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APPROVAL OF THE APPELLATE DIVISION
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Although it is posted on the internet, this opinion is binding only on the
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SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-2537-14T1
WILLIAM LEWIS, ROBERT LEWIS
and LEWIS ENTERPRISES,
Plaintiffs-Respondents,
v.
ROBERT HULL,
Defendant-Appellant,
and
POINT PLEASANT LANDCO, LLC,
SINGULARITY HOLDINGS, LLC, and
SURF LAUNDROMAT, LLC,
Defendants.
______________________________________________________
Submitted February 7, 2017 – Decided March 2, 2017
Before Judges Fisher, Ostrer and Leone.
On appeal from the Superior Court of New
Jersey, Law Division, Ocean County, Docket No.
L-3759-11 and Monmouth County, Docket No. L-
220-16.
Law Offices of William M. Luers, LLC,
attorneys for appellant (William M. Luers, on
the brief).
Koster, Brady & Nagler, LLP, attorneys for
respondents (Danielle M. Hughes, on the
briefs).
PER CURIAM
This is the second of two suits between Robert Lewis, William
Lewis and their business, Lewis Enterprises (collectively
"Lewis"), on one hand, and Robert Hull and his business, Point
Pleasant Landco, LLC (collectively "Hull"), on the other. This
second suit was based on a settlement agreement reached in the
first, by which Hull agreed to remediate contaminated property
previously owned by Lewis and later by Hull, and to hold Lewis
harmless for any further claims on or remediation of the property,
in exchange for Lewis's payment of $290,000. When Hull later
refused to remediate, Lewis undertook the task and commenced this
suit, alleging, among other things, Hull's breach of the settlement
agreement. Summary judgment was entered on Lewis's claim that Hull
breached the settlement agreement and, in later proceedings, the
judge summarily awarded Lewis $290,000 and attorneys' fees, as
authorized by the settlement agreement. In appealing, Hull argues
summary judgment was improvidently granted, claiming a question
of fact regarding whether Lewis fraudulently induced the
settlement agreement by failing to disclose in discovery he had
insurance coverage for Hull's claims in the first suit. We affirm
because, even assuming Lewis was deceptive during discovery, Hull
2 A-2537-14T1
chose not to perform the settlement agreement and therefore had
no right to retain the settlement funds paid by Lewis.
To put the issues in perspective, we start at the beginning.
In 1947, Claude and Ida Asa purchased property on Richmond Avenue
in Point Pleasant, where they operated a laundry service and dry
cleaning business until selling the property to Lewis in 1969.
Lewis continued operating a laundry service on part of the property
and leased out the remaining portion,1 until 1978 when Lewis
operated a dry cleaning business as well as a suede and leather
cleaning business on the premises; after a few years, the dry
cleaning operation was discontinued, but Lewis continued to
operate a suede and leather cleaning business until selling the
property to Hull in 1993.
Hull operated a dry cleaning business on the premises. When
Hull attempted to sell the property in 2002, the buyer's inspection
revealed the presence of PCE contamination.2 In response to notices
and demands about the contamination, Lewis asserted it did not use
1
Lewis also leased a portion of the property to New Jersey Natural
Gas, which operated a customer service and appliance showroom
there between 1969 and 1971.
2
The parties use the acronyms PCE and TCE interchangeably while
apparently referring to the same chemical formula, C2Cl4, which is
known as both Perchloroethylene (PCE) and Tetrachloroethylene
(TCE). Our resolution of the issues on appeal does not require
that we delve further into the nature of the contamination or the
world of chemistry.
3 A-2537-14T1
or store PCE on the premises but instead used Valclene, a non-
pollutant comprised of fluorinated-chlorinated hydrocarbons. Hull
claimed he did not use TCE during his ownership of the property.
Consequently, Hull sued Lewis and others in Ocean County in
2004. On June 2, 2008, Hull and Lewis entered into a settlement
agreement. Despite insistence that any contamination was caused
by predecessors, Lewis agreed to pay Hull $290,000 for Hull's
past, present and future remediation expenses and costs, and Hull
agreed to complete the property's remediation, to hold Lewis
harmless, and to indemnify Lewis for any past, present or future
claims and costs of any kind related to the environmental
contamination of the property. The agreement also contained the
parties' stipulation that "[a]ny party which obtains judicial
relief as a result of a material breach of the terms and conditions
of [the settlement agreement] by any other party shall be entitled
to recover its reasonable attorneys' fees and costs from the
breaching party." The suit was dismissed with prejudice as required
by the settlement agreement.
