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Leslie Gaber v. Herman Gaber


January 26, 2012


On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Monmouth County, Docket No. FM-13-1541-02B. Frank J.

Per curiam.


Argued: September 28, 2011

Before Judges Axelrad, Sapp-Peterson and Ostrer.

In this post-judgment matrimonial matter, both parties appeal from a March 18, 2010 order. Plaintiff Leslie Gaber (wife) challenges the successful motion in aid of litigant's rights of defendant Herman Gaber (husband) to enforce his right to equitable distribution under the parties' property settlement agreement (PSA) and recover his share of the proceeds of a marital investment from a damages award, plus counsel fees. Husband cross-appeals the denial of prejudgment interest on the award and the denial of the balance of the requested counsel fee. We discern no error of law or abuse of discretion by the Family Part judge and affirm.


The parties were married in 1981, wife filed for divorce in March 2002, and they were divorced on May 14, 2002. The final judgment of divorce incorporated the parties' PSA dated February 25, 2002. Over the course of the marriage, both parties worked, earned income and acquired assets. In 1998, wife took $400,000 of marital funds out of a business of which she was the sole owner, Leslie Gaber Associates, Inc. (LGA), and gave it to the parties' mutual accountant and financial adviser, Howard Krant, to be invested in an entity known as Highgate Manor Group, LLC (Highgate). In l999, wife took an additional $100,000 of marital funds from LGA and gave that sum to Krant as well, this time to invest in Lakewood Plaza Associates, L.P. (Lakewood). Krant informed the parties the investments were made but, as the trial court noted, there is no proof of this. Nevertheless, as wife's attorney acknowledged at oral argument, it does not matter for purposes of this appeal whether Krant converted the money or invested it into Highgate and Lakewood.

As expressly acknowledged, the parties negotiated and executed the PSA with the assistance of independent counsel, waived discovery and further investigation as to the identification and valuation of assets, and agreed to rely on the information provided to each other through Krant, who the parties also relied upon to value their assets. LGA was valued at $1,500,000 without a formal valuation and husband waived "all right, title and interest" in this entity in exchange for $750,000, which was undisputedly paid to him by wife. The PSA further stated in parallel provisions (paragraphs 5.3(c) and

5.3(d)) that the "parties have an interest in a business entity known as" Highgate and Lakewood, "which value has been agreed upon by the parties to be" $400,000 and $100,000, respectively, and that neither entity has been "formally valued, pursuant to the parties instructions." Moreover, "[t]he parties agree they will each maintain a 50% interest" in the LLC and LP entities.

On or about July 28, 2003, wife, LGA, and others*fn1 filed suit in New York state court (the New York action) against Krant and others, alleging fraud, conversion, concealment, breach of fiduciary duty, and unjust enrichment arising out of Krant's accounting, tax, and investment advice, and misappropriation of funds, including the $500,000 the parties entrusted to him to invest in Highgate and Lakewood ("Krant claims that he purchased ownership interests in Defendants Highgate and Lakewood with funds from Gaber & LGA; however, no such investment income appears on the tax returns. Therefore, Krant either improperly prepared the tax returns or Gaber Plaintiffs have no ownership interest in Highgate or Lakewood."). Husband acknowledged in his interrogatory answers in his subsequent lawsuit against Krant that he learned of the existence of the New York action around August 2003.

Pursuant to a confidential settlement and release agreement (confidential settlement agreement) dated September 22, 2004, in which wife individually and on behalf of LGA, "acknowledge[d] and agree[d] that they have released all ownership that they may have in Highgate . . . and Lakewood . . ., and agree[d] to sign any documents required to indicate that they have given up, transferred or released any such interest." The document further provided that the plaintiffs were paid an undifferentiated sum of about $1.7 million, "[t]he settlement shall finally settle and resolve, among other things, all claims asserted or which could have been asserted by Plaintiffs and Defendants[,]" and "[t]his document contains the complete Agreement between the Parties."

On May 14, 2008, husband filed suit against wife, LGA, and Krant*fn2 in the New Jersey Superior Court, Law Division (the New Jersey action). As against Krant, count one alleged breach of contract for accounting and investment related services; count two alleged breach of the implied covenant of good faith and fair dealing in their business relations; count three alleged unjust enrichment for wrongful receipt and retention of husband's investment proceeds in Highgate and Lakewood;*fn3 count four alleged fraud in advising husband to invest in Highgate and Lakewood without, among other things, first disclosing his ownership interest in the company; count five alleged fraudulent concealment of their ownership interest in Highgate and Lakewood; count six alleged conspiracy to defraud husband by convincing him to invest in Highgate and Lakewood; count seven alleged conversion; count eight alleged breach of fiduciary and other duties as husband's accountant and investment advisor; count nine alleged negligence as husband's accountant and investment advisor; count ten alleged professional malpractice; count eleven alleged respondeat superior; and count twelve alleged failure to properly account and pay husband monies due on his investments.

