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Cameron & Mittleman v. Chapman

March 17, 2010

CAMERON & MITTLEMAN, AMY MOWER, AND RICHARD MITTLEMAN, PLAINTIFFS-APPELLANTS,
v.
PHILIP CHAPMAN AND CHAPMAN HENKOFF PEDUTO & SAFFER, LLC, DEFENDANTS-RESPONDENTS, AND PAUL CAMPELLONE AND ADLER, POLLOCK & SHEEHAN, INC., DEFENDANTS.



On appeal from Superior Court, Law Division, Monmouth County, Docket No. L-1821-09.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued February 24, 2010

Before Judges Miniman and Waugh.

Plaintiffs Cameron & Mittleman, LLP, Amy Mower, and Richard Mittleman (collectively "Cameron Firm")*fn1 appeal the dismissal of their complaint for contribution and indemnification against Philip Chapman and Chapman, Henkoff, Peduto & Saffer (collectively "Chapman Firm").*fn2 We reverse.

I.

The issue presented on this appeal is whether the Chapman Firm is a "joint tortfeasor"*fn3 with the Cameron Firm with respect to economic losses claimed by non-party Metallix Refining, Inc. (Metallix), in a lawsuit it filed against the Cameron Firm and others (underlying action).*fn4 In order to explain our conclusion that the two law firms, and the individual attorney parties, are potentially joint tortfeasors for the purposes of the Joint Tortfeasors Contribution Law (JTCL), N.J.S.A. 2A:53A-1 to -5, we must set forth the facts with respect to the two underlying business transactions, as well as the legal theories involved in the underlying action and this action.

A.

RFE Industries, Inc. (RFE), Metallix's predecessor, was the owner of an unincorporated division, known as the "MFE Division" (MFE), which manufactured and sold "tin and tin lead alloys and silver anodes, silver salts and recycling of tin and tin-lead residues." In August 1997, RFE filed for bankruptcy protection.

After RFE's bankruptcy filing, non-party Anton Noll, Inc. (Noll), sought to acquire MFE by purchasing its assets. At the request of RFE's bankruptcy counsel, the bankruptcy court appointed the Chapman Firm as special counsel to represent RFE during the negotiation and execution of the proposed asset purchase agreement. Noll retained the Cameron Firm to represent it.

The final agreement between RFE and Noll provided for two types of payment by Noll to RFE: (1) a present payment for MFE's machinery, equipment and inventory; and (2) future payments of royalties based on revenues to be derived by Noll from designated MFE customers over a three-year period. The agreement as drafted did not prohibit Noll from making any further transfer of the purchased assets, nor did it call for any U.C.C. or other filing to protect RFE's interests with respect to the future royalty payments.

In September 1997, the bankruptcy court authorized the asset purchase, which closed on January 30, 1998. Shortly thereafter, in February 1998, Noll agreed to sell the MFE assets to Fry's Metals, Inc. (Fry). That transaction closed on February 19, 1998. The Cameron Firm also represented Noll in connection with the sale to Fry. It appears that the Noll-Fry transaction was the subject of negotiation prior to the finalization of the RFE-Noll transaction.

Following the sale of the MFE assets to Fry, both Noll and Fry apparently refused to make the royalty payments required by the agreement between Noll and RFE. Metallix, as RFE's successor, filed suit against Fry and others, and subsequently named the Cameron Firm as a defendant. Metallix did not, however, make any claim against the Chapman Firm, its counsel in the RFE-Noll transaction.

Pursuant to variously stated legal theories in the underlying action, Metallix alleges, among other things, that the Cameron Firm wrongfully conspired with Noll and Fry to defraud RFE and deprive it of the royalty payments due under its agreement with Noll. Metallix further alleges that, while the transaction was still being negotiated between Noll and RFE, the Cameron Firm "deliberately suppressed and fraudulently concealed" information pertaining to the agreement that Noll, its client, was negotiating with Fry, and that it had an affirmative legal duty to disclose that information to RFE. Metallix has apparently submitted an expert's report in the underlying ...


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