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Clair v. City of Atlantic City

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


September 4, 2009

EDWARD CLAIR, WILLIAM CIBOTTI, JOHN TAIMANGLO, SEA THRILLS TOURS, INC. AND A.C. CLUB, INC. T/A CHRISTINE'S, PLAINTIFFS-APPELLANTS,
v.
CITY OF ATLANTIC CITY, THE MUNICIPAL BOARD OF ALCOHOLIC BEVERAGE CONTROL OF THE CITY OF ATLANTIC CITY, YVONNE PRESTON, ABC BOARD; SID TRUSTY, ABC BOARD; CATHERINE GRADY, ABC BOARD; DETECTIVE JAMES MOONEY, ACPD; DETECTIVE CHRISTOPHER BARBER, ACPD; AMBER CORBETT, ABC; STEVE FRAME, AC CODE ENFORCEMENT; PAT MALIA, AC CODE ENFORCEMENT; ELMER WALTERS AND WALLACE SHIELDS, DEFENDANTS, AND DETECTIVE JACK IMFELD, ACPD, AND JOHN SCHULTZ, DEFENDANTS-RESPONDENTS.

On appeal from the Superior Court of New Jersey, Law Division, Atlantic County, Docket No. L-1177-04.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Submitted March 11, 2009

Before Judges Rodríguez, Payne and Waugh.

Plaintiffs Edward Clair, William Cibotti, John Taimanglo, Sea Thrills Tours, Inc., and A.C. Club, Inc. t/a Christine's (collectively, "A.C. Club"), appeal from a grant of summary judgment dismissing their tortious interference with business relations claim against defendants John Schultz (Schultz) and Jack Imfeld (Imfeld). We affirm.

This matter involves a lengthy and complex history involving several prior lawsuits, the facts of which bear on the issues in the present matter.

A.C. Club leased the first floor of a building located in Atlantic City. A.C. Club intended to open a restaurant on the premises. Another entity, K.A.V., Inc., originally leased the second and third floors of the same building, intending to open a nightclub. In 1999, both A.C. Club and K.A.V. applied for a liquor license with the municipal Board of Alcoholic Beverage Control (ABC Board). Imfeld, an Atlantic City police detective with ABC Board enforcement duties, investigated and opposed A.C. Club's application. The ABC Board granted A.C. Club's application and denied K.A.V.'s application.

A.C. Club then took over the lease for the second and third floors of the building and applied to expand its first-floor liquor license to the second and third floors, enabling it to run a nightclub. The ABC Board granted this application but imposed conditions on the expanded license, prohibiting alcoholic beverage service between 3:00 a.m. and 10:00 a.m. and prohibiting the operation of a "discotheque." These conditions were imposed in response to community objections based on a history of noise, violence, drug use, property destruction, the accumulation of garbage and broken glass, parking congestion and public urination associated with previous nightclubs operating in that location.

Approximately one month later, A.C. Club requested that the ABC Board amend the license conditions, claiming that, with the conditions in place, it could not obtain financing or operate at a profit. The ABC Board partially amended the license conditions but A.C. Club nevertheless appealed to the Division of Alcoholic Beverage Control (State ABC). The State ABC Director stayed enforcement of the conditions pending resolution of the appeal. During this period, A.C. Club operated a nightclub with an unrestricted liquor license. A.C. Club has not produced any business records from this period of operation.

A.C. Club's appeal was heard by an administrative law judge, Edgar R. Holmes (ALJ), in May 2001. The ALJ found the liquor license conditions had been imposed based on A.C. Club's representation to the ABC Board that it intended to open an upscale restaurant and nightclub, but that A.C. Club instead opened a discotheque-style nightclub. Under the circumstances, the ALJ found A.C. Club's assertion that the conditions in the liquor license were arbitrary and capricious was "disingenuous," because they would have been of no consequence if the business had been operated as represented. The ALJ concluded that the imposition of liquor license conditions was not arbitrary or capricious. The ALJ also rejected A.C. Club's contention that similar local establishments were not subject to the same liquor license conditions as untimely raised and insufficiently pled. The State ABC Director affirmed. A.C. Club did not appeal this determination.

In a parallel action, in July 2002, A.C. Club applied to renew its liquor license for 2002-2003. This renewal was denied on the grounds that A.C. Club had not complied with the conditions in the liquor license, based on three separate violations in February and September 2002. Moreover, there was substantial public testimony that A.C. Club's operation was bringing the same drug use, noise, violence and other, related, problems associated with previous nightclubs in that location. A.C. Club appealed the denial to the State ABC.

Meanwhile, in October 2002 and April 2003, the ABC Board began a series of enforcement actions against A.C. Club for various regulatory violations. These violations were discovered in the course of three different inspections in February and September 2002, two of which were led by Imfeld. In May 2003, A.C. Club entered into a consent order under which the ABC Board dropped all charges against A.C. Club and A.C. Club surrendered its liquor license and withdrew its appeal of the denial of its 2002-2003 renewal application.

A.C. Club then brought suit against numerous parties on a variety of claims. Nearly all these claims and parties were dismissed by pretrial motion, leaving only claims of tortious interference with a business relationship against Schultz, a rival club owner, and Imfeld.

