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J.R.S. Holdings, L.L.C. v. Jes Properties

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


August 17, 2010

J.R.S. HOLDINGS, L.L.C., PLAINTIFF-RESPONDENT,
v.
JES PROPERTIES, L.L.C. AND JONATHAN SACHAR, A/K/A JONATHAN E. SACHAR, A/K/A JONATHAN EDWARD SACHAR, JOINTLY AND SEVERALLY, DEFENDANTS-APPELLANTS.

On appeal from the Superior Court of New Jersey, Law Division, Hunterdon County, Docket No. L-518-08.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Submitted August 3, 2010

Before Judges Graves and Yannotti.

Defendants Jonathan E. Sachar (Sachar) and JES Properties, L.L.C. (JES) appeal from an order dated July 17, 2009, which denied their motion for reconsideration of an order entered on April 17, 2009, that required Sachar and JES to retain separate counsel for himself or JES; and awarded plaintiff attorney's fees and costs in the amount of $13,558.06. We reverse.

The following facts are pertinent to our decision. JES borrowed $200,000 from plaintiff, pursuant to a commercial loan and security agreement dated February 21, 2008. The agreement states that Sachar is the sole owner of JES and its managing member. The agreement provides, among other things, that plaintiff may enforce the agreement through legal action and recover damages caused by any breach, "including court costs, reasonable attorneys' fees and other costs and expenses incurred in the enforcement of" JES Properties' obligations under the agreement. Sachar signed the agreement as "guarantor."

JES and Sachar defaulted and plaintiff brought this action against defendants to enforce the agreement. On October 31, 2008, plaintiff obtained a judgment against defendants in the amount of $238,303.59, plus costs in the amount of $328.29. On November 5, 2008, plaintiff served an information subpoena upon defendants, which required that they provide the requested discovery.

On November 8, 2008, defendants filed a motion to vacate the judgment. Plaintiff filed a cross-motion to enforce litigant's rights. Plaintiff argued, among other things, that Rule 1:21-1(c) barred Sachar from representing himself and representing JES in this case. The court heard the motions on January 9, 2009.

The court entered two orders dated January 12, 2009. One was an order denying defendants' motion to vacate the default judgment and granting plaintiff's cross-motion for counsel fees and costs in the amount of $7,397.42. The other order required defendants to comply with the information subpoena.

It appears that defendants did not provide all of the information sought by the information subpoena and plaintiff filed another motion in aid of litigant's rights. The court filed a memorandum of decision dated April 17, 2009, in which it concluded that defendants had not complied with the information subpoena. The court ordered defendants to respond completely to the information subpoena within twenty days of the date of the order.

The court also found that, despite its prior order, Sachar had not retained an attorney for JES. The court determined that Sachar would have an additional thirty days to obtain counsel for JES and, if he failed to do so, plaintiff could file a motion for sanctions. The court entered an order dated April 17, 2009, which memorialized its ruling.

Sachar and JES thereafter filed a motion for reconsideration of the court's prior orders and also sought a reduction of the counsel fees previously awarded to plaintiff. Plaintiff filed a cross-motion seeking the imposition of sanctions and the award of additional counsel fees and costs. The court addressed the motions in a memorandum of decision dated July 17, 2009.

The court found that Sachar did not violate the court's prior orders by failing to retain separate counsel for himself or JES Properties. The court also determined that Sachar had not established a basis for reconsideration of its prior orders. The court entered an order dated July 17, 2009, which denied defendants' motion for reconsideration, and awarded plaintiff counsel fees and costs in the amount of $13,558.06. This appeal followed.

In this appeal, Sachar and JES argue that the court: 1) erred by finding that Rule 1:21-1(c) precludes him from representing himself and JES in this litigation; 2) erred by finding that a conflict of interest would arise if he represented himself and JES in this case; and 3) abused its discretion by awarding plaintiff attorneys' fees and costs for litigating the issues pertaining to Sachar's concurrent representation of himself and JES.

We note initially that the trial court found that defendants' motion for reconsideration was untimely because it had not been filed within twenty days of the date of the orders at issue, as required by Rule 4:49-2. The rule states that a motion for reconsideration "seeking to alter or amend a judgment or order shall be served not later than [twenty] days after service of the judgment or order[.]" R. 4:49-2. The rule applies only to final judgments or orders. Johnson v. Cyklop Strapping Corp., 220 N.J. Super. 250, 257 (App. Div. 1987), certif. denied, 110 N.J. 196 (1988). The orders of January 12, 2009 and April 17, 2009, were not final judgments or orders; therefore, defendants' motion for reconsideration was timely.

