February 3, 2012
RENATE GRAVERS AND PAUL DI FRANCESCO, PLAINTIFFS-APPELLANTS,
PETER U. LANFRIT, ESQ. AND LANFRIT & TULLIO, LLC, DEFENDANTS-RESPONDENTS.
On appeal from the Superior Court of New Jersey, Law Division, Somerset County, Docket No. L-2015-09.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued November 2, 2011
Before Judges Lihotz, Waugh, and St. John.
Plaintiffs Renate Gravers and Paul Di Francesco appeal from the Law Division's January 21, 2011 order granting summary judgment and dismissing their attorney malpractice claim against defendants Peter U. Lanfrit, a member of the Bar, and his law firm, Lanfrit & Tullio, LLC. We reverse.
We discern the following facts and procedural history from the record on appeal.
In April 2001, Gravers and Dennis Siclari, who is not a party, entered into a contract to purchase developable land in Milford from Hunterdon Medical Center (Medical Center). Plaintiffs agreed to pay $750,000 for a 30.8 acre property with one residence, anticipating that the property would be subdivided into at least fourteen residential lots. The property was eventually subdivided into fifteen properties, including the one on which the original residence was located. The contract required Gravers and Siclari to pursue the necessary land-use approvals. Although not a signatory to the contract, Di Francesco was described by Gravers as an "acknowledged partner" of Siclari and himself.*fn1
Lanfrit represented Gravers and Siclari in negotiating the contract with the Medical Center. Whether he also represented Di Francesco is disputed by Lanfrit, although there is at least one statement for legal services from Lanfrit's firm to Siclari and Di Francesco in the record.
Article 10.1 of the contract provided:
The Buyer shall have the right to assign this Contract should they so desire with the consent of the Seller, which consent shall not be unreasonably withheld. Buyer shall provide to Seller sufficient information regarding the proposed Assignee so that Seller may make an informed decision concerning the assignment.
In August 2001, plaintiffs entered into an assignment agreement with Braco Land Design, Inc. (Braco Land). (We refer to this agreement as "the first assignment.") It called for plaintiffs to assign their rights under the contract to Braco Land, which would develop the property and close title with the Medical Center. Lanfrit represented Gravers and Siclari in negotiating the first assignment.
As consideration for the first assignment, plaintiffs were to receive $10,000 on signing, which was reimbursement of the amount of the deposit they paid to the Medical Center. At the time of the closing with the Medical Center, plaintiffs were to receive $75,000 for each building lot approved by the Milford Planning Board (Board), minus the amount paid to the Medical Center by Braco. In addition, Braco Land was required to list the homes constructed on the lots with Di Francesco Realty, Inc. (Di Francesco Realty), at which both Gravers and Di Francesco were licensed brokers. Under the agreement, Di Francesco Realty was to receive a 2.75% commission on the sale of each residence.
The plaintiffs' agreement with Braco Land did not contain a specific provision prohibiting further assignment. However, it contained the following clause:
Assignee shall have the right to further assign the Contract to a New Jersey corporation, limited liability company or limited liability partnership owned in whole or in part by Nicholas P. Braco, Jr. [(Emphasis added.)]
It is not clear whether the parties intended that there would be no further assignments except to a Braco entity or only that plaintiffs' consent would not be required for an assignment to another Braco entity.
In July 2004, Braco Land assigned its rights under the first assignment to Barbieri Builders Corporation (Barbieri), a company not owned in whole or in part by Braco. (We refer to this agreement as "the second assignment.") Barbieri agreed to assume and perform all Gravers and Siclari's obligations under the contract with the Medical Center. The second assignment also provided that Braco Land and Barbieri would cooperate in obtaining the consent of Seller and any other parties that may be required under the terms of Article Ten of the Contract or of the Assignment agreement by and between Dennis Siclari and Renate Gravers to Braco Land . . . dated August 30, 2001, and in all other ways reasonably necessary to effectuate the intent and purpose of this Assignment.