Count thirteen alleged fraud by wife in connection with the PSA by failing to disclose the existence of assets; count fourteen alleged wrongdoing by Krant by failing to disclose the existence of wife's separate investments in connection with the execution of the PSA; count fifteen sought reformation of the PSA regarding non-disclosed assets and investments possessed by wife that were subject to equitable distribution; count sixteen sought a declaratory judgment that the cut-off date for equitable distribution was the filing of the complaint; count seventeen alleged wife was unjustly enriched by her retention of assets subject to equitable distribution; count eighteen alleged conversion by wife of proceeds of property due husband; count nineteen sought an accounting by wife; and count twenty alleged a conspiracy by wife and Krant by entering into the confidential agreement to deprive husband of proceeds to which he was lawfully or equitably entitled.

Wife provided husband with the confidential settlement agreement for the first time on July 11, 2008, during the discovery phase of the New Jersey action. On August 24, 2009, husband settled with Krant for $100,000. The trial court was advised the case against wife was stayed pending the outcome of the present matter.

In November 2009, husband filed this notice of motion in aid of litigant's rights in the Family Part, supported by his certification. He argued that although LGA remained the legal owner of the entire Highgate and Lakewood investments, pursuant to the PSA, "'each' had an equal 50% interest" in both entities for equitable distribution purposes. Thus, based on the stipulated value of each entity, as suggested by Krant, each had a $200,000 interest in Highgate and each had a $50,000 interest in Lakewood. According to husband, wife was the only party who had a "legal interest" or claim against Krant because LGA, her corporation, paid Krant the $500,000 relating to Highgate and Lakewood. Husband contended that wife's and LGA's settlement and release of "all . . . interest that they may have" in Highgate and Lakewood included his "equitable interest" pursuant to the PSA. Accordingly, he was entitled to reimbursement of $250,000, plus interest, as well as counsel fees. Husband certified that his settlement with Krant was based, in large part, on his claim that "Krant had some exposure as a fiduciary and for interfering with [his] equitable rights."

Wife filed a cross-motion for counsel fees and costs, supported by her opposing certification. She claimed, "pursuant to [the PSA], [] each [party] maintained a separate interest in Lakewood and Highgate personally[,]" she "never had control of [husband's] interest in Highgate or Lakewood, either personally, or through [her] ownership of LGA[,] and when [she] settled [her] lawsuit against Krant, [she] specifically did not collect any monies on assets maintained by [husband] pursuant to" their PSA. Wife claimed she was only repaid her share of the assets. She further contended husband settled his claims for his personal interest in Highgate and Lakewood with Krant by virtue of the New Jersey action settlement, "thereby extinguishing the only legitimate legal claim that he possessed."

Husband filed a supplemental certification. Both attorneys filed certifications of services. Judge Eugene A. Iadanza heard oral argument on March 5, 2010. By order dated March 18, 2010, the court granted husband's request for an order in aid of litigant's rights by enforcing the parties' PSA, directed wife to pay him $250,000, representing his equitable interest in Highgate and Lakewood, but denied his request for interest thereon. The court further granted husband's request for counsel fees in part, awarding him $30,000 in fees and $2,000 in costs, and denied wife's request for counsel fees. This appeal ensued.

On appeal, wife argues the court erred: (1) in granting husband's request to recover $250,000 from her, representing his interest in Highgate and Lakewood "when the court made an affirmative finding, based upon the clear and convincing evidence submitted by [wife], that [she] did not receive any portion of [husband's] separate interest in these entities"; (2) in granting husband's enforcement application as the parties' PSA created no duty owed by wife to husband and further erred in determining that wife "extinguished, released, or otherwise jeopardized all legal rights with regard to [husband's] separate interest" in Highgate and Lakewood; (3) when finding husband lacked standing against Krant for return of his separate interest in Highgate and Lakewood as the court specifically noted Krant's breach of fiduciary duty and husband's subsequent recovery from Krant after asserting such a claim; and (4) in disregarding the specific waivers and releases made by and between the parties as specifically set forth in the PSA.

Wife alternatively argues that if husband could overcome the aforementioned "fatal flaws," the court erred in failing to conduct a plenary hearing based on the conflicting allegations in the parties' certifications, and in failing to determine the actual value of the entities when husband sought the return of his investment and in failing to credit the $100,000 received by husband from Krant against the amount due from wife. Husband further asserts error by the court in failing to consider all the factors enumerated in Rule 5:3-5 and in awarding counsel fees to husband.

