Opinion
DOCKET NO. A-3070-11T3
02-15-2013
AMBASSADOR BUILDERS L.L.C., Plaintiff, v. GARY KAUFER and BALBOA INSURANCE COMPANY, Defendants, and GARY KAUFER, Third Party Plaintiff-Appellant, v. E. ALLEN MACDUFFIE, JR., P.C.; E. ALLEN MACDUFFIE, JR., ESQ., Third Party Defendants-Respondents, and CGI; JOSEPH KALERT; AMERICAN CLAIMS MANAGEMENT; BRIAN GILLIAM; VANGUARD ADJUSTERS GROUP, INC.; VICTOR TONZILLO, PRIORITY ONE ADJUSTMENT SERVICES; and ATLANTIC BUILDERS, INC., Defendants.
Harry Jay Levin, argued the cause for appellant (Levin Cyphers attorneys; Mr. Levin and Jarrod M. Miller, on the brief). Daniel S. Jahnsen, argued the cause for respondents (Bolan Jahnsen Dacey, attorneys; Mr. Jahnsen, of counsel and on the brief; Elizabeth A. Wilson, on the brief).
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
Before Judges Reisner, Yannotti and Harris.
On appeal from the Superior Court of New Jersey, Law Division, Ocean County, Docket No. L-0925-08.
Harry Jay Levin, argued the cause for appellant (Levin Cyphers attorneys; Mr. Levin and Jarrod M. Miller, on the brief).
Daniel S. Jahnsen, argued the cause for respondents (Bolan Jahnsen Dacey, attorneys; Mr. Jahnsen, of counsel and on the brief; Elizabeth A. Wilson, on the brief). PER CURIAM
Third-party plaintiff Gary Kaufer (Kaufer) appeals from a trial court order dated January 13, 2012, granting summary judgment dismissing his legal malpractice claim against third-party defendants E. Allen MacDuffie, Jr,. P.C., and E. Allen MacDuffie, Jr., Esq. (MacDuffie). Kaufer also appeals from the trial court's decision, rendered after a bench trial, dismissing his damages counter-claim against Ambassador Builders, L.L.C. (Ambassador) under the Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to -20. We affirm.
Kaufer has not provided us with a copy of an order memorializing the trial court's February 1, 2012 decision. This case became ripe for appeal as of right on March 12, 2012, when the remaining defendants (not involved in this appeal) were dismissed from the case. Kaufer did provide us with a copy of the dismissal order.
I
We begin by addressing the summary judgment order, which dismissed the malpractice claim against MacDuffie. The factual background is set forth at length in Judge E. David Millard's comprehensive written opinion dated January 19, 2012, and need not be repeated here in the same detail. We summarize the most pertinent evidence, which primarily concerns MacDuffie's alleged failure to file a lawsuit on Kaufer's behalf within the applicable statute of limitations.
On July 18, 2006, Kaufer's modular home in Tuckerton was damaged by fire. Kaufer and his insurer, Balboa Insurance Company (Balboa), disagreed over the extent of the fire damage, with Kaufer and his privately-retained public adjuster asserting that the home needed to be demolished and rebuilt, and Balboa insisting that the structure could be repaired. Despite the disagreement with Balboa, Kaufer signed a contract on September 26, 2006, with Atlantic Builders for a new modular home to be constructed and installed in place of the fire-damaged home. He signed a change order with Atlantic on November 10, 2006, arranging to replace the existing one-story home with a two-story home.
After entering into the contract to demolish the damaged house and replace it with a larger home, Kaufer became dissatisfied with the services of his adjuster. One apparent source of the dissatisfaction stemmed from the adjuster's hiring an engineer in an attempt to bolster Kaufer's claim. Unfortunately for Kaufer, the engineer opined that the damaged house could be repaired. Not surprisingly, the engineer's report caused Balboa to reaffirm its view that the house did not need to be demolished and replaced.
In February 2007, Kaufer retained MacDuffie to represent him in the negotiations with Balboa. MacDuffie negotiated with Balboa on Kaufer's behalf. However, through Ambassador, a separate corporation which he controlled, MacDuffie also lent Kaufer over $65,000 to assist Kaufer to complete the Atlantic contract and secure the installation of the new home.
After Kaufer failed to repay about $36,000 of the loan, Ambassador sued him. In response, Kaufer filed a third-party complaint against MacDuffie and a counterclaim against Ambassador.
According to MacDuffie's undisputed certification, Kaufer discharged MacDuffie as his counsel by letter dated January 22, 2008. That certification is consistent with Kaufer's third- party complaint, which recited that Kaufer "discharged MacDuffie as his attorney" in late January 2008. According to MacDuffie's certification, Kaufer directed MacDuffie to turn over his file to Kaufer's new attorney, Howard Butensky, Esq. MacDuffie did so, documenting his actions in two letters to Butensky, both dated January 24, 2008.