Shortly after the second assignment was signed, Barbieri entered into a contract to resell the property to Ryan Homes, a national developer, for $3,640,000. That sale was not to take place until after Barbieri had purchased the property from the Medical Center. Consequently, this was not a further assignment of plaintiffs' contract with the Medical Center.
In or about October 2004, apparently without disclosing the existence of the second assignment, Braco Land sought to amend its agreement with Gravers and Siclari. It proposed to convey the subdivided lot on which the existing residence was located to plaintiffs in lieu of the requirement that the subdivided properties be listed with Di Francesco Realty. Braco Land confirmed the tentative amendment in an October 4, 2006 letter to Gravers and Siclari.
Prior to the first assignment, Lanfrit had initiated the subdivision approval process with the Board on behalf of Gravers and Siclari. After the first assignment, he continued to pursue the land-use approvals on behalf of Braco Land. His involvement before the Board continued after the second assignment.
Plaintiffs maintain that the second assignment was not disclosed to them by Lanfrit or anyone else until April 2006, almost two years after it was signed. Lanfrit, however, contends that he "advise[d] Siclari and Gravers to get independent counsel on the issue," although he did not recall when he rendered that advice. He also contends that plaintiffs were otherwise aware of the second assignment prior to April 2006.
In June 2006, an attorney representing Barbieri contacted counsel for the Medical Center about the closing, which had been scheduled for the middle of June. That contact was apparently the first time the Medical Center had learned about the second assignment. The Medical Center's attorney then wrote to Lanfrit, noting that the Medical Center's consent was required for all assignments, that no such consent had been sought with respect to the second assignment, and that it needed information about Barbieri before it could consent. The Medical Center eventually agreed to consent to the second assignment and to reschedule the closing to late July 2006, conditioned on time being of the essence.
On July 28, 2006, Gravers and Siclari entered into an agreement with Barbieri. The preamble to that agreement acknowledged that Gravers and Siclari had not yet consented to the second assignment. It also reflected the earlier amendment of the first assignment to substitute the lot for the real estate listings. Gravers and Siclari agreed to consent to the second assignment in return for $375,000, and additional compensation payable within thirty days of the recordation of the subdivision map. The additional compensation was to be, at Barbieri's option, an additional payment of $250,000 or conveyance of clear title to the new lot on which the existing residence was located.
Lanfrit represented Gravers and Siclari at the closing, which took place on July 29, 2006. Gravers and Siclari directed the closing attorney to distribute the $375,000 payment due to them at closing to themselves and Di Francesco in three equal shares. Barbieri opted to transfer the lot to Gravers and Siclari in lieu of the $250,000 payment.
On November 2, 2009, plaintiffs filed a six-count complaint against
Lanfrit and his law firm for malpractice, fraud, and tortious
interference. They alleged that Lanfrit knew about Braco Land's
assignment to Barbieri in 2004 and also knew that the assignment
violated the terms of their assignment to Braco Land,*fn2
but did nothing to prevent or disclose the second
assignment. They further alleged that, because they only became aware
of the second assignment immediately prior to the closing with the
Medical Center, they were forced to accept Barbieri's terms for the
October 28, 2006 agreement under duress. Plaintiffs asserted that
Lanfrit's representation of both Braco and Barbieri subsequent to his
representation of them presented
a conflict of interest and that
his conduct amounted to fraud. Plaintiffs sought compensatory and
punitive damages. Lanfrit duly answered the complaint, denying its
On November 19, 2010, Lanfrit filed a motion for summary judgment. He argued that plaintiffs had suffered no ascertainable damages because they received the same payment they would have received had there been no assignment from Braco Land to Barbieri, that is, $375,000 plus title to the one lot.