On his cross-appeal, husband argues that the court had no discretion to deny a reallocation of post-judgment interest; if any interest is characterized as prejudgment, the court abused its discretion in failing to reallocate it; and the court abused its discretion by awarding husband only a small percentage of his legal fees expended in this action.


Our scope of review of a Family Part judge's factual findings is limited; we are generally bound by them when they are "supported by adequate, substantial, credible evidence." Cesare v. Cesare, 154 N.J. 394, 411-12 (1998). Because of the special expertise of Family Part judges, "we do not second-guess their findings and the exercise of their sound discretion," and we recognize that "'[j]udicial discretion connotes conscientious judgment, not arbitrary action; it takes into account the law and the particular circumstances of the case before the court.'" Hand v. Hand, 391 N.J. Super. 102, 111 (App. Div. 2007) (quoting Higgins v. Polk, 14 N.J. 490, 493 (1954)). However, a trial judge's legal decisions are subject to our plenary review. Crespo v. Crespo, 395 N.J. Super. 190, 194 (App. Div. 2007); Lobiondo v. O'Callaghan, 357 N.J. Super. 488, 495 (App. Div.), certif. denied, 177 N.J. 224 (2003).

Based on our review of the record and applicable law, we affirm on both the appeal and cross-appeal substantially for the reasons set forth in Judge Iadanza's statement of reasons appended to the order.

The court found the PSA created a fifty percent equitable interest for each party in Highgate and Lakewood. However, because all of the actual money transferred to Krant for these investments came from wife through her company, LGA, the court concluded that wife had the "sole legal ownership rights of the investment entities" and was the only one who could seek legal recourse against Krant for return of those monies. Similarly, because husband did not pay any money to Krant and he had no personal stake in LGA under the terms of the PSA, the court was satisfied that "Krant did not have any legal obligation to [husband], other than the possible breach of fiduciary duties and interference with equitable rights."

Relying on Vander Weert v. Vander Weert, 304 N.J. Super. 339, 349 (App. Div. 1997), which recognized the general principle that a spouse cannot convert or diminish marital assets so as to diminish the other spouse's distributable share, Judge Iadanza found wife owed husband a duty under paragraphs 5.3(c) and (d) of the PSA to protect his equitable interest in the investment entities. The judge was not persuaded by wife's argument that her settlement with Krant only extinguished her fifty percent interest in the entities and did not extinguish husband's fifty percent interest. Rather, he was satisfied wife breached her duty when she settled the New York action and signed the release, "converting the entities into a cash payment[,]" without paying husband his $250,000 equitable interest or "by not having LGA waive the possibility of [husband] seeking similar relief in the future regarding his equitable interest in Highgate and Lakewood." As such, wife was directed to pay husband $250,000.

Although wife makes various arguments in the alternative, Judge Iadanza correctly recognized that her position was "essentially that her settlement with Krant only extinguished her 50% interest in the entities and did not extinguish [husband's] 50% interest." He also found this argument unpersuasive. We agree with the court's ruling as based on the competent, credible evidence in the record and supported by the law.

In support of his motion, husband certified that the money invested in Highgate and Lakewood came from LGA, which wife did not dispute in her certification. Moreover, at oral argument, in response to a question from Judge Iadanza, wife's attorney acknowledged that "[t]he $500,000 came from [wife] individually or through money that she wrote out of LGA[.]" Furthermore, while Krant may not be the most trustworthy source of information, he confirmed in his answers to interrogatories in the New Jersey action that "all of the investments were directly made by [wife] or entities associated with her." As wife provided the funds, she was the only one who could seek legal recourse against Krant for return of the funds or assert a cause of action related to the investment, despite the fact that both parties maintained equitable interests in the entities pursuant to the PSA.

The correspondence between wife's and Krant's counsel leading up to the confidential settlement is not competent evidence that husband's monetary interests in Highgate and Lakewood were excluded from the settlement. As the judge pointed out, though both wife and Krant were aware of the PSA, the document was silent as to any legal or equitable interest that husband possessed in the two entities. Furthermore, for whatever reason, neither wife nor Krant insisted on the inclusion of any language in the agreement that may have preserved husband's interest in Highgate or Lakewood. Wife cannot hide behind the language "all ownership interest that [she] may have" and claim she was merely releasing her fifty percent ownership (emphasis added). If that were wife's intention, it was incumbent on her to have clearly stated it in the agreement. Instead, the agreement provided, in part, that wife, individually, and on behalf of LGA and other entities she controlled:

[A]cknowledge and agree that they have released all ownership interest that they may have in Highgate . . . and Lakewood . . ., and agree to sign any documents required to indicate that they have given up, transferred or released any such interest.