Balboa did not formally deny Kaufer's claim until February 7, 2008. In that letter, Balboa declined to pay for the additional cost of demolishing and replacing the house, as opposed to repairing it. Balboa sent the denial letter to MacDuffie, who no longer represented Kaufer at that point. According to his certification, MacDuffie "immediately forwarded" the letter to Butensky "for [his] consideration and action." The new attorney did not file suit against Balboa.
Nonetheless, Kaufer later sued MacDuffie for malpractice, alleging that MacDuffie "fail[ed] to file suit" against Balboa "within a year of Kaufer's loss, which would have been July 18, 2007." Kaufer based that claim on the theory that the Balboa policy limited claims to one year after the loss, and that one-year period expired while MacDuffie was still representing Kaufer.
In moving for summary judgment, MacDuffie asserted that, notwithstanding the policy language, the limitations period was tolled until Balboa actually denied the disputed portion of Kaufer's claim. Citing Peloso v. Hartford Fire Insurance Co., 56 N.J. 514, 520 (1970), Judge Millard agreed with MacDuffie and concluded, on this issue, that MacDuffie did not breach a duty of care owed to Kaufer. See Jerista v. Murray, 185 N.J. 175, 190-91 (2005).
The judge rejected Kaufer's argument that MacDuffie could not assert the statute of limitations as "an affirmative defense" without pleading that defense in his answer. The judge reasoned that MacDuffie was not asserting that Kaufer's malpractice complaint against him was filed beyond the statute of limitations. Rather, MacDuffie was arguing that the statute of limitations on Kaufer's claim against Balboa neither commenced nor expired while MacDuffie was representing Kaufer.
Judge Millard also rejected Kaufer's claims against MacDuffie based on alleged violations of the Rules of Professional Conduct, reasoning that the RPCs "do not generally provide an independent basis for a cause of action." See Baxt v. Liloia, 155 N.J. 190, 202 (1998); Johnson v. Schragger, 340 N.J. Super. 84, 90 (App. Div. 2001). He rejected several additional claims against MacDuffie, reasoning that Kaufer failed to produce evidence that any of those alleged shortcomings proximately caused him any damages. Rather, the judge concluded that "the proximate cause of Kaufer's damages was Kaufer's failure to litigate the claim against Balboa."
In particular, the judge found no merit in Kaufer's claim that MacDuffie was somehow responsible for the decision to demolish the fire-damaged house. The judge found that Kaufer had decided to demolish and replace the house long before he retained MacDuffie to represent him. He also concluded that one of Balboa's reasons for refusing to replace the house -- that Kaufer denied it the opportunity to inspect the damaged structure prior to demolition -- was without merit. Instead of blaming MacDuffie for Balboa's unreasonable stance, Kaufer should have litigated that issue in a suit against Balboa.
As Kaufer's attorney candidly conceded at the oral argument of this appeal, Kaufer's malpractice expert's report did not include an opinion that MacDuffie committed legal malpractice by allegedly advising Kaufer to demolish the house.
Balboa's February 7, 2008 letter also refuted Kaufer's claim that the house foundation had been fatally compromised by water damage after the fire, noting that the foundation was "being used to support" the new house.
The judge further concluded that the Ambassador loan was "an attempt to assist a client in a difficult situation" and did not form the basis for a malpractice claim. He reasoned that MacDuffie's alleged failure to make a higher demand in negotiating with Balboa was not the proximate cause of Balboa's refusal to settle the claim.
Our review of the summary judgment order is de novo, employing the same standard used by the trial judge. See Prudential Prop. & Cas. Ins. Co. v. Boylan, 307 N.J. Super. 162, 167 (App. Div.), certif. denied, 154 N.J. 608 (1998). We determine whether there are material facts in dispute, and if not, whether the undisputed facts, viewed in the light most favorable to the non-movant, nonetheless entitle the moving party to judgment as a matter of law. Ibid.; Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995).
In appealing from the dismissal of the malpractice claim, Kaufer first asserts that the trial judge should not have granted summary judgment with respect to his claim that MacDuffie committed malpractice by advising Kaufer to demolish the house. We disagree. First, contrary to Kaufer's argument, this issue was addressed at oral argument of the motion, with no objection from Kaufer's attorney. See Nieder v. Royal Indemn. Ins. Co., 62 N.J. 229, 234 (1973). Second, Kaufer produced no expert report opining as to this alleged malpractice. Third, we agree with Judge Millard that even if MacDuffie had given such advice, it did not cause Kaufer's damages. Balboa had more than a year to inspect the fire-damaged house and, in fact, had it inspected. MacDuffie cannot fairly be blamed for Balboa's unreasonable assertion that it had no inspection opportunity.