In opposition, plaintiffs argued they could have declared Braco Land in default of the first assignment had Lanfrit made timely disclosure of the second assignment. They could then have terminated the first assignment and used their relationships with other investors to obtain the financing necessary to complete the purchase from the Medical Center themselves. Once they arranged to purchase the property, plaintiffs argued, "they had contacts with several builders/developers and, after closing, they could have resold the property to a nationally known builder/developer at the peak of the 2004-2005 real estate market and derived a substantial profit." Plaintiffs further argued that the only reason they consented to the second assignment was duress, "because by that date they did not have time to marshal resources, terminate the Braco Barbieri assignment, and exercise their right to complete the purchase with [the Medical Center] directly."
With regard to damages, plaintiffs pointed to the purchase agreement between Barbieri and Ryan Homes as establishing $3,640,000 as the fair market value of the property. Subtracting the costs of improvements required by the Board, $823,864, the $750,000 cost to purchase the property from the Medical Center, and the $250,000 value of the lot they received, plaintiffs claimed damages of $1,691,136.
Plaintiffs further argued that summary judgment was inappropriate because there was outstanding discovery. They filed a cross-motion to suppress Lanfrit's answer for failure to provide certain discovery. Specifically, plaintiffs argued that "there was a wealth of other discoverable information to be ascertained from depositions including representatives of Braco, Barbieri as well as those of [Lanfrit] with respect to the underlying transactions and state of knowledge of the partners."
On January 21, 2011, the motion judge rendered an oral decision granting Lanfrit's motion for summary judgment.*fn3 After a very brief recitation of facts, the judge explained her decision as follows:
Plaintiffs allege that this assignment was not permitted, that the defendants . . . had a duty to stop the assignment or notify the plaintiffs thereof.
Plaintiffs entered into a contract with Barbieri, in which they retroactively consented to the assignment from [Braco] to Barbieri . .
Plaintiffs received $375,000 at closing title to a lot containing existing buildings.
A non-moving party cannot defeat a motion for summary judgment merely by pointing to any fact in dispute. The judge function is not for he himself or herself to weigh the evidence and determine the truth, but to determine whether there is a genuine issue for trial.
Here, the plaintiffs argue essentially that they could have made more money if they had known of the assignments earlier and that Lanfrit's multiple representation is unfair.
Plaintiffs argue that they suffered damages. However, presenting hypothetical situations or speculative damages where different facts could lead to different outcomes does not satisfy the standard put forth in Brill [v. Guardian Life Insurance Co. of America, 142 N.J. 520 (1995)].
Had the plaintiffs bargained for the right to assign the property to a party of their choice, they would have control of specifically who developed the land, there may have been an issue of fact. But even here a cursory review of the facts indicates the plaintiffs received what they bargained for, $375,000 [and] title to one lot.
The plaintiffs have not made a prima facie case of malpractice and, therefore, the defendant's motion for summary judgment is in fact granted.
With regard to the discovery issue raised in the cross-motion, the judge held that plaintiffs had not demonstrated that "the information is so material that it raises a triable issue of fact sufficient to defeat the instant summary judgment." The judge entered separate orders on each motion.
This appeal followed.
On appeal, Gravers and Siclari argue that the motion judge erred by granting summary judgment because discovery was not complete, that there were disputes concerning genuine issues of material fact, and that the judge incorrectly determined that they were entitled to no damages. Lanfrit asserts that the judge correctly determined that plaintiffs were not entitled to any damages and that any disputed issues of fact were not material to that determination. Lanfrit argues that, even if he were found to be liable to plaintiffs for malpractice or on some other theory of liability, they would not have been able to recover any damages because they suffered no ascertainable loss.
It is well-established that our review of a trial judge's conclusions of law is de novo. Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995) ("A trial court's interpretation of the law and the legal consequences that flow from established facts are not entitled to any special deference."). Consequently, we review a grant of summary judgment de novo, applying the same standard governing the trial court under Rule 4:46-2(c). Brill, supra, 142 N.J. at 539-40; Chance v. McCann, 405 N.J. Super. 547, 563 (App. Div. 2009) (citing Liberty Surplus Ins. Corp. v. Nowell Amoroso, P.A., 189 N.J. 436, 445-46 (2007)).
