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Salvemini v. Spector

Superior Court of New Jersey, Appellate Division

December 13, 2013

ANTHONY SALVEMINI, 53-55 KINGSWOOD ROAD, LLC and 68 MADISON STREET, LLC, Plaintiffs-Respondents,
v.
STEPHEN R. SPECTOR, ESQ. and SPECTOR & DIMIN, P.A., Defendants-Appellants.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued September 23, 2013

On appeal from Superior Court of New Jersey, Law Division, Hudson County, Docket No. L-1943-09.

Michelle Joy Munsat argued the cause for appellants.

Mark A. Clemente argued the cause for respondents (Clemente Mueller, P.A., attorneys; Mr. Clemente, on the brief).

Before Judges Yannotti, Ashrafi and Leone.

PER CURIAM.

Defendants Stephen R. Spector (Spector) and the Spector & Dimin law firm appeal from a judgment entered in favor of plaintiffs Anthony Salvemini (Anthony), 53-55 Kingswood Road, LLC and 68 Madison Street, LLC, in the amount of $226, 321.07. For the reasons that follow, we reverse and remand for entry of judgment dismissing plaintiffs' complaint with prejudice.

I.

A. The Property Transfers and Related Transactions.

In 1997, Corrado Salvemini (Corrado) divorced his wife, and a partner at Spector & Dimin represented him in the divorce proceedings. The divorce was hotly contested and Corrado's daughter Elizabeth sided with her mother, while Corrado's sons Anthony and Ignatius (Nat) sided with him. Shortly after commencement of the divorce proceedings, Anthony and Nat took over management of Corrado's personal and business affairs.

Several years later, Corrado began a serious relationship with Maria Zimmerman (Maria). In June 2000, he informed his sons that he was considering marrying her. Corrado instructed his sons to find a lawyer who could prepare a prenuptial agreement. He wanted to protect his assets if the anticipated marriage to Maria failed. Corrado's assets included his home, located at 53-55 Kingswood Road in Weehawken, and a building with four rental units, located at 68 Madison Street in Hoboken.

In May 2003, Corrado, Anthony and Nat agreed to a plan proposed by Spector. The plan called for the creation of two limited liability corporations (LLCs). Anthony and Nat would be the only members of the LLCs, and they would have equal ownership interests in both entities. One of the LLCs would purchase Corrado's Weehawken residence, and the other LLC would purchase the building in Hoboken. The LLCs would issue notes and mortgages to Corrado for the properties acquired, and make interest payments on the notes.

In addition, Corrado would retain a life estate in his residence. He would lease the house from the LLC that purchased it, and pay a monthly rent of $5, 000. The LLCs also would be obligated to pay the taxes, property insurance and maintenance costs for the properties. Upon Corrado's death, the principal due on the notes and the mortgages would be cancelled. During his lifetime, Corrado could not sell or transfer his interest in the notes and mortgages. After discussing the transactions with Corrado and his sons, Spector drafted the final versions of the documents required to effectuate the plan.

The closing took place on June 20, 2003. Corrado, Anthony, Nat and Spector were present. After Spector explained the documents, Corrado asked if he could receive additional payments should he require them. Corrado was informed that Anthony and Nat both had to agree to any change; however, they did not discuss amending or changing the agreements at that time. Anthony and Nat assured Corrado that he could have additional payments and they would "work it out." Corrado executed the documents.

Corrado transferred the Weehawken property to 53-55 Kingwood Road, LLC, and received a 30-year note in the amount of $825, 000, with an annual interest rate of 4.75%. The note required payment of interest only, in the amount of $3267.60 per month. In addition, Corrado transferred the Hoboken property to 68 Madison Street, LLC, and received a 30-year note in the amount of $951, 500, with an annual interest rate of 4.75%. The note required payment of interest only in the amount of $3766.35 each month.

After the transactions were consummated, Anthony and Nat took over control and management of the Weehawken and Hoboken properties. In July 2004, Corrado and Maria signed the premarital agreement. They were married in 2005. It appears that at that time there was no family discord, and Elizabeth was in the process of reconciling with Corrado and her siblings.

