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Advisors Financial Center, L.L.C v. Gary Goldberg Planning Services

February 8, 2011

ADVISORS FINANCIAL CENTER, L.L.C., PLAINTIFF-APPELLANT/ CROSS-RESPONDENT,
v.
GARY GOLDBERG PLANNING SERVICES, INC., AND GARY GOLDBERG, DEFENDANTS/THIRD PARTY PLAINTIFFS-RESPONDENTS/ CROSS-APPELLANTS,
v.
LIEBERMAN ASSET MANAGEMENT, LLC, ADVISORS CAPITAL MANAGEMENT, LLC, CHARLES LIEBERMAN AND KEVIN KERN, THIRD PARTY DEFENDANTS/CROSS-RESPONDENTS.



On appeal from Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-1381-05.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued telephonically January 5, 2011

Before Judges Carchman and Graves.

Plaintiff Advisors Financial Center, L.L.C. (AFC), appeals from a final order entered October 23, 2009, awarding counsel fees to defendants Gary Goldberg Planning Services, Inc., and Gary Goldberg (collectively GGPS) in the amount of $28,608.70 as a sanction for frivolous litigation. After reviewing the record and applicable law, we reverse.

Both parties provide clients with financial services and advice, and they entered into an agreement under which GGPS would refer clients to AFC in exchange for a fee. As a result of a fee dispute, AFC filed a complaint against GGPS on June 14, 2004, seeking compensatory and punitive damages. Although the initial complaint was dismissed after the parties executed a compromise and settlement agreement (CSA) on July 9, 2004, AFC filed a second complaint to enforce the CSA. Following a bench trial, the court entered a judgment for GGPS, and damages were subsequently determined by an arbitrator. The court entered a final judgment in favor of GGPS in the amount of $224,738.84 on February 21, 2008, and AFC appealed.

Thereafter, the court entered a consent order staying GGPS's efforts to enforce the judgment during the pendency of the appeal. The order also required AFC to provide GGPS with a $340,000 letter of credit in lieu of a supersedeas bond and an escrow in the sum of $18,000. However, the parties agreed that the letter of credit would terminate if "the Appellate Division remand[ed] the matter back to the lower Court for a new trial or new findings by the Court below in favor of AFC."

AFC obtained a letter of credit from M&T Bank (M&T) that was scheduled to expire on October 29, 2009. The letter stated:

It is a condition of this credit that it shall be deemed automatically extended without amendment for sixty (60) days from the expiration date hereof, or any future expiration date, unless thirty (30) days prior to any expiration date M&T Bank notifies the beneficiary [GGPS] in writing that M&T Bank elects not to consider this credit renewed for any additional period.

On appeal, we affirmed the trial court's judgment in an unpublished opinion but remanded the matter for reconsideration of damages based on two portions of the CSA. Advisors Fin. Center, L.L.C. v. Gary Goldberg Planning Servs., Inc., No. A-3649-07 (App. Div. Sept. 3, 2009) (slip op. at 3). Specifically, the case was remanded for "reconsideration of the amount of the judgment and . . . reconsideration of counsel fees available pursuant to the CSA."*fn1 Ibid.

On September 9, 2009, AFC filed a motion to vacate the February 21, 2008 judgment in favor of GGPS "pending adjudication of the remanded litigation." In an accompanying certification, Jack Zakim (Zakim), counsel for AFC, also stated that AFC was entitled to the release of its "security for the stay of execution inclusive of the $340,000.00 Letter of Credit . . . and $18,000[.]00 plus accrued interest escrowed with defense counsel."

David R. Strickler (Strickler), counsel for GGPS, opposed the motion, asserting that Zakim "misstated the effect of the Appellate Division decision, apparently in a futile bad-faith attempt to snatch for AFC an imaginary victory from the jaws of a decision adverse to his client." Strickler also sent Zakim a "safe harbor letter," in which he demanded that Zakim withdraw the motion to vacate and threatened to cross-move for sanctions if he did not. The letter alleged that the Appellate Division decision neither vacated nor reversed the trial court's February 21, 2008 judgment and that Zakim had no "legal authority" to support his position. In response, Zakim claimed that the motion was "well supported by the facts and law," and he refused to withdraw it. Shortly thereafter, GGPS cross-moved for sanctions pursuant to Rule 1:4-8.

Strickler sent Zakim another letter on September 25, 2009, stating that M&T "ha[d] notified GGPS that it ha[d] elected not to extend" the letter of credit, which would expire on October 29, 2009. Strickler demanded that AFC provide GGPS with $340,000 to be placed in Reiter's escrow account, a supersedeas bond, or a new letter of credit. In addition, Gary Goldberg personally attempted to collect on the original letter of credit on October 7, 2009.

On October 9, 2009, the trial court denied AFC's motion to vacate and ordered AFC to pay GGPS "reasonable attorneys' fees and expenses incurred . . . as a direct result of [AFC's] violation of [Rule] 1:4-8." It ultimately awarded counsel fees and ...


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