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Comando v. Nugiel

Superior Court of New Jersey, Appellate Division

June 11, 2014

ELIZABETH A. COMANDO, individually and derivatively on behalf of 10 CENTRE DRIVE, LLC, Plaintiff-Appellant,
v.
MARY F. NUGIEL [1] and RCP MANAGEMENT COMPANY, Defendants-Respondents, And PRIDE CONSTRUCTION SERVICES, LLC,

Argued May 7, 2014

Approved for Publication June 24, 2014.

Page 378

On appeal from the Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-5130-13.

Kevin J. O'Connor argued the cause for appellant ( Peckar & Abramson, P.C., attorneys; Mr. O'Connor, on the brief).

Robert J. Feinberg argued the cause for respondents ( Giordano, Halleran & Ciesla, P.C., attorneys; David C. Roberts and Michael T. Strouse, on the brief).

Before Judges LIHOTZ, MAVEN and HOFFMAN.

OPINION

Page 379

[436 N.J.Super. 206] LIHOTZ, J.A.D.

On our leave granted, plaintiff Elizabeth A. Comando, individually and derivatively on behalf of 10 Centre Drive, LLC (10 Centre), a corporation she owns with defendant Mary F. Nugiel, appeals from a November 22, 2013 interlocutory order, denying her motion to disqualify Norris McLaughlin & Marcus, P.A. (NMM) from providing legal representation to defendants. Plaintiff argues she was a former client, as NMM provided legal representation to her in acquiring and securing financing of real estate. Further, she alleges she was wrongfully denied the right to exercise a promised option to acquire an ownership interest in defendant RCP Management Company (RCP), which maintained its headquarters in 10 Centre's realty. Finally, Comando asserts NMM's current representation of defendants is adverse to the interests of 10 Centre, which is also a current client, noting NMM additionally provided prior representation including preparation of [436 N.J.Super. 207] the twenty-year lease agreement between RCP, as tenant, and 10 Centre, as landlord.

Since this matter was argued on May 7, 2014, we issued our opinion in a related appeal that addressed another provision of the same order. Comando v. Nugiel, A-2070-13 (App. Div. May 22, 2014). In that matter, we determined the provisions of the 10 Centre Operating Agreement required a form of alternative dispute resolution once Comando and Nugiel were deadlocked over whether to sell the realty owned by 10 Centre and leased by RCP and defendant Pride Construction Services.

Thereafter, we received correspondence, issued on behalf of NMM by substituted counsel, advising that " as of May 20, 2014, the Norris McLaughlin & Marcus firm has ceased rendering legal services to the [d]efendants as it relates to this action in its entirety." This materially changed the position NMM previously had taken, as expressed in an email communication from NMM dated March 13, 2014, to Comando's counsel, which advised of substituted counsel undertaking representation, but stated " [NMM] reserve[d] the right to continue to provide legal representation to all of the [d]efendants in this matter, and [NMM is] not representing . . . that [it would] never have another conversation with [Nugiel] about this case, or about other matters."

Defendants maintain that the substitution of counsel coupled with the recent representations that NMM's legal advice on issues in this litigation has ceased moot Comando's arguments raised on appeal. Comando disagrees and presses her claim of disqualification. She identifies findings by the motion judge, which, she asserts, if not reviewed and reversed, will adversely affect the ongoing litigation. Specifically, Comando argues the judge erroneously found NMM had not provided legal representation to her. She also asserts that despite finding NMM represented 10 Centre, the judge improperly rejected the asserted corporate derivative claims and suggested instead that the complaint alleges individual claims by Comando against Nugiel.

[436 N.J.Super. 208] Following our review, we conclude the record is far too limited and contains material

Page 380

factual disputes making this court unable to discern the full extent and nature of NMM's prior legal representation of Comando, which could only have been determined following an evidentiary hearing. The evidence certainly shows NMM provided limited legal services to her and also rendered extensive legal services to 10 Centre, as well as RCP and Nugiel. Moreover, in at least one specific transaction, that is the negotiation of the RCP lease for realty owned by 10 Centre, NMM acted as counsel for the landlord, 10 Centre, and the tenant, RCP. The terms of and parties' compliance with that lease are now at issue. Accordingly, NMM's continued dual representation of providing legal services to 10 Centre and, up until recently, rendering legal advice to RCP to defend the claims raised in this complaint, raises a conflict prohibited by the Rules of Professional Conduct ( RPC ). Further, the trial judge erroneously rejected the derivative claims by incorrectly determining the issues raised claims held by Comando individually.

At this juncture, NMM has removed itself from providing legal representation to any party regarding this litigation. However, with respect to the derivative claims advanced by 10 Centre, NMM has a continuing conflict prohibiting its representation of the corporation, while also representing RCP, which must be waived. Regarding Comando's claim of disqualification based on her prior representation, although we conclude the judge inaccurately found NMM provided no legal representation to her, the record does not allow this court to fully assess the extent and nature of that representation. Nevertheless, NMM's complete withdrawal renders the question moot.

I.

These facts are found in the motion record. Comando commenced employment with RCP on March 1, 2004. In exchange for Comando's employment efforts to grow RCP's business, she received a base salary and additional compensation of one-third of [436 N.J.Super. 209] the net profits generated in " the North Region," to which she was assigned. Comando also understood she would be given the opportunity to obtain an ownership interest in RCP. Ibid. She contends the parties entered into a Client Purchase Option Covenant, setting forth the terms upon which she could purchase the North Region portfolio in the event she or RCP terminated her employment.

In 2009, Comando was promoted to Senior Vice President, and on April 29, 2011, she was named a " Principal" of RCP. Ibid. Comando avers that in the ensuing years she contributed significantly to RCP's expansion in the region and its resulting increases in revenue.

In June 2010, Nugiel retained NMM " to represent RCP in general corporate matters arising from time-to-time." NMM's June 28, 2010 engagement letter, authored by Jesse P. Nash, acknowledged NMM had been retained " to represent [RCP] as an entity" " for the purpose of: reviewing [RCP's] employee manual/handbook and such other legal matters for and/or on behalf of [RCP] as may arise from time[-]to[-]time." The letter urged " any shareholder, director, member, partner or officer" with legal questions regarding particular rights or obligations to obtain separate counsel. Nash's letter concluded: " We will not represent the interests of any one individual in any way that is in conflict with the interests of the entity as a whole."

In early 2011, Comando and Nugiel formed 10 Centre as a holding company to acquire and manage real property that would become RCP's headquarters. According to Nash, Nugiel requested he and NMM provide legal representation in

Page 381

" (1) the formation of the limited liability company, (2) preparation of the RCP lease for the property, (3) preparation of an operating agreement for [10 Centre], and (4) [assistance] with legal issues surrounding obtaining the financing needed by [10 Centre] to purchase the new headquarters" for RCP. There is no mention of the preparation or existence of a new engagement letter for these ...


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