Jarwick v. Wilf Report and Recommendation 11-5-13.pdf

8/14/2019 Jarwick v. Wilf Report and Recommendation 11-5-13.pdf

1/132

P l ~ o ~ t e : (609) 750-2646Fnx: (609) 897-7286E n t a i l : orlofsky@bla~ikrome.conz

Michael B. Himmel, sq.Michael T.G. Long, sq.Lowenstein S a n d l e r LLP65 i v i n g s t o n AvenueRoseland,NJ 07068

j

BLANK_~_'.~~ROMEPCOUNSELORS AT LAW

N ovember 5, 01 3VIAE-MAILANDFEDERALEXPRESS

Alan M. e b e n s f e l d , Esq.David M. rroyo, sq.L e b e n s f e l d Sharon S c h w a r t z .C.140 Broad S t r e e tR e d Bank,NJ 07701

P r i c e O . i e l e n , Esq.Cynthia A. e p p e r t , Esq.Neuberger, Quinn, i e l e n , Rubin Gibber, .A.One South t r e e t , 27t h F l o o rB a l t i m o r e ,M 1202Sheppard A. uryan, sq.Bruce H. nyder, sq.L a s s e r Hochman,LLC75 Eisenhower ParkwayRoseland,NJ 07068

Re: Jarwick Developments, n c . , e t a l . v . Joseph Wilf, t a i . ,Superior Court of New e r s e y , Chancery i v i s i o n , Morris County,Docket No .MRS-C-184-92

Dear Counsel:Pursuant o p a r a g r a p h 5 of h e Order of eference o S p e c i a l Master, a t e d September 4,

2013, t t a c h e d i s a copy of h e Report and Recommendation of p e c i a l Master, tephen M.O r l o f s k y , Regarding h e A w a r d of t t o r n e y s Fees and C o s t s of n v e s t i g a t i o n and i t i g a t i o nPursuant o N . J . S . A . 2 C : 4 1 - 4 c .

Th e r i g i n a l of h i s Report and Recommendation has been i l e d with h e C l e r k i n as e p a r a t e l e t t e r , w i t h c o p i e s t o you and Judge Wilson.

S i n c e r e l y y o u r s ,~ ~~, ~

~ ~ :

STL ~ PH EN M.ORLOF YS M O/ d sEnclosurec c : Hon. eanne M. ilson, . S . C .(w/enc.) v i a e - m a i l o n l y and F e d e r a l Express)

John F. a l k i n , Esq. w/enc.) v i a e - m a i l and F e d e r a l Express)301 C a r n e g i e C e n t e r 3 r d F l o o r P r i n c e t o n , N J 08540

A e n n s y l v a n i a L L P S t e p h e n M . r l o f s k y N e w l e r s e y A d m i n i s t r a t i v e P a r t n e rw w w . B l a n k R o m e . c o m

H o n g K o n g H o u s t o n L o s A n g e l e s New o r k P h i l a d e l p h i a P r i n c e t o n S h a n g h a i W a s h i n g t o n ~ W i l m i n g t o n


2/132

Phone: (609) 750-2646Tax: (609) 897-7286E n t n i l : or[[email protected]

VIAFEDERALEXPRESSC l e r k of h e CourtS u p e r i o r Court ofNew e r s e yMorris County CourthouseWashi ngton and Court t r e e t sMorristown,NJ 07963-0910

BL NK ~ ~ . ~ ` ROMEPCOUNSELORS AT L A W

November 5, 013

Re: Jarwick Developments, n c . , e t a l . v . Joseph Wilf, t a l . ,Superior Court of New e r s e y , Chancery i v i s i o n , Morris County,Docket No.MRS-C-184-92

Dear C l e r k :Pursuant o p a r a g r a p h 5 of h e Order of eference o S p e c i a l Master, a t e d September 4,

2013, n c l o s e d f o r f i l i n g i n t h e above a t t e r a r e an r i g i n a l and two o p i e s of h e Report andRecommendati on of p e c i a l Master, Stephen M r l o f s k y , Regarding h e A ward of t t o r n e y sFees and C o s t s of n v e s t i g a t i o n and i t i g a t i o n Pursuant o N . J . S . A . 2 C : 4 1 - 4 c .

P l e a s e file t h e e n c l o s e d o r i g i n a l Report and Recommendation of h e S p e c i a l Master andr e t u r n adate-stamped Filed copy o me n t h e stamped, e l f - a d d r e s s e d envelope n c l o s e d f o ryour o n v e n i e n c e .

By e p a r a t e letter, a l l Counsel of ecord have been e r v e d with a copy of h i s Report andRecommendation v i a e l e c t r o n i c m a i l . I have l s o p r o v i d e d Judge Wi lson and h e r law l e r k , M r.C a l l o n , with o u r t e s y c o p i e s .

Should you have any u e s t i o n s , p l e a s e do not e s i t a t e t o c o n t a c t me. Thank you o r youra s s i s t a n c e and o o p e r a t i o n .