The settlement shall finally settle and resolve, among other things, all claims asserted or which could have been asserted by [the] Plaintiffs and [the] Defendants.

The agreement also contained mutual releases, to both the plaintiffs and the defendants and, among others, their "assigns." Wife's argument that she and Krant intended other than that expressly stated is further undermined by the inclusion of an integration clause -- "This document contains the complete Agreement between the Parties."

Wife argues the court's holding imposed a "fiduciary duty" on her, which had the effect of creating a "new or better" contract than the parties' PSA. This is an inaccurate characterization of Judge Iadanza's holding. We have recognized "that valid public policy concerns require divorcing spouses to deal fairly with each other." Tannen v. Tannen, 416 N.J. Super. 248, 262 (App. Div. 2010), aff'd, 208 N.J. 409 (2011). Wife did not do so here. She released all legal rights against Krant in regards to Highgate and Lakewood by converting the entities into a cash payment and effectively diminished husband's equitable share in the two investments by way of a confidential settlement. Wife did not share any of the proceeds with husband, nor did she inform him of the settlement and release until four years later when she was obligated to do so in the discovery phase of litigation.

There is no merit to wife's argument that by waiving his interest in LGA in exchange for cash, husband also waived any right to the settlement proceeds paid by Krant to wife in the New York action as and for LGA's interests in Lakewood and Highgate. "The basic contractual nature of matrimonial agreements has long been recognized" and thus "courts should enforce contracts as the parties intended." Pacifico v. Pacifico, 190 N.J. 258, 265-66 (2007). It cannot reasonably be argued that the parties intended to create a fifty percent equitable interest for husband in the Highgate and Lakewood investments only to waive the same interest in another provision in the PSA by releasing his interest in LGA. If that were the case, the parties would have expressly linked them in the PSA. Instead, in providing for equitable distribution of their business interests, they listed LGA, with wife to buy out husband's entitlement at half of the $1.5 million value, and separately listed each of the investment entities as previously discussed.

The judge properly awarded husband $250,000 based on the stated value of Highgate and Lakewood in the PSA. Wife cites no legal authority to support her argument that the court should have disregarded the parties' stipulated value and made an independent determination of the value of the asset. Nor does wife provide legal support for her claim that the judge should have reduced this amount by the $100,000 husband received from Krant in the New Jersey action. Husband filed a multi-count complaint against Krant, his accountant and financial advisor, not all of which pertained to the Highgate and Lakewood issue. We discern no error by the court in awarding husband the full value of his equitable interest in the investment entities as valued by the parties in their PSA.

We also reject wife's argument that the court erred in not conducting a plenary hearing. We first note that she did not request one. Nevertheless, no plenary hearing was required because the material facts were not in dispute. See Shaw v. Shaw, 138 N.J. Super. 436, 440 (App. Div. 1976) (holding that trial courts have discretion to determine if the affidavits conflict and if a hearing would be helpful in resolving factual conflicts). It is undisputed that wife or LGA was the source of the $500,000 invested with Krant. Moreover, as wife's counsel acknowledged at oral argument, it is immaterial to this appeal whether or not Krant actually invested the funds in Highgate or Lakewood. Even if the investments were not made, wife extinguished her cause of action against Krant for the alleged misappropriation without preserving husband's equitable interest or compensating him for his one-half share. Judge Iadanza did not need a plenary hearing to decide the issues in this case and a hearing would not have changed the result.

We will address wife's challenge to the court's award of attorney's fees to husband in the context of husband's cross-appeal challenging the quantum of the award.


We turn now to husband's cross-appeal. The judge rejected husband's argument that he was entitled to interest on the $250,000 simply because wife received interest under the terms of the confidential settlement agreement. He thus denied husband's request of eight percent per annum interest on the principal amount, totaling about $360,000. The judge concluded there was "no proof that the Highgate and Lakewood investments were ever actually made by Krant" and thus, "in exercising [his] equitable powers," he was satisfied that "requiring payment of the stated value of $250,000 as listed in the PSA [was] a sufficient remedy for [wife's] actions in regard to [husband's] rights."

Husband argues that denial of prejudgment interest was an abuse of discretion because it allowed wife an undeserved windfall and resulted in inadequate compensation to him. He also contends he was entitled to an allocation of post-judgment interest as of right under Rule 4:42-11(a) because his motion in aid of litigant's rights was filed post-divorce. Husband requests we exercise original jurisdiction, R. 2:10-5, and calculate the reallocation of interest.