Kaufer also repeats the argument that MacDuffie waived the "defense" of the statute of limitations. This contention was thoroughly addressed and rejected by the trial judge. It is without sufficient merit to warrant further discussion here. R. 2:11-3(e)(1)(E).
We find no more merit in Kaufer's attempt to distinguish Peloso. Kaufer argues that Peloso is inapplicable because the insurer made some payments on his claim, but refused to pay the costs associated with replacing the house. This is a distinction without a difference. Shortly after the fire, Kaufer made a claim for the cost of replacing his home. Although there were extensive negotiations over whether repair or replacement was warranted, Balboa did not deny the replacement-cost aspect of the claim until February 7, 2008. Under Peloso, the one-year limitations period was tolled from the date of the claim until the February 7 denial. Peloso, supra, 56 N.J. at 501-02; see also Azze v. Hanover Ins. Co., 336 N.J. Super. 630, 642-43 (App. Div.), certif. denied, 168 N.J. 292 (2001).
Kaufer's additional arguments on this point are without sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E). We affirm the grant of summary judgment substantially for the reasons stated in Judge Millard's opinion.
To the extent that Kaufer improperly asserts new arguments for the first time in his reply brief, we decline to consider them.
--------
II
We next address Kaufer's CFA claim. Through MacDuffie's efforts, Ambassador provided bridge loans to enable Kaufer to complete the purchase of the new house. Ambassador later sued Kaufer to collect on the balance of the loans. However, Ambassador voluntarily dismissed that claim at the commencement of the bench trial. MacDuffie, who represented Ambassador at the trial, stated: "Mr. Kaufer is impoverished. He lost his house [to foreclosure]. I don't want to compound his present miseries, and I wish to dismiss the complaint." Thereafter, the trial proceeded on Kaufer's CFA claim against Ambassador, as well as other claims not pertinent to this appeal.
At the trial, Kaufer testified that his house, which was mortgaged, was damaged by a fire. On cross-examination, Kaufer admitted that he not only lost his house to the fire, but about $80,000 worth of his largely-uninsured landscaping equipment was stolen. Because the insurance company was refusing to pay to replace the house, he eventually retained MacDuffie to assist him in negotiating with Balboa and its adjusters.
Kaufer testified that, at some point, Balboa's then-adjuster, Brian Gilliam, told MacDuffie that Balboa would pay to replace the house. According to Kaufer, acting in reliance on Gilliam's statement, MacDuffie advised Kaufer to "tear down the house and . . . move on with the project." MacDuffie also offered to lend Kaufer the money to raze the house, in the expectation that Balboa would pay Kaufer's claim. Kaufer testified that he believed MacDuffie had Kaufer's "best interest at heart" in offering the loan, but "it all went sour after we found out we weren't supposed to tear down the house."
Kaufer testified that he and Ambassador had no written loan agreement. However, from time to time, Ambassador sent him checks and also sent checks to Atlantic, the modular home builder. As a result of the loans, Kaufer was able to have the modular home delivered. In his direct testimony, Kaufer admitted that he signed two different contracts with Atlantic, one for about $80,000 and the other for about $152,000. He contended that MacDuffie told him to ask the owner of Atlantic to "up the house so we can get more money from the insurance company." However, on cross-examination, he was unable to explain why both documents bore dates prior to the date on which he retained MacDuffie to represent him.
On cross-examination, Kaufer admitted that very soon after he filed his claim, Balboa offered to pay him $117,000 to settle the claim. He also admitted that on September 26, 2006, he signed a contract with Atlantic for a new modular home that would have cost about $79,000. He further admitted that even after he signed the addendum for a larger house, the total price was $81,855. He conceded that Balboa was offering him "almost $30,000 more than the [Atlantic] contract." However, he contended it was MacDuffie's idea to get an inflated quote of $152,000 to try to get more money on the claim.
Kaufer testified that he signed a document authorizing MacDuffie to "make reimbursements from insurance checks for the money" that Ambassador had paid to Atlantic Builders, but he had no recollection of the circumstances under which he signed that document. He confirmed that Ambassador did not do any work on the house or deliver any construction materials; its sole role was to lend him money.
According to Victor Tonzillo, Kaufer's original public adjuster, his initial estimate was for a "total rebuild" of the house. That would not mean demolishing the house, because the foundation did not need to be rebuilt. Rather, a "total rebuild" would involve gutting the house and completely rehabilitating it. He explained this to Kaufer in detail. He also explained to Kaufer that the $117,000 offer from the insurance company was not the total amount the company would pay; Balboa would also pay architect fees and other costs "as incurred" if it found those costs reasonable.