Sachar argues that the court erred by finding that Rule 1:21-1(c) precludes him from representing himself and JES in this case. We agree. The rule provides in pertinent part that, "a business entity other than a sole proprietor shall neither appear nor file any paper in any action in any court of this State except through an attorney authorized to practice in this State." R. 1:21-1(c). Here, the trial court reasoned that the under Rule 1:21-1(c), "a person cannot represent himself pro se, and simultaneously represent a [corporate] co-defendant."

However, the rule does not preclude a licensed attorney from representing himself and also representing a corporate co-defendant. It is undisputed that Sachar is an attorney who is authorized to practice law in New Jersey. Although Sachar was temporarily ineligible to practice here because he failed to pay his annual fee for the Lawyers' Fund for Client Protection pursuant to Rule 1:28-2, he made the required payment and his license to practice was reinstated. Therefore, Rule 1:21-1(c) does not bar Sachar's concurrent representation of himself and JES.

Sachar also argues that the trial court erred by finding that his representation of himself and JES would create a conflict of interest. Again, we agree. RPC 1.7 provides that:

(a) Except as provided in paragraph (b), a lawyer shall not represent a client if the representation involves a concurrent conflict of interest. A concurrent conflict of interest exists if:

(1) the representation of one client will be directly adverse to another client; or

(2) there is a significant risk that the representation of one or more clients will be materially limited by the lawyer's responsibilities to another client, a former client, or a third person or by a personal interest of the lawyer.

(b) Notwithstanding the existence of a concurrent conflict of interest under paragraph (a), a lawyer may represent a client if:

(1) each affected client gives informed consent, confirmed in writing, after full disclosure and consultation, provided, however, that a public entity cannot consent to any such representation. When the lawyer represents multiple clients in a single matter, the consultation shall include an explanation of the common representation and the advantages and risks involved;

(2) the lawyer reasonably believes that the lawyer will be able to provide competent and diligent representation to each affected client;

(3) the representation is not prohibited by law; and

(4) the representation does not involve the assertion of a claim by one client against another client represented by the lawyer in the same litigation or other proceeding before a tribunal.

Here, the court reasoned that a conflict of interest would arise because Sachar is the sole owner of JES, a finding disputed by plaintiff even though its agreement with JES states that Sachar is the sole owner of JES. However, even if Sachar is, in fact, the sole owner of JES, that would not establish that Sachar's concurrent representation of himself and JES in this lawsuit would be a conflict of interest under RPC 1.7(a).

The record does not establish that Sachar's representation of himself is "directly adverse" to JES, nor does the record establish that the concurrent representation "materially" limits Sachar's representation of JES. As Sachar points out, his interest in this lawsuit and that of JES are the same. Moreover, even if a conflict of interest existed, Sachar and JES have, in their filings in this case, established that they have consented to the dual representation, as permitted by RPC 1.7(b).

Sachar additionally argues that the court erred by denying his motion for a reduction in the attorneys' fees and costs awarded to plaintiff. The court's order of January 12, 2009, awarded plaintiff attorney's fees and costs in the amount of $7,397.42. The court's order of April 17, 2009 awarded plaintiff attorneys' fees and costs in the amount of $12,754.31. The court's order dated July 17, 2009 awarded plaintiff an additional $13,558.06 in counsel fees and costs.

As we stated previously, the contract at issue in this case provides that plaintiff is entitled to attorneys' fees and costs incurred in a legal action brought to enforce the agreement. The court awarded plaintiff the fees and costs incurred in enforcing the judgment and litigating the dispute over Sachar's representation of himself and JES. Because we have concluded that Sachar may represent himself and JES, plaintiff should not have been awarded fees and costs for litigating that issue in the trial court. Moreover, the court did not make any findings as to the reasonableness of the fees and costs that plaintiff sought.

Accordingly, we reverse the court's July 17, 2009 and April 17, 2009 orders. We remand the matter to the trial court for reconsideration of the awards of attorneys' fees and costs. The court shall limit the awards to the attorneys' fees and costs incurred by plaintiff to enforce the agreement and exclude any fees and costs related to the litigation over Sachar's ability to represent himself and JES. The court also must determine whether the fees and costs awarded are reasonable.

Reversed and remanded to the trial court for further proceedings in conformity with this opinion. We do not retain jurisdiction.

20100817

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