A few months after the settlement, the New Jersey Department
of Environmental Protection (NJDEP) issued to Hull a notice of
deficiency regarding the property. Hull did not respond, and, on
May 19, 2010, the NJDEP issued a notice of deficiency not only to
Hull but also Lewis. On June 1, 2010, Hull responded to the NJDEP
4 A-2537-14T1
by advising he had no intention of remediating the property.3 Lewis
unsuccessfully sought to informally extricate himself from the
thrust of the NJDEP's directive and began remediating the property.
In 2011, Lewis also filed this suit in Ocean County against
Hull, seeking damages based on, among other theories, Hull's breach
of the settlement agreement. Cross-motions for summary judgment
were filed in 2014, and the trial judge concluded as a matter of
law and undisputed fact that Hull breached the settlement
agreement. On the scheduled trial date soon thereafter, the judge
heard Lewis's oral application for final relief and agreed there
were no triable issues; the judge found Lewis was entitled to
$290,000 in damages, as well as attorneys' fees pursuant to the
terms of the settlement agreement. Lewis also voluntarily
dismissed his alleged causes of action against Hull. After Lewis's
counsel fees were quantified in the amount of $45,570.01, judgment
was entered on October 20, 2014, in favor of Lewis and against
Hull, in the amount of $335,570.
The trial judge denied Hull's subsequent motion for
reconsideration, and Hull filed a timely appeal, arguing in a
single point that his summary judgment motion should not have been
denied and that he should have been permitted to present a defense
3
Hull transferred the property to an unrelated entity in 2010.
5 A-2537-14T1
of fraud based on what he claims was Lewis's misrepresentations
during discovery about insurance coverage.
While the appeal was pending, Hull moved in this court for
supplementation of the record to include discovery obtained during
the course of a legal malpractice action commenced by Hull against
attorneys who represented him in the first suit; specifically,
Hull sought to provide this court with information that suggested
Lewis failed to disclose it possessed insurance coverage for the
claims asserted by Hull in the first suit. He claimed that this
factual assertion was relevant because he believed when he settled
the first suit that Lewis was a "collection risk[]" if they had
gone to trial in the first case and he obtained a large judgment.
Hull claimed that, for this reason, he agreed to the $290,000
settlement even though that amount only constituted approximately
nineteen percent of the fees and environmental engineering costs
incurred. We denied without prejudice the motion to supplement the
record on appeal and, instead, granted a limited remand so Hull
could move in the trial court for relief from the judgment in
light of the information in question. After a delay caused by a
transfer of the matter from Ocean to Monmouth County, Hull filed
his Rule 4:50 motion. By way of a comprehensive and thoughtful
oral decision, Judge Jamie S. Perri denied relief.
6 A-2537-14T1
We thereafter allowed Hull to file an amended notice of appeal
as the means of seeking review of the denial of his Rule 4:50
motion, and the parties filed additional briefs. Hull argues in
this portion of his appeal that:
I. THE JUDGMENT SHOULD BE VACATED BECAUSE
[LEWIS HAS] SUFFERED NO DAMAGES THAT CAN BE
RECOVERED AT CONTRACT.
A. The Court Should Deny [Lewis] the
Windfall Judgment Sought that
Breaks with the National Consensus
on the Collateral Source Rule.
1. The National Consensus
Disallows the Recovery
[Lewis] Seek[s] under the
Collateral Source Rule.
2. The Policies under-
lying Contract Law Mili-
tate Against the Recovery
that [Lewis] Seek[s].
3. There are no Special
Circumstances in this
Case to Justify Applica-
tion of the Collateral
Source Rule.
B. Under New Jersey Law, [Lewis]
Should Not Obtain the Windfall
Judgment [Sought].
II. THE COURT SHOULD REMAND THE MATTER TO THE
TRIAL COURT TO DETERMINE IF [LEWIS IS] IN
MATERIAL BREACH OF THE SETTLEMENT AGREEMENT.
7 A-2537-14T1
We consider, first, the issues raised in the parties' initial
briefs, and then the issues arising from the Rule 4:50
determination required by our limited remand.
I
The standard applied when reviewing an order granting summary
judgment is the same Brill4 standard that governed the trial judge.
Townsend v. Pierre, 221 N.J. 36, 59 (2015). We examine only those
materials submitted in support of and opposition to the motion,
and interpret the factual assertions in the light most favorable
to the opponent. Brill, supra, 142 N.J. at 540.
In now arguing that summary judgment, which was based on his
breach of the settlement agreement, was erroneously granted, Hull
asserts he was misled about whether Lewis was covered by insurance
during the legal proceedings leading up to the settlement. Hull,
however, offered nothing in support at that time; indeed, it is
not even clear from the record on appeal that Hull made that
argument when opposing summary judgment. Instead, although in his
initial brief here he asserts that summary judgment should not
have been granted because he was misled about insurance coverage,
he refers only to a certification filed in support of a later
motion for reconsideration. The motion judge could not have erred
4
Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995).
8 A-2537-14T1
in granting summary judgment by failing to consider factual
allegations only asserted at a later date.5
In his reply brief, Hull asserted we should reverse the
summary judgment because the judge did not provide a ruling that
had sufficient specificity demanded by Rule 1:7-4(a). Because this
argument was not raised in his initial brief, we need not now
consider it. See State v. Smith, 55 N.J. 476, 488 (1970)
(recognizing the impropriety of raising an argument for the first
time in a reply brief). Moreover, despite the brevity of the
judge's ruling, we find no merit in this contention. The judge
found that Hull breached the settlement agreement because there
was no dispute that Hull had not honored his part of the bargain.
In fact, Hull clearly and indisputably refused to remediate the
property despite the promise he made to Lewis when he received
$290,000 from Lewis. The argument of counsel on the summary
judgment motion's return date demonstrates this; at that time
5
We would further note that Hull did not identify in his notice
of appeal that he was seeking our review of the order denying
reconsideration nor did he argue in his brief that the judge erred
in denying reconsideration. Consequently, we do not review that
order. See Sikes v. Twp. of Rockaway, 269 N.J. Super. 463, 465-66
(App. Div.) (orders not designated in the notice of appeal are not
subject to review), aff’d o.b., 138 N.J. 41 (1994); see also Almog
v. Israel Travel Advisory Serv., Inc., 298 N.J. Super. 145, 155
(App. Div. 1997) (only arguments appearing under "appropriate
point headings" are considered), appeal dismissed, 152 N.J. 361,
cert. denied, 525 U.S. 817, 119 S. Ct. 55, 142 L. Ed. 2d 42 (1998).
9 A-2537-14T1
Hull's attorney argued his client "certified and suggests that he
was using passive remediation, which is a nice way of saying [he]
will do nothing." In light of that unequivocal acknowledgement
that Hull had not upheld and would not uphold his part of the
bargain, we reject Hull's contention that summary judgment on the
breach of contract theory was erroneous. That argument and any
other arguments that might be discerned from Hull's pre-remand
submissions are without sufficient merit to warrant further
discussion in a written opinion. R. 2:11-3(e)(1)(E).
II
As noted earlier, Hull also appeals the denial of the Rule
4:50 motion, which we permitted to be filed and considered during
the pendency of this appeal.
At the remand stage, Hull did a better job of providing
evidence supportive of his claim that Lewis misled him prior to
the settlement agreement about the existence of insurance
coverage. But we find no abuse of the judge's discretion in denying
relief. See Hodgson v. Applegate, 31 N.J. 29, 37 (1959)
(recognizing that such a motion is "addressed to the sound
discretion of the trial court, guided by equitable principles");
see also F.B. v. A.L.G., 176 N.J. 201, 207 (2003); ATFH Real Prop.,
LLC v. Winberry Realty P'ship, 417 N.J. Super. 518, 528 (App. Div.
10 A-2537-14T1
2010), certif. denied, 208 N.J. 337 (2011). Although Judge Perri
assumed Lewis was not entirely open about insurance coverage in
pre-settlement discovery, she denied the motion for a number of
reasons. Now, in appealing the denial of the Rule 4:50 motion,
Hull does not seem to reprise his fraud argument but instead
asserts that the return to Lewis of the $290,000 in settlement
proceeds constitutes a windfall or is otherwise barred by his
argument for an expansive application of the collateral source
rule. We find Hull's arguments to be without sufficient merit to
warrant further discussion, R. 2:11-3(e)(1)(E), adding only the
following brief comments.
As we have observed, Judge Perri appropriately assumed Lewis
was not sufficiently forthcoming in discovery about insurance
coverage in the first suit. On this point, Hull relied on Lewis's
response to an interrogatory seeking insurance information;
without waiving his general objections, Lewis asserted that he had
"been unsuccessful in locating any insurance policies pre-1986
with respect to the property or business operations conducted at
the property and accordingly has not been able to assert any claims
for potential coverage against any insurance carriers." That
answer was certified by Lewis on September 27, 2004, prior to the
settlement. Nothing obtained from discovery in the legal
malpractice action demonstrated that this was a false statement
11 A-2537-14T1
at the time it was made. To the contrary, the record created in
the trial court following our remand suggests only that there was
some litigation or communications, or both, between Lewis and
insurance companies and that Lewis and certain insurers resolved
their disputes about the existence of coverage by agreeing to fund
the $290,000 settlement with Hull that shortly followed. But Lewis
had an obligation to seasonably amend his discovery responses.
