320 (1978).

Further, where credibility determinations are made by the trial court, "that determination is entitled to deference if supportable by the record . . . ." Pressler, Current N.J. Court Rules, comment 6.1 on R. 2:10-2 (2008).

Here, the judge found Feliciano more credible than Ciman or Vado. The judge credited Feliciano's version of the facts that he borrowed $30,000 from Ciman to pay a vendor and that she contributed no money towards the purchase of the condominium unit. Therefore, neither she nor Vado acquired an interest in the property. From our review of the record, we conclude that this finding is supported by the proofs. This part of the judgment must be affirmed as binding on us. R. 2:11-3(e)(1)(A).

Ciman also contends that the judge abused his discretion by holding Ciman liable for punitive damages. A decision to award punitive damages and the amount of that award rests within the sound discretion of the fact finder. Maudsley v. State, 357 N.J. Super. 560, 590 (App. Div. 2003). We must review an award of punitive damages pursuant to the abuse of discretion standard. Maul v. Kirkman, 270 N.J. Super. 596, 619-20 (App. Div. 1994). An award of punitive damages is discretionary and not a matter of right. Neigel v. Seaboard Finance Co., 68 N.J. Super. 542, 555 (App. Div. 1961); Maudsley, supra, 357 N.J. Super. at 590. A trial court's discretion is not absolute, and is constrained by the requirement that the trial judge "take account of the applicable law and the particular circumstances of the case to the end that a just result is reached." Master Auto Parts, Inc. v. M. & M. Shoes, Inc., 105 N.J. Super. 49, 53 (App. Div. 1969). A punitive damage award may be set aside only if "sustaining . . . the award would result in a manifest denial of justice." Leimgruber v. Claridge Assocs., Ltd., 73 N.J. 450, 459 (1977). It is well settled that punitive damages should only be assessed when the facts show that one party has engaged in particularly egregious conduct. Leimgruber, supra, 73 N.J. at 454. Specifically, punitive damages are a limited form of remedy only awarded when needed to exact punishment or to deter similar future behavior. Tarr v. Bob Ciasulli's Mack Auto Mall, Inc., 194 N.J. 212, 218 (2008) (quoting Herman v. Sunshine Chem. Specialties, Inc., 133 N.J. 329, 339 (1993)). As such, to warrant the imposition of punitive damages, "the plaintiff must prove . . . that the defendant acted with actual malice or in willful and wanton disregard of the harm that might be caused to [another]." Liberty Mut. Ins. Co. v. Land, 186 N.J. 163, 186 (2006). The key to the right to punitive damages is the wrongfulness of the intentional act." Nappe v. Anschelewitz, Barr, Ansell & Bonello, 97 N.J. 37, 49 (1984).

In assessing such damages, the trier of fact should take into consideration all of the circumstances surrounding the particular occurrence including the nature of the wrongdoing, the extent of harm inflicted, the intent of the party committing the act, the wealth of the perpetrator, as well as any mitigating circumstances which may operate to reduce the amount of the damages. [Maiorino v. Schering-Plough Corp., 302 N.J. Super. 323, 357 (App. Div. 1997) (quoting Leimgruber, supra, 73 N.J. at 456).]

Furthermore, whether punitive damages are available is largely "dictated by the nature of the relationship between the parties or the duty imposed upon the wrongdoer." Sandler v. Lawn-A-Mat Chemical & Equipment Corp., 141 N.J. Super. 437, 459 (App. Div.), certif. denied, 71 N.J. 503 (1976).

A breach of a fiduciary duty is a tort. In re Estate of Lash, 169 N.J. 20, 27 (2001). Therefore, "[o]ne standing in a fiduciary relation[ship] with another is subject to liability to the other for harm resulting from a breach of duty imposed by the relation." Restatement (Second) of Torts § 874 (1979). Moreover, comment b to section 874 states: "[A] fiduciary who commits a breach of his duty as a fiduciary is guilty of tortious conduct to the person for whom he should act." Restatement (Second) of Torts, supra, § 874 comment b.

Applying that standard here, we conclude that it was an abuse of discretion to award Feliciano punitive damages. Although Vado and Ciman's conduct was egregious based on the factfinding, Feliciano was in part, a willing participant. Most notably, he agreed that title to the condominium unit should be placed in Vado's name to avoid the possibility that GMAC, the seller, would not deliver title to him. In short, he seeks the equitable remedy of punitive damages with unclean hands. See Borough of Princeton v. Bd. of Chosen Freeholders of Mercer County, 169 N.J. 135, 158 (2001) (holding that a court can utilize the doctrine of unclean hands to deny relief to one who was also a wrongdoer in the transaction).

Lastly, Ciman contends that the trial judge failed to address her counterclaim against Feliciano for unpaid rent. We disagree. Although the judge did not expressly state it, his finding that Ciman had no ownership interest in the property implicitly means that she was not entitled to rent.

We reverse the award of punitive damages and affirm the judgment in all other respects.

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