On appeal from Superior Court of New Jersey, Chancery Division, Burlington County, Docket No. C-000055-09.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Sabatino, Ashrafi and Fasciale.
Plaintiff Louise Davidowski appeals from dismissal at trial of her cause of action for fraud. Defendants are her son, Alan Davidowski, and his friend, Gail Dellaira, who is a realtor. Louise alleged that Alan*fn1 and Dellaira defrauded her of about $125,000 by means of a sham private mortgage and note to Dellaira executed near the time that her husband, Henry Davidowski, died. Louise also claimed that Alan had promised to make her a beneficial co-owner of a home he purchased using proceeds from the sale of Louise's home after Henry's death.
During several days of testimony at trial, evidence was presented that Louise had filed a petition for bankruptcy soon after selling her home in 2005, and her debts had been discharged. In the bankruptcy petition, Louise had not listed a beneficial interest in Alan's property or a potential claim against Dellaira. Consequently, at the conclusion of Louise's case in chief, the trial judge dismissed her claims of fraud on grounds of judicial estoppel.
We must determine whether the doctrine of judicial estoppel was correctly applied in the circumstances of this case. If plaintiff can prove that Alan and Dellaira fraudulently procured a private mortgage on her former home, the bankruptcy filing may have been part of the same scheme, and Louise's creditors may be the innocent victims of the fraud. We now reverse the order dismissing Louise's complaint and remand for further proceedings to determine whether fraud was committed, which of the parties participated in the alleged fraud, whether the bankruptcy trustee has any interest in Louise's claim, and whether a remedy can be devised to correct wrongful conduct.
Louise is a widow in her seventies, retired from her employment as a maintenance worker for a municipal Buildings and Grounds Department. In July 2009, she filed a complaint against Alan in the Chancery Division seeking a constructive trust on proceeds from the sale of a house owned by Alan in which Louise had been living for several years until disputes arose and Alan allegedly forced her out. Dellaira was not a party in Louise's original complaint but was later added as a defendant in an amended complaint.
Louise claimed that Alan and Dellaira had fraudulently procured a private third mortgage and note for $125,000 on the Florence Township home she had owned for many years with her husband Henry. Dellaira was the named mortgagee. Louise claimed that she had no recollection of the mortgage and either her signature had been forged or she had been deceptively induced to execute the mortgage and note near the time of Henry's death in October 2004. She claimed she was defrauded of the equity in her home when the sham private mortgage was paid off to Dellaira at the time she sold her home in August 2005.
The Chancery judge considered the papers submitted and heard argument on an order to show cause, and then denied Louise's application for a constructive trust. Alan's property was sold and the proceeds of the sale were distributed without benefit to Louise. Louise's claim of fraud proceeded through pretrial discovery and came to trial before a different judge in October 2010. At the bench trial, counsel did not make opening statements, and our record does not otherwise clarify the remedies that Louise was seeking at the time of trial. It appears that the only available remedy was money damages from Alan and Dellaira.
The trial judge heard testimony from Louise, Alan, Dellaira, and Michael Nieschmidt, the attorney who had represented Louise in 2005 and 2006 for the sale of her house and for her bankruptcy petition. After Louise rested her case, the judge granted defendants' motion to dismiss the complaint on grounds of judicial estoppel.*fn2
A trial judge's authority to dismiss a cause of action at the close of a party's case is found in Rules 4:37-2(b) and 4:40-1. Under those rules, the judge must determine whether the evidence and all reasonable inferences drawn from that evidence can sustain a judgment in favor of the claimant. See R. 4:37-2(b); Zive v. Stanley Roberts, Inc., 182 N.J. 436, 441 (2005). If "reasonable minds could differ," the motion to dismiss must be denied. Sons of Thunder v. Borden, Inc., 148 N.J. 396, 415 (1997); Dolson v. Anastasia, 55 N.J. 2, 5 (1969).
On the other hand, "when the proof of a particular fact is so meager or so fraught with doubt that a reasonably intelligent mind could come to no conclusion but that the fact did not exist[,]" the court may grant a motion to dismiss without further presentation of evidence. Ferdinand v. Agric. Ins. Co., 22 N.J. 482, 493 (1956); see City Check Cashing, Inc. v. Mfrs. Hanover Trust Co., 166 N.J. 49, 64-65 (2001); cf. Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 532-40 (1995) (similar standards apply to a motion for dismissal under Rule 4:37-2(b) and a motion for summary judgment under Rule 4:46-2(c), including whether the evidence "'is so one-sided that one party must prevail as a matter of law'" (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S. Ct. 2505, 2512, 91 L. Ed. 2d 202, 214 (1986))). A trial court must take into consideration the entirety of testimony from a witness rather than isolated excerpts favorable to one party or the other on a motion to dismiss. See Ritondo v. Pekala, 275 N.J. Super. 109, 111 (App. Div.), certif. denied, 139 N.J. 186 (1994).
On appeal, we apply the same standard as the trial judge in considering dismissal of claims. RSB Lab. Servs., Inc. v. BSI Corp., 368 N.J. Super. 540, 555 (App. Div. 2004). That is, we conduct plenary review of the record and consider de novo whether a claim should have been dismissed under Rules 4:37-2(b) or 4:40-1.
We will recount in some detail the evidence presented in Louise's case in chief. The private third mortgage and note to Dellaira were dated September 30, 2004, just two weeks before Henry's death and at a time when Henry was hospitalized with a deteriorating heart condition. Louise was the only named mortgagor; Henry was not named in the ...