Thereafter, Corrado complained about the amount of monies he was receiving from the LLCs and asked for an accounting. Nat thought Corrado should receive whatever he wanted, including the additional monies he was demanding. Anthony was not opposed to making additional payments, but he was concerned that the LLCs would not have sufficient funds to meet the operating expenses of the properties.

Corrado also wanted the transactional documents changed so that Elizabeth would be a one-third owner of the LLCs. Corrado insisted that he had an absolute right to change the documents, and he demanded that Anthony and Nat accede to his request. Nat supported Corrado's demand but Anthony refused to make any changes in the documents which would allow his sister to share ownership in the LLCs. The family members tried but could not resolve the dispute.

B. The Underlying Litigation.

In September 2007, Corrado filed a complaint in the Chancery Division, General Equity Part, against Anthony, Nat and the two LLCs. He alleged that Anthony and Nat, with Spector's assistance, had fraudulently structured the documents for the transactions, fraudulently induced Corrado into executing the documents, and unduly influenced his decision to enter into the agreements.

Corrado sought rescission or reformation of the property transfers, imposition of a constructive trust on the properties held by the LLCs, an accounting for the rents and management of the properties, and appointment of a receiver. Prior to trial, Nat informed the court that he did not oppose Corrado's demand for relief. Anthony assumed responsibility for defendants for the defense of himself and the LLCs in the litigation.

Following a trial, the Chancery Division judge issued a written opinion, in which he concluded that Corrado's complaint should be dismissed with prejudice. The judge found that the transactions were not the product of undue influence or fraud. The judge wrote that

From 2000 through 2003 it is clear that Corrado was a domineering, outspoken, crafty and intelligent business man. Corrado was a self-made millionaire, who as a real estate developer/builder had taken part in well over [seventy-five] real estate closings. His children, as well as his lawyers and tax advisors, described him as the type of person who was not easily swayed, a person in total control of his faculties who could not be persuaded to do anything he did not want to do. Given these undisputed facts regarding Corrado's character, personality, and intelligence, the claim that he was deceived by Anthony is not sustainable.

The judge found that Corrado's goal was to protect his assets and his sons' interest in those assets, in the event his marriage to Maria failed. The judge stated that Corrado had reviewed all of the transactional documents and understood them. The judge found that Corrado had willingly and voluntarily signed the documents.

The judge pointed out that the only concern that Corrado raised at the closing was that he would not have enough money to pay his expenses. The judge stated that, after Corrado was told that changes could be made to the documents, he expressed no further objections to the plan. The judge concluded that Anthony had demonstrated by clear and convincing evidence that the transactions were not the product of deception.

The judge additionally determined that Corrado had sought out and received advice regarding the transactions from highly competent professionals, including lawyers and accountants. The judge wrote that "[e]very professional retained by Corrado acknowledged [his] professional and ethical responsibility to insure that [Corrado] was competent, well informed and free from undue influence." The judge noted that the lawyers who testified stated "that although the sons were very much involved in the process, Corrado was also involved and ultimately had the final say on all important matters."

C. Plaintiffs' Complaint and Defendants'Pre-Trial Motions.

In April 2009, Anthony and the LLCs filed this action against Spector and his law firm. Plaintiffs alleged that Spector was negligent in rendering legal service to plaintiffs regarding the transactions. They also asserted claims of breach of contract and breach of fiduciary duty.

In October 2010, defendants filed a motion for summary judgment. Defendants argued that Spector's representation of Corrado, Anthony and Nat was not a nonwaivable conflict of interest under Baldasarre v. Butler, 132 N.J. 278 (1993), as claimed by plaintiffs. They further argued that Spector's representation of all of the parties to the transactions was not an impermissible conflict of interest, and the evidence was not sufficient to establish the breach of fiduciary duty claim. They additionally argued that plaintiffs did not suffer any damages proximately caused by defendants. The judge denied the motion.

In May 2011, defendants filed another motion for summary judgment on the issue of proximate cause. In response to this motion, plaintiffs argued that their attorneys' fees and costs in the underlying action, without more, constituted compensable damages. The judge denied defendants' motion.

Thereafter, defendants filed three motions in limine to bar plaintiffs' expert witness, Robert W. McAndrew (McAndrew), from testifying at trial. Defendants argued that McAndrew's report constituted an impermissible "net opinion" and did not ...


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