September 12, 2008
ELEANOR BAYROFF,*FN1 PLAINTIFF-APPELLANT,
HOWARD L. EGENBERG, AN ATTORNEY AT LAW, DEFENDANT, AND MITCHELL BAYROFF AND ANDREA WOHL, DEFENDANTS-RESPONDENTS.
On appeal from the Superior Court of New Jersey, Law Division, Union County, L-3413-07.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued August 26, 2008
Before Judges Messano and Chambers.
Plaintiff Eleanor Bayroff appeals from the order of November 21, 2007, releasing the sum of $40,000 in escrow funds to defendants, Howard L. Egenberg, Mitchell Bayroff, and Andrea Wohl and from the denial of her motion for reconsideration of that order.
Plaintiff contends that the disposition of the $40,000 is governed by the settlement of prior litigation and that the entire controversy doctrine bars defendants' assertion in this litigation that they are entitled to all of these monies. She also argues that even if the merits of defendants' claim is reached, the proofs are not sufficient to warrant a holding in defendants' favor. Defendants maintain that the dispute over the $40,000 was carved out of the settlement and that based on the facts presented, they are entitled to the monies.
This dispute over disposition of $40,000 in escrow funds has its origins in a real estate venture between Frederick Bayroff and Joseph Bayroff, the founders of J & F Realty, which owned a number of properties in the Bayonne area. When Joseph Bayroff died, his partnership interest in J & F Realty went to his wife, who in turn transferred her interest to her two children, defendants Mitchell Bayroff and Wohl.
In 2001, Mitchell Bayroff and Wohl sued Frederick Bayroff to compel the sale of the assets of J & F Realty and for an accounting (the "J & F Realty litigation"). We will not review the extensive procedural history of that case which lasted five years except to the extent necessary to explain the facts relevant to this appeal. When Frederick Bayroff died, plaintiff became the executrix of his estate.
While the J & F Realty litigation was pending in arbitration, various properties owned by J & F Realty were sold, including vacant property on East 24th Street in Bayonne. Due to the presence of four old hot tar tankers on the property, Mitchell Bayroff, Wohl, and Eleanor Bayroff agreed to give the buyer a credit in the amount of $40,000, and the buyer would assume the responsibility of removing the tankers from the property. At the closing on April 12, 2005, Mitchell Bayroff, Wohl and Eleanor Bayroff agreed that $90,000 from the proceeds would be held in escrow by defendant Howard L. Egenberg, Esq., who handled the real estate transaction for them, until the J & F Realty litigation was concluded. Howard L. Egenberg makes clear in his certification that he had not been asked at the time of the closing to hold $40,000 in escrow for the tankers.
An arbitration award in the J & F Realty litigation was entered on August 16, 2005, but was thereafter overturned by order dated May 8, 2006. The matter was set down for a plenary hearing on the issues that had been submitted to arbitration. No one raised before the trial court then any dispute regarding the $40,000 credit for the tankers.
On October 4, 2006, the J & F Realty litigation settled with Mitchell Bayroff and Wohl agreeing to pay the sum of $25,000 to Eleanor Bayroff. The settlement was placed on the record. At that time, counsel for Mitchell Bayroff and Wohl stated:
This settlement, however, does not necessarily affect any monies that are being held in escrow for a closing that took place. There is a property that the parties had a joint interest in. The property was sold, and there is money being held in escrow. The agreement is if any of the issues that are now resolved that were before this court are issues that there [are] escrows being held for, those escrows should be released, but to the extent there are issues that were not dealt with before this court, then that would be a separate issue that the parties will deal with, with their respective attorneys.
When asked whether the representation of settlement terms placed on the record were accurate, counsel for Eleanor Bayroff stated: "That is correct, your Honor. I am assuming that within a reasonable time we will get the check, we will exchange releases, carving out this exception that counsel spoke about."
The release Eleanor Bayroff signed on October 18, 2006, stated:
I specifically release . . . [a]ll claims of whatsoever nature, arising out of the litigation involving J & F Realty and in particular the subject matter of the accounting litigation set forth in Docket No. HUD-C-200-01 . . . which litigation has been settled by me and concerning which I make this release, subject only to reserving any matters relating to a certain escrow held by Howard Egenberg, Esq. to the extent it concerns matters not relating to J & F Realty.
Of the $90,000 in escrow, $40,000 was set aside, and Eleanor Bayroff received $25,000, representing her one-half share of the remaining $50,000, and an additional $25,000, representing the settlement paid by Mitchell Bayroff and Wohl, for a total of $50,000 paid to Eleanor Bayroff.
A dispute then arose over the remaining $40,000. Plaintiff moved and defendants cross-moved in the J & F Realty litigation for resolution of their claims against the $40,000. The trial judge denied the motions, indicating in the order of April 13, 2007, that the denial "shall not be construed as barring any claim under the Entire Controversy Doctrine."
Thereafter, Eleanor Bayroff commenced this litigation maintaining that she was entitled to $20,000, representing half of the $40,000 held in escrow by Egenberg. By Order dated November 2, 2007, Egenberg was permitted to deposit this sum into court.
In their counterclaim, Mitchell Bayroff and Wohl contended that the hot tar tankers were Frederick Bayroff's and that he hired Robert Bubnis to move them onto the 24th Street property owned by J & F Realty. In the motions below, they presented Bubnis' certification establishing these facts. As a result, they argued that the $40,000 should be allocated against Eleanor Bayroff's share, since she is the successor in interest to Frederick Bayroff. On cross-motions for summary judgment, Eleanor Bayroff presented no evidence to refute Bubnis' certification. Setting forth its decision in a letter opinion dated November 20, 2007, the trial court found that the entire controversy doctrine did not bar the counterclaim and directed that the $40,000 in escrow be paid to Mitchell Bayroff and Wohl. Plaintiff's motion for reconsideration was denied by letter opinion dated January 7, 2008.