The tortious interference claim was based on A.C. Club's allegations that Schultz used his influence with the local police, the ABC Board, and various regulatory agencies to prevent A.C. Club from opening and operating a nightclub. Specifically, A.C. Club complained of arbitrary and unrealistic zoning and occupancy requirements, A.C. Club being required to obtain permits Schultz was not required to obtain, Imfeld's domination of the ABC Board, operational restrictions on A.C. Club's liquor license that were not imposed on any other establishment in Atlantic City, disparate enforcement of health and safety regulations, disparate enforcement of drug laws and employment regulations, and frequent police raids calculated to harass A.C. Club's owners and patrons.

The judge initially denied defendants' motion for summary judgment, finding strong evidence of a close relationship between Imfeld and Schultz and a disparate pattern of law enforcement activity. Nevertheless, the judge found A.C. Club's proofs of tortious interference generally incompetent, in that they were largely comprised of hearsay statements and rumor.

Defendants filed a second motion for summary judgment.

A.C. Club submitted an appraisal assessing the value of the property at $7,620,000 and assessing the value of lost business at $1,000,000 for the restaurant and $2,000,000 for the nightclub, based on twenty-four-hour operation with an unrestricted liquor license.

A.C. Club also served Schultz with a request for admissions, seeking more detailed information regarding his relationship with Imfeld. Schultz requested a protective order barring his answers, which the judge denied with the stipulation that Schultz was not required to answer the requests for admissions until after the disposition of the pending summary judgment motions.

The judge granted summary judgment to both Imfeld and Schultz, finding the ALJ's decision collaterally estopped A.C. Club from attacking the conditions placed on its liquor license and that, because it kept no business records during its period of unrestricted operation beginning in 2001, A.C. Club could not prove the damages necessary to sustain its complaint.

With regard to damages, the judge specifically noted the lack of required recordkeeping with regard to: A.C. Club's employees; payroll; income; invoices for alcohol bought and sold; and the volume of business done. N.J.A.C. 13:2-23.13, 23.32. This made it impossible to ascertain actual or projected revenues, which in turn affected the ability to calculate damages.

Further, A.C. Club's expert's damages assessment consisted of estimates that did not take into account actual expenses, income, overhead, or the possibility A.C. Club would not operate on a twenty-four hour schedule. Because these estimates were entirely speculative, the judge found the defendants were deprived of the ability to challenge the figures and that A.C. Club failed to prove its damages under any principle of law.

On appeal, A.C. Club contends the judge erred in granting defendants' motion for summary judgment, in part because:

IN ITS REVIEW OF THE FACTS THE COURT FAILED TO ACCORD ALL REASONABLE INFERENCES TO [A.C. CLUB].

We find this argument to be without merit and reject A.C. Club's assertion that "Mere Uncertainty as to the Precise Amount of [A.C. Club's] Damages Does Not Preclude Recovery or Warrant the Grant of Summary Judgment Against It."

Summary judgment is appropriate where, after viewing all relevant evidence in the light most favorable to the non-moving party, (1) there are no material issues of fact in dispute and (2) the moving party is entitled to judgment as a matter of law. Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995); R. 4:46-2(c). Reasonable inferences may only be drawn from actual facts: bare conclusions are insufficient to defeat a meritorious motion for summary judgment. Brae Asset Fund, L.P. v. Newman, 327 N.J. Super. 129, 134 (App. Div. 1999). "Summary judgment is not to be denied if the papers pertinent to the motion show palpably the absence of any issue of material fact, although the allegations of the pleadings, standing alone, may raise such an issue." U.S. Pipe & Foundry Co. v. Am. Arbitration Assoc., 67 N.J. Super. 384, 400 (App. Div. 1961) (citing Judson v. Peoples Bank & Trust Co. of Westfield, 17 N.J. 67, 74-75 (1954)).

To establish a prima facie claim of tortious interference, a plaintiff must prove there was a reasonable certainty that, without the interference, the plaintiff "would have received the anticipated economic benefits." Printing Mart of Morristown v. Sharp Elecs. Corp., 116 N.J. 739, 751 (1989) (quoting Leslie Blau Co. v. Alfieri, 157 N.J. Super. 173, 185-86 (App. Div.), certif. denied sub nom., Leslie Blau Co. v. Reitman, 77 N.J. 510 (1978)). Further, a plaintiff must show that the injury resulted in damages. Norwood Easthill Assocs. v. Norwood Easthill Watch, 222 N.J. Super. 378, 384 (App. Div. 1988).

Here, we agree with the judge's finding that A.C. Club could not show with any degree of certainty what benefits it would have realized absent disparate regulatory enforcement. Although "mere uncertainty as to the amount [of damages] will not preclude the right of recovery," Tessmar v. Grosner, 23 N.J. 193, 203 (1957), there is nothing in the record to suggest A.C.

Club could present "evidence afford[ing] a basis for estimating damages with some reasonable degree of certainty . . . ." Ibid.

There is substantial evidence A.C. Club operated a twenty-four-hour discotheque with an unrestricted liquor license beginning in 2001, when the State ABC Director stayed the conditions in A.C. Club's liquor license. A.C. Club has presented no records from that period of operation, either because the records were lost or because such records were never maintained. Further, A.C. Club's expert report on projected damages was based on entirely speculative estimates lacking any factual basis. The assessment also did not account for the possibility that A.C. Club would be unable to operate on a twenty-four-hour basis.

Therefore, we find the judge properly granted summary judgment to the defendants on the ground that, even when all material facts are viewed in the light most favorable to A.C. Club, A.C. Club could not make out a prima facie claim for tortious interference.

In light of our holding, we do not reach A.C. Club's remaining contentions on appeal.

Affirmed.

20090904

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