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Rand, Algeier, Tosti & Woodruff v. Ray Braun

October 14, 2011


On appeal from Superior Court of New Jersey, Law Division, Essex County, Docket No. L-2833-02.

Per curiam.


Argued May 10, 2011

Before Judges Graves, Messano, and Waugh.

Defendant Ray Braun appeals the judgment of the Law Division, following a bench trial, dismissing his counterclaim and third-party complaint for legal malpractice against plaintiff Rand, Algeier, Tosti & Woodruff (RATW) and third-party defendant David Rand, a former RATW partner. We affirm.

This matter was started by RATW as a collection action for attorneys fees it claimed were due from Braun. RATW and Rand had represented Braun in connection with litigation brought in the General Equity Part against him by Barry Novin, co-owner with Braun of a closely-held corporation. Braun filed a counterclaim against RATW and a third-party complaint against Rand, alleging malpractice in connection with their representation of his interests in the underlying litigation.

In that action, Novin successfully sought dissolution of the corporation and the sale of the property that was its sole asset. Braun alleged in his malpractice claim that his attorneys were negligent in failing to press for his desired result, a division of the property into separate buildable lots to be distributed between the two shareholders, so that they could develop their own lots separately.

Because the underlying litigation had been brought in the General Equity Part, in which factfinding is traditionally performed by a judge rather than a jury, the trial judge in this case determined that the "trial within a trial"*fn1 required by Braun's malpractice claim should be a bench trial, despite Braun's demand for a jury trial on all issues. After holding the bench trial, the judge concluded that the division of the property sought by Braun would not have been a viable remedy under the circumstances. Consequently, she dismissed the malpractice action.

On appeal, Braun argues that the trial judge erred in holding a bench trial rather than a jury trial. He further argues that, in any event, the judge's conclusion that division of the property was not a viable remedy was erroneous. Finally, he challenges the judge's decision to exclude his damages expert.

For reasons explained below, we conclude that no trial was necessary to resolve the issue of whether a division of the property was a viable remedy. Consequently, we need not reach the issue of whether the trial within a trial should have been a jury trial or a bench trial.


We discern the following facts and procedural history from the record on appeal.

In 1980, Braun, a certified public accountant, was the treasurer of Hartz Mountain Industries (Hartz Mountain), a corporation that develops land in northern New Jersey and New York. At the same time, he operated his own corporation, known as G&L Associates, which developed real estate in Ocean County. Braun typically bought small tracts of developed land, rehabilitated the properties, and then rented them.

In 1980 or 1981, Braun met Novin through a mutual friend, who told Braun that he and Novin were interested in purchasing a piece of property in Montville and wanted Braun to join them in the purchase. In July 1981, Braun and Novin became the sole shareholders of Montview Associates, Inc. (Montview), a Subchapter S corporation formed by Braun. According to Braun, Montview was created "to provide a somewhat of an umbrella against lawsuits in case there was a problem . . . and to purchase a piece of property in Montville." A contract for the purchase of the property by Montview from the Pine Brook Jewish Center (Jewish Center) was executed later in 1981.

Braun and Novin each held a fifty percent interest in Montview. From the time of its formation through 1996, Montview had no assets other than the contractual right to purchase the property. Montview did not obtain legal title to the property pending approval of the final subdivision, which allowed Montview, as lessee, to benefit from the Jewish Center's tax exempt status.

Braun and Novin never entered into a shareholders' agreement specifying each shareholder's duties and responsibilities with respect to Montview and each other. It was Braun's understanding that all decisions would be made on a "fifty-fifty basis." Braun and Novin had other occupations at the time Montview was created. In 1982, Braun had left Hartz Mountain and started a certified public accounting firm. Novin operated an insurance company.

At the time Montview entered into the contract to purchase the property, it was part of the Jewish Center's cemetery tract and "had to be subdivided" for development purposes. According to Braun, he and Novin initially intended to purchase the property and to develop it together, "start[ing] with the subdivision of the property . . . all the way up to the final sales of the houses."

From 1981 through 1984 or 1985, Braun and Novin spoke cordially "[t]hree times every two months" about the property. According to Braun, they had no difficulty in making decisions about the property. From 1985 onward, however, the shareholders began to have differences.

Patrick English, Braun's attorney in the mid-1980s, testified that Braun and Novin "were working together" until 1997, but "there were times when their relationship was not the best" and "there were definitely differences of opinion on how to proceed in certain aspects." Braun testified that at times "there were little flare-ups." He further testified that, between 1981 and 1987, he and Novin "had [their] differences." For example, Braun ...

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