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Archer & Greiner v. Rosefielde

United States District Court, D. New Jersey

June 12, 2017

ARCHER & GREINER, A Professional Corporation, Plaintiff/Counter-defendant,
v.
ALAN P. ROSEFIELDE, Defendant/Counter-claimant/Third-Party Plaintiff, BENJAMIN MORGAN and JOHN CONNELL, Third-Party Defendants.

          ELLIS I. MEDOWAY THOMAS A. MUCCIFORI KERRI E. CHEWNING ARCHER & GREINER, PC ONE CENTENNIAL SQUARE HADDONFIELD, On behalf of Plaintiff/Counter-defendant and Third-Party Defendants

          ANDREW RUBIN On behalf of Defendant/Counter-claimant/Third-Party Plaintiff

          OPINION

          NOEL L. HILLMAN, U.S.D.J.

         This matter concerns claims by Plaintiff, Archer & Greiner, PC, against Defendant, Alan P. Rosefielde, for unpaid legal fees, and Rosefielde's counterclaims and third-party complaint against Archer & Greiner, PC and two of its lawyers, Benjamin Morgan and John Connell (collectively hereinafter “Archer”), for legal malpractice, breach of fiduciary duty, and breach of contract arising out of the representation of Rosefielde that resulted in the alleged unpaid legal fees. Archer has moved for judgment on the pleadings in its favor on Rosefielde's claims against it. For the reasons expressed below, Archer's motion will be granted in part and denied in part.

         BACKGROUND

         This action arises out of Archer's representation of Rosefielde in a dispute between Bruce Kaye, who managed several timeshare business entities, and Rosefielde, an attorney whom Kaye initially retained as outside counsel and later became in-house general counsel of Kaye's business entities and Kaye's personal attorney, as well as Chief Operating Officer of several of the timeshare entities.

         The background for this “inordinately complicated” and “massive” case[1] was summarized by the N.J. Supreme Court when the dispute finally came before it on Kaye's petition for certification:

For approximately two years, Rosefielde served as Chief Operating Officer (COO) of some of Kaye's timeshare businesses, and functioned, in effect, as those entities' General Counsel. In that capacity, Rosefielde committed serious misconduct by acting on his own behalf instead of acting for his employers' benefit and exposing his employers to potential liability. That misconduct, among other issues, led to Rosefielde's dismissal and this litigation.
Kaye, in his individual capacity and as trustee of two trusts, Kaye's son Jason Kaye, and business entities that Kaye owned sued Rosefielde and several entities. Plaintiffs asserted claims based on Rosefielde's breach of fiduciary duty, fraud, legal malpractice, unlicensed practice of law, and breach of the duty of loyalty. Following a lengthy bench trial, the trial court found that Rosefielde engaged in egregious conduct constituting a breach of his duty of loyalty, breach of his fiduciary duty, legal malpractice, and civil fraud. The trial court rescinded Rosefielde's interest in several entities, awarded compensatory damages, punitive damages, and legal fees, and dismissed Rosefielde's counterclaims. It declined, however, to order the equitable disgorgement of Rosefielde's salary as a remedy for his breach of the duty of loyalty, on the ground that his breach did not result in damage or loss to the entities that employed him. The Appellate Division affirmed that determination, and this Court granted certification on the issue of equitable disgorgement.

Kaye v. Rosefielde, 121 A.3d 862, 864 (N.J. 2015) (Kaye III).

         The N.J. Supreme Court's opinion granting certification provided that “the petition for certification is granted limited to the issue of whether the Appellate Division erred by affirming the trial court's holding that economic damages are a necessary prerequisite for disgorgement of the employee's salary.” Kaye v. Rosefielde, 91 A.3d 22 (N.J. 2014).

         After considering that question, the N.J. Supreme Court reversed the appellate division and held that “the remedy of equitable disgorgement is available to a trial court even absent a finding that the employer sustained economic loss by virtue of the employee's disloyal conduct. In accordance with the broad discretion afforded to courts fashioning equitable remedies that are fair and practical, a trial court may order disgorgement of an employee's compensation as a remedy for a breach of loyalty in an appropriate case.” Kaye III, 121 A.3d at 864-65.

         In his claims against Archer, Rosefielde argues that the N.J. Supreme Court's certification of the disgorgement issue was flawed from the outset because Rosefielde was not an “employee.” Because the N.J. Supreme Court based its holding on the assumption that Rosefielde was an employee rather than an independent contractor, which Rosefielde contends that he was and that Kaye also viewed him that way, the determination that he must be disgorged of his salary is incorrect. Rosefielde blames Archer for this incorrect court order because it failed to correct, in either its brief, at oral argument, or in a motion for reconsideration, the N.J. Supreme Court's mistaken assumption that Rosefielde was Kaye's employee.

         Rosefielde also claims that Archer committed legal malpractice, breached its fiduciary duty to Rosefielde, and breached their contract in other ways: (1) failing to follow his detailed request that the brief submitted to the N.J. Supreme Court explain that Rosefielde had entered into a settlement agreement regarding his and Kaye's Florida litigation, and that the appeal was the only outstanding dispute between him and Kaye; (2) failed to argue in the brief or at oral argument the doctrine of judicial estoppel - that Rosefielde could be considered an employee for the purposes of engorgement, but could not be considered an employee under New Jersey's Contentious Employee Protection Act; (3) billed excessively for its work, and billed for unnecessary work; and (4) by written agreement, Archer accepted a payment by Rosefielde of $30, 000 in full satisfaction of all amounts due and owing Archer as of September 26, 2013, but Archer is seeking payment for five bills that were invoiced prior to September 26, 2013.

         Archer argues that it is entitled to judgment in its favor on Rosefielde's malpractice and breach of fiduciary claims because the N.J. Supreme Court's decision did not hinge on the settlement or Rosefielde's classification as an employee or independent contractor. Archer further argues that even if Archer erred in the ways Rosefielde contends, it had no impact on the N.J. Supreme Court's decision.

         Archer also argues that contrary to Rosefielde's allegations, it pointed out to the court in several of its brief that the lower courts did not classify Rosefielde as an employee and that Rosefielde had settled the litigation with Kaye. Archer further argues that Rosefielde's breach of contract claims are either a repackaging of ...


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