On appeal, Eleanor Bayroff makes the following arguments:
THE CLAIM OF MITCHELL AND ANDREA CONCERNING ELEANOR'S RESPONSIBILITY FOR THE $40,000 CREDIT GIVEN TO THE BUYER IN CONNECTION WITH THE APRIL 12, 2005 CLOSING IS BARRED BY THE ENTIRE CONTROVERSY DOCTRINE, R. 4:30A.
THE COURT BELOW ERRED IN AWARDING $40,000 TO COUNTERCLAIMANTS.
THE COURT BELOW SHOULD HAVE GRANTED ELEANOR'S MOTION FOR $20,000 OF THE ESCROW SEPARATE AND APART FROM THE COUNTERCLAIM AGAINST FRED'S ESTATE THAT IT IS LIABLE TO MITCHELL AND ANDREA FOR HAVING PLACED THE TANKERS AT 110 E. 24TH STREET.
Eleanor Bayroff maintains that Mitchell Bayroff's and Wohl's claim for the full $40,000 is barred by the entire controversy doctrine. The entire controversy doctrine requires that all aspects of a controversy among the litigants be asserted in a single action. K-Land Corp. No. 28 v. Landis Sewerage Auth., 173 N.J. 59, 70 (2002) (quoting Pressler, Current N.J. Court Rules, comment 1 on R. 4:30A (2002)). A claim that should have been joined under this doctrine and was not will be barred from future litigation. R. 4:30A. Eleanor Bayroff contends that since the claim regarding the $40,000 was known to Mitchell Bayroff and Wohl at the closing on April 12, 2005, they could have asserted their claim in the J & F litigation before the settlement of that litigation on October 4, 2006. Hence, Eleanor Bayroff maintains that the claim is barred by the entire controversy doctrine.
The motion judge correctly rejected this argument in his letter opinion of November 20, 2007, writing:
The "entire controversy doctrine" states that non-joinder of claims required to be joined by the doctrine shall result in the preclusion of the omitted claims. R. 4:30A. The doctrine requires a litigant to present all aspects of a controversy in one legal proceeding. Hobart Bros. v. Nat. Union Fire Ins., 354 N.J. Super. 229, 240 (App. Div.), certif. den., 175 N.J. 170 (2002). The doctrine is intended to prevent a party from voluntarily holding back a related component of the controversy in the first proceeding by precluding a party from raising it in a subsequent proceeding thereafter. Id. at 240-41.
Because the hot tar tanker issue arose after the submission of issues to Judge Olivieri in 2004, and because Judge Olivieri limited the scope of subsequent hearings to issues previously raised, and because the hot tar tanker issue was not an aspect of the foreclosure controversy being adjudicated by Judge Olivieri, the entire controversy doctrine does not apply in this case.
Further, we note that the entire controversy doctrine is also inapplicable here because the parties carved out an exception at the time of their settlement. Both sides on the record at the time of the settlement acknowledged that the settlement did not cover monies that were being held in escrow arising from a closing. The release Eleanor Bayroff signed expressly states that it does not cover matters relating to an escrow being held by Egenberg. Mitchell Bayroff and Wohl maintain that the statements refer to the $40,000 now at issue. While these statements do not expressly mention the $40,000 or the East 24th Street property, Eleanor Bayroff provides no other explanation for these exceptions set forth on the record and in her release.
Eleanor Bayroff also contends that the motion judge erred in awarding the $40,000 to Mitchell Bayroff and Wohl on two grounds: "(1) their claim to all the money is based on hearsay; and (2) they agreed to split the cost equally."
In finding that Frederick Bayroff was responsible for the hot tar tanks being located on the property, the trial judge relied on the certification of Robert Bubnis, which states in pertinent part:
2. In the summer of 2000, I was contacted by Fred Bayroff to move four (4) hot tar/asphalt tankers.
3. At the direction of Mr. Bayroff, my company moved these tankers from the property . . . located at 170 Avenue F, Bayonne, New Jersey to the vacant property located on E. 24th Street, Bayonne, New Jersey.
Although Bubnis is certifying to what Fred Bayroff told him, this is not inadmissible hearsay because the statement is being offered for the fact that Mr. Bayroff gave the instruction, something Bubnis knows first hand. Thus, the person whose credibility is at issue is Bubnis, not Bayroff. "As a general proposition, '[w]here statements are offered, not for the truthfulness of their contents, but only to show that they were in fact made and that the listener took certain action as a result thereof, the statements are not deemed inadmissible hearsay.'" Carmona v. Resorts Int'l Hotel, Inc., 189 N.J. 354, 376 (2007) (quoting Russell v. Rutgers Cmty. Health Plan, Inc., 280 N.J. Super. 445, 456-57 (App. Div.), certif. denied, 142 N.J. 452 (1995)).
Eleanor Bayroff further argues that even if Frederick Bayroff did put the tankers on the property, Egenberg's uncontested certification states that the parties agreed to split the cost. That is not so. Egenberg states in his certification: "I do not recall any discussion as between Mitchell and Eleanor as to who would be responsible for the $40,000. Both agreed, as I recall it, to share the expense as a reduction from the gross sales price." Thus, while the parties agreed to allow the sale price to be reduced by this amount, Egenberg could not say that the parties reached any agreement on the allocation of the loss between them.
The balance of the arguments raised by appellant are without sufficient merit to warrant discussion in a written opinion. R. 2:ll-3(e)(1)(E).
After a careful review of the record, we find no error on the part of the court below. We affirm substantially for the reasons set forth by the motion judge in his two letter opinions and for the reasons expressed above.