The owner of Atlantic testified that the contract price covered the cost of buying the modular home and setting it on the foundation. It did not include demolishing the foundation or any interior finish work to the house. He testified that the $152,000 estimate came about at Kaufer's request. Kaufer told him that his lawyer said he could get a favorable settlement with the insurance company if Atlantic could give a $152,000 estimate. According to Atlantic's owner, "someone from Florida called me up and identified himself as an agent for the insurance company and says he wanted an estimate for the house being completed, all these things, for 152,000." Based on that request, Atlantic's owner gave Kaufer a revised contract, which he intended as an estimate designed to cover the cost of the house itself plus the cost of "complet[ing] the house." He also agreed to back-date the document.
Called as Kaufer's witness, MacDuffie testified that when Kaufer was "broke," he asked MacDuffie for a $10,000 loan. MacDuffie provided the loan from a trust fund that he controlled. The loan was repaid from insurance proceeds. He later arranged for additional loans, from Ambassador to Kaufer, to cover the cost of the modular home. Kaufer signed a document acknowledging the loans and authorizing MacDuffie to endorse the insurance checks and repay the loans from the proceeds. MacDuffie was willing to arrange the loans because at the time, he had a cooperative relationship with Balboa's adjuster and checks were coming in from Balboa on a regular basis.
He admitted that when the checks came from Balboa, they were written to several different payees. Chase Manhattan Bank, the holder of the mortgage on Kaufer's property, was a payee on one of the checks that he endorsed. MacDuffie testified that he notified Chase, and that Chase was "aware of what happened" and was satisfied with what has happened," because "the money was going toward the construction of the building."
MacDuffie denied telling Kaufer to demolish the house. However, once Atlantic's owner called him to say that a modular home was ready to install, MacDuffie agreed to arrange a loan so that it could be installed. Ambassador did not charge Kaufer interest on the loan.
MacDuffie testified that Balboa eventually paid at least $117,000 on Kaufer's claim, which was the amount Balboa agreed the claim was worth. MacDuffie testified that he never saw the contract between Kaufer and Atlantic, and did not know how much Atlantic was charging Kaufer for the modular home. He testified that had he known that Kaufer was buying the modular home for $81,000, he would have questioned why Kaufer was prolonging the dispute over the claim.
In an oral opinion issued February 1, 2012, Judge Millard found that Ambassador violated the CFA, N.J.S.A. 56:12-1 and -2, by extending loans to Kaufer without legally-required documentation. The judge also awarded Kaufer approximately $75,000 in counsel fees under the CFA.
However, the judge rejected Kaufer's claim for damages under the CFA, finding that he suffered no ascertainable loss as a result of the lack of written loan documents. The judge concluded that Ambassador, through MacDuffie, provided a series of no-interest bridge loans, from which Kaufer benefited, and from which neither Ambassador nor MacDuffie realized any benefit. Although the loans were used for Kaufer's benefit, to pay for the modular home, he did not repay the loans in full. The judge also found that Kaufer was not defrauded. He found that Kaufer understood "that when the monies came in from the insurance company MacDuffie was going to be [repaid.]" Kaufer obtained at least $117,000 in insurance proceeds, which was more than sufficient to pay for the new modular home. The judge further noted the "very disturbing testimony" concerning Kaufer's apparent attempt to defraud the insurance company by obtaining an inflated cost estimate from Atlantic.
On this appeal, we are bound by the judge's factual findings, so long as they are supported by sufficient credible evidence. Rova Farms Resort, Inc. v. Investors Ins. Co. of Am. 65 N.J. 474, 484 (1974).
Having reviewed the record, we find no basis to disturb the judge's finding that Kaufer suffered no ascertainable loss as a result of Ambassador's technical violations of the CFA. To the contrary, Kaufer benefited from MacDuffie's willingness to arrange no-interest bridge loans when he badly needed them. On this record, the problems Kaufer encountered appear to have been of his own making. Not satisfied with an insurance settlement that would have made him whole for his loss, he tried to use the fire damage as an opportunity to obtain a windfall. In the process, he not only obtained the entire $117,000 insurance settlement, either directly from Balboa or through Ambassador's payments to Atlantic for his benefit, he also obtained an additional $36,000 in loan money that he never repaid.
The multiple unpublished opinions that Kaufer cites do not support his claim that he suffered an ascertainable loss. All of those cases involved plaintiffs who lost money, either because the defendants failed to provide goods or services for which the plaintiffs had paid them, or because the defendants failed to pay money they owed the plaintiffs. Further, Kaufer did not present any evidence to support his claim that MacDuffie's actions caused Kaufer to default on his mortgage. In fact, Kaufer, who ran a landscaping business, admitted that shortly after the fire, someone stole $80,000 worth of his landscaping equipment, which was almost entirely uninsured. He also admitted that he used some of the Balboa insurance proceeds to pay his living expenses. Kaufer's arguments on this point are without sufficient merit to warrant further discussion. R. 2:11-3(e)(1)(E).
Affirmed.
I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION