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Cole, Schotz, Meisel, Forman and Leonard, P.A. v. Kleiman

March 17, 2010

COLE, SCHOTZ, MEISEL, FORMAN AND LEONARD, P.A., PLAINTIFF-APPELLANT/ CROSS-RESPONDENT,
v.
BRIAN KLEIMAN AND RIVKA CHAYA KLEIMAN, HUSBAND AND WIFE, STEVEN KLEIMAN AND RIVKA BASYA KLEIMAN, HUSBAND AND WIFE, HD MANAGEMENT HEALTHCARE, LLC, HAPPY DAYS ADULT HEALTHCARE, LLC, AND NEW HORIZONS BEHAVIORAL HEALTHCARE CENTER, LLC, DEFENDANTS-RESPONDENTS/CROSS-APPELLANTS.



On appeal from Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-1745-06.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued February 24, 2010

Before Judges Axelrad, Sapp-Peterson and Espinosa.

Plaintiff Cole, Schotz, Meisel, Forman & Leonard, P.A. ("Cole Schotz" or "the law firm") filed this lawsuit to collect unpaid legal fees arising from the representation of the defendants in certain litigation. Defendants did not dispute the reasonableness of the fees or that the work billed was performed. Their position was that only the "corporate defendants" and not the "individual defendants" were responsible for the legal fees incurred. Following a non-jury trial, the trial court dismissed the complaint against the individual defendants and concluded that, pursuant to the equitable doctrine of quantum meruit, plaintiff was entitled to recover $116,104.56 plus prejudgment and post-judgment interest from the corporate defendants. Plaintiff appealed and defendants cross-appealed. We reverse that part of the final judgment that dismissed the complaint against the individual defendants and remand for entry of judgment against all defendants, jointly and severally, and affirm the remainder of the judgment, including the awards of prejudgment and post-judgment interest.

Cole Schotz filed a complaint to recover unpaid legal fees from all defendants in March 2006. One answer and counterclaim was filed on behalf of all defendants. Summary judgment was granted to Cole Schotz, entering judgment on its collection claim and dismissing defendants' answer and counterclaim. Defendants appealed and, in an unpublished opinion, this court affirmed the dismissal of the counterclaim and reversed the dismissal of the answer. Cole, Schotz, Meisel, Forman & Leonard, P.A., v. Kleiman, No. A-6519-06 (App. Div. July 16, 2008). The trial that was conducted as a result produced the following pertinent evidence.

On or about February 2, 2005, an order to show cause and complaint was filed in chancery court in Essex County, 300 Broadway Healthcare Center, LLC v. Happy Days Adult Healthcare, LLC, No. C-25-05 (the underlying litigation). All of the defendants here, brothers Brian and Steven Kleiman*fn1 and their wives, Rivka Chaya Kleiman and Rivka Basya Kleiman, respectively (collectively, the "individual defendants"); HD Management Healthcare, LLC; Happy Days Adult Healthcare, LLC; and New Horizons Behavioral Healthcare Center, LLC (collectively, the "corporate defendants");*fn2 were named as defendants. The lawsuit concerned a dispute over the control and ownership of a large nursing home, 300 Broadway Health Care Center d/b/a New Vista Nursing Home and Rehabilitation Center ("New Vista" or "the nursing home"), that was located at 300 Broadway in Newark. There were two factions in that dispute, the defendants here (the Kleiman faction) and a group of investors led by George Weinberger (the Weinberger faction). When the attorney representing defendants had to withdraw from the case as a result of a conflict of interest, he referred the matter to Michael Meisel of Cole Schotz.

Meisel met with Brian and Steven in the early part of February. At the time of their meeting, there had been months of negotiations between the two factions regarding a proposal in which the Kleiman faction would buy out the Weinberger faction. However, as Meisel described it, the Weinberger faction had "forced the issue" and "put a gun to their head" by filing an order to show cause and complaint to terminate the Kleimans and their management company as the manager of the nursing home. There were, then, two tracks for the representation sought from Cole Schotz, a defense in the litigation and continued negotiation on behalf of the Kleiman faction's efforts to buy out the Weinberger faction.

Meisel testified that, in their first meeting, Brian and Steven asked if the nursing home could pay the legal fees. Meisel responded:

I explained to them it was a derivative suit that the nursing home was a plaintiff in the case bringing claims against them and their management company and that we were representing the Kleiman interests, not the nursing home, and it would be inappropriate for us to accept checks from the nursing home, and it would be inappropriate and it would be objectionable for the other side[.]

Meisel testified further that he told Brian and Steven that Cole Schotz would have to be paid by the Kleimans. Although Meisel never had any conversations with Rivka Chaya Kleiman or Rivka Basya Kleiman, it was undisputed that Brian Kleiman acted as the spokesman for all the defendants.

Approximately one month after Cole Schotz first began work for defendants, Meisel wrote a letter, dated March 16, 2005 (the retainer letter), to Brian Kleiman. Pursuant to Brian's instructions, the letter was sent to the address for the nursing home. However, neither the address nor anything in the letter indicated that the letter was sent to Brian in his capacity as a member of any LLC. The letter stated that it "confirm[s] our retention and authorization to represent you, Steven, Happy Days Adult Healthcare, LLC and the other named defendants in this litigation [and in] the parallel effort to conclude the purchase of the Weinberger Group interests." In discussing responsibility for fees and costs, the letter states:

In addition to our fees, you are also responsible for reimbursing us on out-of-pocket disbursements we advance on your behalf, and we will provide you with an itemized monthly invoice showing ...


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