S i ~ ~ e e l y y o u r s ,~,- ~ ~ r

tST'~;PHEN M ORLOF~YS M O/ dsE n c l o s u r ec c : Hon. eanne M ilson, . S . C .(w/enc.) v i a e - m a i l and e d e r a l Express)

John F. a l l o n , Esq. w/enc.) v i a e - m a i l and e d e r a l Express)All Counsel of ecord v i a e - m a i l and F e d e r a l Express)

3 0 1 C a r n e g i e C e n t e r 3 r d Fl o or Pr i n c e t on , N J 08540A e n n r y l v a n i a L L P S t e p h e n M . r l o f s k y N e w l e r s e y A d m i n i s t r a t i v e P a r t n e r

w w w . B l a n k R o m e . c o m

B o c a R a t o n ~ i n c i n n a t i H o n g K o n g H o u s t o n L o s A n g e l e s New o r k Ph i l a d e l ph i a Pr i n c e t on S h a n g h a i W a s h i n g t o n W i l m i n g t o50536197v.1


3/132

JARWICKDEVELOPMENTS,INC.,ADA REICHMANN nd JOSEFHALPERN, nd h e JOSEF HALPERNIRREVOCABLETRUST,

P l a i n t i f f s

JOSEPHWILF nd ESTATEOFHARRYWILF e c e a s e d n d i v i d u a l l y and a sp a r t n e r s i n t h e p a r t n e r s h i p known s J.H.W.ASSOCIATES, EONARD . WILFZYGMUNT ILF MARK ILFSIDNEY WILF RACHELAFFORDABLEHOUSING, ALWILLASSOCIATES,p a r t n e r s h i p PERNWILASSOCIATES,p a r t n e r s h i p MARVIN . COHEN CPA ndMIRONOV, LOAN ARZIALE, LCf / k / a BECK WEISS COMPANY, . A .

D e f e n d a n t s .

SUPERIORCOURT OFNEW ERSEYCHANCERY IVISION:MORRISCOUNTYDOCKETNO.MRS-C-184-92

REPORT AND RECOMMENDATION OF PECIAL MASTER, TEPHENM.ORLOFSKY, SQ. REGARDINGTHE AWARD FATTORNEYS' EESAND COSTS

OF NVESTIGATIONAND LITIGATIONPURSUANT TO .J.S.A. 2C:41-4c

141737.00601 22251319v.4


4/132

TABLEOFCONTENTSPage

I INTRODUCTION 2I I BACKGROtTND : 3

Uniform P a r t n e r s h i p Act/Breach of i d u c i a r y Duty 9Breach of o n t r a c t 9Breach of h e Covenant of Good a i t h and F a i r Dealing 1Fraud 1Conversion : 1 1NJRICO 1 1P u n i t i v e Damages 1 3

I I I OVERVIEWOFTHEFEEAPPLICATIONS 1 3IV. PLAINTIF FS SHOULDRECOVERTHEATTORNEYS' EESANDCOSTS

INCURRED N LITIGATING THEIRNON-RICO CLAIMS, HEIRUNSUCCESSFUL JRICOCLAIMS,AND THEIRCLAIMSAGAINSTTHEACCOUNTANTDEFENDANTS 1 7A . Governing Legal S t a n d a r d s 1 7B . P l a i n t i f f s Should Recover h e A t t o r n e y s Fees and Costs n c u r r e d In

L i t i g a t i n g T h e i r Non-RICO Claims 1 91 . A l l of l a i n t i f f s Claims Were Based Upon h e Same a c t s 1 92 . The Fact h a t NJRICOWas ot Alleged U n t i l October of2009 s

I r r e l e v a n t 2 53 . The o r e n s i c Accounting n v e s t i g a t i o n Was e l a t e d t o P l a i n t i f f s

NJRICOClaims 2 54 . A l l of h e Motions h a t t h e Wilf Defendants C h a l l e n g e Were e l a t e d

t o P l a i n t i f f s NJRICO laims 2 65 . A l l of l a i n t i f f s W i t n e s s e s Testimony Was e l a t e d t o P l a i n t i f f s

NJRICOClaims 2 86 . The Time l a i n t i f f s Counsel Spent Attempting t o S e t t l e o r Mediate

t h i s Case Was e l a t e d t o P l a i n t i f f s NJRICO laims 3 07 . P l a i n t i f f s NJRICO nd u n i t i v e Damage Claims Are R e l a t e d 3 0

C.. P l a i n t i f f s Should Recover h e A t t o r n e y s Fees and Costs n c u r r e d InL i t i g a t i n g T h e i r Unsuccessful NJRICO laims 3 1

D. P l a i n t i f f s Should Recover h e A t t o r n e y s Fees and C o s t s I n c u r r e d InL i t i g a t i n g Against h e S e t t l i n g Accountant Defendants 3 4