Rule 4:17-7. And although there is little in the record to suggest
that Hull was particularly interested in the status of Lewis's
attempts to secure coverage prior to reaching a settlement for
$290,000, we agree with Judge Perri that it was fair to assume,
for purposes of the Rule 4:50 motion, that Lewis was not
"forthcoming" about his attempts to obtain insurance to cover
Hull's claims against him. Accordingly, even though Hull presented
little but his conclusory assertions about his state of mind when
settling the first case, we will assume for present purposes that
Lewis concealed relevant information about insurance coverage
prior to the settlement of the first suit.6
6
Hull has also referred to the answers to interrogatories given
by Lewis in this second suit. In response to Hull's interrogatory
about insurance coverage, Lewis informed Hull that he (Lewis) was
the "plaintiff[] in this matter and as such, there will be no
judgment entered against [him] in relation to this lawsuit." Even
if we were to assume in spite of the logic of Lewis's response,
that it was misleading, we fail to see how this 2013 statement
12 A-2537-14T1
Judge Perri, however, correctly recognized that this
assumption was irrelevant. That is, Judge Perri determined that
even if Hull had been misled when settling the first case, he
presented no legal or equitable reason to support his efforts to
retain the $290,000 settlement proceeds. Stated another way, the
final order in the second suit called only for the return to Lewis
of the $290,000 settlement proceeds and no other aspect of the
agreement is relevant here.7 And Hull's arguments in support of
his Rule 4:50 motion both in the trial court and here, relate
solely to the propriety of the return of the $290,000. Even if we
assume the judge who granted summary judgment in Lewis's favor
reached that conclusion for the wrong reasons, that determination
may still stand if the right reasons call for the same result. See
Isko v. Planning Bd. of Livingston, 51 N.J. 162, 175 (1968).
So, if we assume Hull was misled when he settled the first
action, the question is whether that alleged fact permits Hull to
retain the funds paid by Lewis in settlement. Clearly not, as
Judge Perri correctly held. In similar circumstances, our Supreme
Court has held that when a contract is procured through fraud, the
could have misled Hull when he settled the first case with Lewis
in 2008.
7
We are mindful that the final judgment also compelled Hull's
payment of Lewis's counsel fees, but that aspect of the judgment
was not appealed.
13 A-2537-14T1
injured party must make a choice: rescind or affirm. Merchants
Indem. Corp. v. Eggelston, 37 N.J. 114, 130 (1962). When
rescinding, the injured party "must return what he received."
Ibid. The injured party cannot choose both; only when choosing
to affirm the contract, may the injured party retain the
consideration and seek damages proximately caused by the deceit.
Ibid. It is undisputed, and Hull argues even now, that he chose
to rescind by unequivocally refusing to remediate the property and
by refusing to indemnify and hold Lewis harmless. Having so chosen,
Hull cannot retain the settlement proceeds. Accordingly, whether
the summary judgment entered in favor of Lewis was based on a
different or even incorrect analysis based on what was later
learned or assumed, the outcome must be the same. For these
reasons, and for substantially the reasons set forth by Judge
Perri in her thoughtful oral decision, we affirm.
We would further add that we find no merit in Hull's arguments
in his supplement brief that Lewis will now receive an unjust
windfall or that the collateral source rule obligates his (Hull's)
retention of the $290,000. Clearly, the results of this litigation
do not provide Lewis with a windfall, merely the return of money
paid to Hull in exchange for a promise Hull never kept; the only
windfall that would occur here would be if Hull were allowed to
retain those funds.
14 A-2537-14T1
Hull's argument about the collateral source rule is equally
misguided. Although New Jersey's collateral source rule is a
creature of legislation, and applies only to actions for personal
injury or death, N.J.S.A. 2A:15-97, the point of the rule – even
if we were to assume it had application here – is to prevent an
injured party from obtaining a double recovery. Perreira v.
Rediger, 169 N.J. 399, 409 (2001). In asserting Lewis would obtain
a windfall or double recovery, Hull assumes those funds belong to
Lewis's insurer not Lewis. Whether true or not – and we agree with
Judge Perri that it is not likely so8 – what becomes of the funds
is a matter between Lewis and his insurer; in these circumstances,
Hull has no standing to complain about the disposition of the
funds.
We find no merit in any other argument that may be discerned
from Hull's submissions.
Affirmed.
8
The record presented on remand revealed that the insurer settled
Lewis's claims against it by agreeing to fund Lewis's settlement
with Hull. If the Lewis-Hull dispute never settled, there is no
reason to believe the insurer would be entitled to the funds it
agreed to convey because those funds were the consideration for
the insurer's settlement of the claims asserted by Lewis against
it.
15 A-2537-14T1
STATE OF NEW JERSEY VS. RICKY BOOKER(12-10-0744, UNION COUNTY AND STATEWIDE)
Combined Opinion