We are not persuaded by husband's arguments. A trial judge may grant prejudgment interest at his or her discretion. Cnty. of Essex v. First Union Nat'l Bank, 186 N.J. 46, 61 (2006); see also Meshinsky v. Nicholas Yacht Sales, Inc., 110 N.J. 464, 478 (l988). An appellate court should not interfere with such award unless the award represents a manifest denial of justice. Cnty. of Essex, supra, 186 N.J. at 61. Prejudgment interest in contract actions are not subject to the mandates of Rule 4:42-ll, which apply only to tort actions, but rather are "assessed on a discretionary basis as the result of the application of equitable principles." DialAmerica Mktg., Inc. v. KeySpan Energy Corp., 374 N.J. Super. 502, 508 (App. Div.), certif. denied, 184 N.J. 212 (2005). The parties unfortunately relied on Krant for investment advice and accounting services. Husband received $100,000 in settlement from Krant and $250,000 court-ordered from wife. Under the circumstances, we do not perceive a manifest denial of justice in the denial of prejudgment interest.

Post-judgment interest was not appropriate. Rule 4:42-ll(a) provides that "[e]xcept as otherwise ordered by the court or provided by law, judgments, awards and orders for the payments of money, taxed costs and attorney's fees shall bear simple interest[.]" The final judgment of divorce was not a judgment, award or order for the payment of money. Husband did not obtain an order for the payment of money until the court's March 18, 2010 award of $250,000.

Wife claims error in the court's award to husband of $32,000 in counsel fees and costs, contending it failed to consider all the factors enumerated in Rule 5:3-5. Husband contends the court abused its discretion in declining to award his requested $82,433.*fn4 We discern no error and affirm both the award and the quantum.

Rule 5:3-5(c) permits a court to award attorneys' fees to any party "on any claim for . . . enforcement of agreements between spouses . . . and claims relating to family type matters." In considering whether and how much to award, the Family Part judge should consider the following nine factors: the parties' financial circumstances, the parties' ability to pay their own fees or contribute to the other party's fees, the reasonableness and good faith of the positions advanced by the parties, the extent of the parties' fees, any fees previously awarded, the amount of fees previously paid to counsel by each party, the results obtained, the degree to which fees were incurred to enforce existing orders, and any other factor bearing on the fairness of an award. Ibid.; Williams v. Williams, 59 N.J. 229, 233 (1971).

A trial court's award of counsel fees is reviewable under the abuse of discretion standard. Yueh v. Yueh, 329 N.J. Super. 447, 466 (App. Div. 2000). A reviewing court "will disturb a trial court's determination on counsel fees only on the rarest occasion, and then only because of clear abuse of discretion." Strahan v. Strahan, 402 N.J. Super. 298, 317 (App. Div. 2008) (internal quotation marks omitted).

The judge found that the attorneys' fees husband incurred in the New Jersey action against wife were recoverable because husband was seeking to protect and preserve marital assets and proceeds. See Finkel v. Finkel, 290 N.J. Super. 204, 210-11 (App. Div. 1996) (holding that fees incurred in a related General Equity Part proceeding necessary to preserve a marital asset were recoverable in the Family Part action). The judge recited the applicable law and factors, considering those he deemed relevant under the circumstances. Neither party provided documentation of current financial circumstances in order to determine an ability to pay his or her own counsel fees. Nonetheless, Judge Iadanza logically was able to infer each had some ability based on the respective settlement received from Krant and assets or proceeds received in equitable distribution under the PSA. He also concluded that neither party acted in bad faith in filing the motion and cross-motion, even though wife was unsuccessful. Husband had a larger counsel fee in the New Jersey action and in connection with his current action, and he was successful in his enforcement motion. The judge also reviewed the bills submitted by husband's attorney and found his hourly rate reasonable. The judge was satisfied that it was appropriate for wife to pay a portion of husband's counsel fee but found it would be unreasonable, under the circumstances, for her to pay the entire fee. Accordingly, the judge determined, within his discretion, that $32,000 was a fair and reasonable amount, under the totality of the circumstances, for which wife should be responsible.

We discern no basis upon which to second-guess this discretionary ruling. We disagree with husband that there was a "disconnect" between the judge's finding that wife dissipated marital funds and his refusal to award husband his attorneys' fees in their entirety. Both parties attributed questionable motives to each other and the judge was satisfied the evidence did not clearly demonstrate that wife acted in bad faith or with the specific purpose to deny husband his interest in the investment properties. Judge Iadanza remedied the fact that husband's equitable share was eliminated by wife's settlement by requiring she pay him $250,000. He also compensated husband, in part, for having to bring the enforcement action.


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