In order to recover damages, a plaintiff has the burden to show, by a preponderance of the evidence, that specific damages were sustained as a proximate result of a defendant's wrongful conduct. See Lieberman v. Emp'rs Ins. of Wausau, 84 N.J. 325, 342 (1980). "Although we require a reasonably accurate and fair basis for the computation of alleged lost profits, the fact that a plaintiff may not be able to fix its damages with precision will not necessarily preclude recovery of damages." V.A.L. Floors, Inc. v. Westminster Cmtys., Inc., 355 N.J. Super. 416, 424 (App. Div. 2002) (internal citations and quotation marks omitted). "Loss of profits, where based on sound fact and not on mere opinion evidence without factual support, is recognized as a proper measure of damages if 'capable of being estimated with a reasonable degree of certainty.'" Stanley Co. of Am. v. Hercules Powder Co., 16 N.J. 295, 314 (1954) (emphasis added) (quoting Rempfer v. Deerfield Packing Corp., 4 N.J. 135, 144 (1950)).
We agree with the motion judge's determination that plaintiffs' $1,691,136 damages claim is too speculative. First, plaintiffs assume that they could have voided the first assignment on the basis of Braco Land's attempt to make an unauthorized second assignment without their consent. However, even if a further assignment was not permitted, their remedy would not have been to invalidate the first assignment, but rather to seek invalidation of the second assignment or to seek damages from Braco Land if the second assignment could not be invalidated. See Owen v. CNA Ins./Cont'l Cas. Co., 167 N.J. 450, 460-61 (2001).
Second, "[a]nticipated profits that are too remote, uncertain, or speculative are not recoverable." Desai v. Bd. of Adjustment of Phillipsburg, 360 N.J. Super. 586, 595 (App. Div.) (citing Stanley Co., supra, 16 N.J. at 314; V.A.L. Floors, supra, 355 N.J. Super. at 426), certif. denied, 177 N.J. 492 (2003). Whatever their business contacts, the record demonstrates that plaintiffs assigned their contract with the Medical Center to Braco Land rather than proceeding with it themselves. See RSB Laboratory Servs., Inc. v. BSI, Corp., 368 N.J. Super. 540, 556 (App. Div. 2004) ("[P]rospective profits of a new business are considered too remote and speculative to meet the legal standard of reasonable certainty." (citing In re Merritt Logan, Inc., 901 F.2d 349, 356 (3d Cir. 1990); Weiss v. Revenue Bldg. & Loan Ass'n, 116 N.J.L. 208, 212 (E. & A. 1936))).
However, the judge's dismissal of the complaint assumes that plaintiffs would not have been able to induce Barbieri to pay a premium for their consent to the second assignment if they had been notified of it in a timely manner, rather than shortly before the Medical Center closing. Plaintiffs' alternate argument is that, because they had no viable alternative, they had to accept Barbieri's offer to pay them what they were already entitled to receive from Braco Land. Had plaintiffs refused to consent to the second assignment shortly before the closing date, the purchase from the Medical Center could have fallen through, causing plaintiffs a significant loss. Had there been timely notice of the second assignment, plaintiffs contend they would have been in a position to condition their consent to the second assignment on an additional payment.
We are not prepared to say, in the context of a motion for summary judgment, that plaintiffs cannot demonstrate that they would likely have been able to obtain a premium above what they were already entitled to, from either Braco Land or Barbieri, for consenting to the second assignment had they not been under the duress of time.*fn4 Consequently, we reverse the judgment dismissing plaintiffs' complaint and remand for further proceedings consistent with this opinion.
Because the denial of the discovery motion was premised in large part on the judge's dismissal of the complaint, we vacate that order.
We express no opinion concerning the merits of plaintiffs' underlying claims with respect to liability or proximate cause. We hold only that Lanfrit, having demonstrated for the purposes of summary judgment that plaintiffs' $1,691,136 damages claim is overly speculative, has not nevertheless demonstrated that plaintiffs have not been damaged at all or that they cannot prove some other measure of damages.