On appeal from the Superior Court of New Jersey, Law Division, Passaic County, Docket No. L-4735-09.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted September 20, 2012
Before Judges Simonelli and Lisa.
After a three day bench trial, Judge Thomas J. LaConte issued a comprehensive oral decision on October 20, 2011, and entered judgment on November 28, 2011, in favor of G.X.R. Auto Body Corp. (G.X.R.) and Antonio Rodano (Rodano) against Albert Turkmany*fn1 for the net amount of $68,540.27, plus post-judgment interest and costs of suit.*fn2
The basis for Turkmany's liability was his breach of fiduciary duty as an agent of Rodano and G.X.R., which also constituted equitable fraud. Because of Turkmany's conduct, litigation was instituted by Globe Motor Car Company (Globe) against Rodano and G.X.R. Turkmany and Powell were brought into the action, first by Rodano and G.X.R., and subsequently, by amended direct claims asserted by Globe. There were various cross-claims and counterclaims asserted between the parties, which we need not set forth in detail for purposes of our analysis. Prior to trial, Globe withdrew from the litigation. Rodano and G.X.R. were not obligated to pay any sums to Globe. However, Rodano and G.X.R. incurred substantial counsel fees in defending the action brought by Globe and in prosecuting and defending the various related claims involving Turkmany. Thus, Rodano's and G.X.R.'s counsel fees constituted their measure of damages.
The total amount of counsel fees was $88,540.27.*fn3 Turkmany has not disputed the reasonableness of these fees. The dispute regards only Rodano's and G.X.R.'s entitlement to the fees. The net judgment against Turkmany was $68,540.27 because Rodano and G.X.R. admittedly owed Turkmany $20,000. Accordingly, Turkmany received the benefit of a $20,000 offset.
Turkmany appeals. He argues that no agency relationship existed between him and Rodano and G.X.R., and, even if there was such a relationship, the trial court erred because the elements of equitable fraud were not met. Turkmany further argues that Rodano and G.X.R. should have been precluded from judgment in their favor because of their own negligence.
Finally, Turkmany argues that an award of counsel fees in this litigation violates the so-called "American Rule," which, subject to certain exceptions which Turkmany says do not apply here, requires litigants to each pay their own counsel fees. We reject these arguments and affirm.
This is a brief summary of the facts giving rise to the dispute. Rodano and his company, G.X.R., are in the business of purchasing used, damaged, or inoperable vehicles (junk cars), primarily for their parts, which are sold on the Internet, over the counter, or by shipment in containers to foreign countries. This operation has been ongoing since 1992 in Jersey City. It is a large-scale operation. Typically, the business has about 4,000 junk cars on its premises at any given time. All necessary permits for operating such a business have been in effect since 1992. Additionally, the business is licensed as a used car dealer. Historically, only one or two used cars were sold per month.
Turkmany was a friend and neighbor of Rodano. Turkmany had been a used car dealer in Paterson for about twenty years, before selling his business. In October 2006, the events involved in this litigation commenced. Turkmany transferred to Rodano $100,000 in cash. Neither party disputes this. On October 5, 2006, Rodano, signing as president of G.X.R., executed a handwritten receipt*fn4 evidencing the transfer and characterizing it as a loan, for one year interest-free. Turkmany claimed that Rodano needed this money for use in G.X.R.'s business and that it was, indeed, a loan for that purpose. Turkmany further contended that this interest-free loan was consideration for an arrangement to follow, which we will describe.
Rodano contended that this was not a loan at all, but that, because Turkmany was having some difficulties with his girlfriend, he wanted to get this $100,000 out of his possession, and Rodano accommodated him. According to Rodano, this transfer of money and the repayment of most of it had nothing to do with the subsequent events that are at the core of the dispute. In any event, over the next several months, Rodano transferred to Turkmany several payments totaling $80,000.
At trial, Turkmany further alleged that he transferred an additional $100,000 cash to Rodano, and that none of it had been repaid. Rodano denied receiving any additional money from Turkmany. There was no written documentation to support Turkmany's claim. The judge credited Rodano and discredited Turkmany. Accordingly, Rodano's total indebtedness to Turkmany was $20,000.
Because Turkmany had sold his used car business, he approached Rodano to see if there was something he could do working for G.X.R. Rodano agreed that Turkmany might be useful to him to go to used car auctions to purchase junk cars for use in G.X.R.'s business. Rodano accompanied Turkmany to auctions for this purpose, and ...