141737.00601 22251319v.4


5/132

V. THEWILFDEFENDANTS' ELECTION OFREMEDIES ARGUMENTDOESNOTPREVENTAN W RD FATTORNEYS' EESAND COSTS 7

VI. THE REASONABLENESS STANDARD 4V I I . THEJARWICKFEEAPPLICATION 4 3

A Rule : 4 2 - 9 ( c ) 4 3B. Request o r A t t o r n e y s Fees 4 4C. Review of easonableness a c t o r s P u r s u a n t t o RPC . 5 ( a ) 4 6

1 . F a c t o r One: The ime a nd a b o r r e q u i r e d , t h e n o v e l t y a nd i f f i c u l t yof h e q u e s t i o n s i n v o l v e d , and h e s k i l l r e q u i s i t e t o perform h e l e g a ls e r v i c e s p r o p e r l y 4 6

2 . F a c t o r Two: The i k e l i h o o d , i f a p p a r e n t t o t h e c l i e n t , t h a t t h ea c c e p t a n c e of h e p a r t i c u l a r e m p lo y m e n t i l l p r e c l u d e o t h e remployment y h e lawyer 4 8

3 . F a c t o r Three: The e e c u s t o m a r i l y charged n t h e l o c a l i t y f o r s i m i l a rl e g a l s e r vi c e s 5

4 . F a c t o r Four: The a m ou n t n v o l v e d a nd h e r e s u l t s o b t a i n e d 55 . F a c t o r F i v e : The ime i m i t a t i o n s imposed b y h e c l i e n t o r t h e

c i r c u m s t a n c e s 5 36 . F a c t o r S i x : The a t u r e a nd e n g t h of h e p r o f e s s i o n a l r e l a t i o n s h i p

with t h e c l i e n t 5 57 . F a c t o r Seven: The x p e r i e n c e , e p u t a t i o n , a nd b i l i t y of h e lawyer

o r lawyers performing h e s e r v i c e s 5 68 . F a c t o r E i g h t : Whether h e f e e i s f i x e d o r c o n t i n g e n t 5 6

D Reasonableness of ates 5 7E. Reasonableness of oLus Expended 6 3

1 Block i l l i n g 6 52 . I n t e r n a l S t r a t e g i z i n g and Conferencing 6 63 . R e v i e w i n g / D i g e s t i n g T r a n s c r i p t s , Research tc 6 84 . P u n i t i v e Damages/Dissolution Wor1c 7

5 Vague n t r i e s 7 16 . Lowenstein r i a l Attendance 7 47 . Neuberger r a v e l Time 7 8

F. R e c o m m e n d e d Revised o d e s t a r C a l c u l a t i o n f o r Fees 8 1G. Requests o r C o s t s / D i s b u r s e m e n t s 8 3

1 Disbursements 8 3i i

14173 .00601 22251319v.4


6/132

2 C o s t s 8 6i . E x p e r t A c c o u n t i n g C o s t s ~ 6i i . Magna Legal e r v i c e s C o s t s 9i i i. O t h e r C o s t s 9 1

V I I I . THEHALPERNFEE PPLICATION 9 4A. H a l p e r n s Request o r A t t o r n e y s Fees 9 4B. R eview of e a s o n a b l e n e s s F a c t o r s P u r s u a n t t o RPC . 5 ( a ) 9 6

1 . F a c t o r One: The i m e and a b o r r e q u i r e d , t h e n o v e l t y and i f f i c u l t yof h e q u e s t i o n s i n v o l v e d , and h e s k i l l r e q u i s i t e t o p e r f o r m t h e l e g a ls e r v i c e s p r o p e r l y 9 6

2 . F a c t o r Two: The i k e l i h o o d , i f a p p a r e n t t o t h e c l i e n t , t h a t t h ea c c e p t a n c e of h e p a r t i c u l a r employment i l l p r e c l u d e o t h e remployment by h e lawyer 1 3

3 . F a c t o r T h r e e : The e e c u s t o m a r i l y c h a r g e d i n t h e l o c a l i t y f o r s i m i l a rl e g a l s e r v i c e s 1 3

4 . F a c t o r F o u r : The Amount n v o l v e d and h e R e s u l t s O b t a i n e d . . . . . . . . . . . . . . 1 0 45 . F a c t o r F i v e : Time i m i t a t i o n s Imposed by l i e n t o r t h e

C i r c u m s t a n c e s 1 46 . F a c t o r S i x : N a t u r e and Length of e l a t i o n s h i p w i t h C l i e n t . . . . . . . . . . . . . . . . . . 1 0 57 . F a c t o r Seven: E x p e r i e n c e of h e Lawyers e r f o r m i n g S e r v i c e s . . . . . . . . . . . 1 0 68 . F a c t o r E i g h t : Whether Fee s F i x e d o r C o n t i n g e n t . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 0 7

C. R e a s o n a b l e n e s s of a t e s 1 7D. R e a s o n a b l e n e s s of our s Expended 1 8

1 . Redacted i l l i n g E n t r i e s 1 12 Block i l l i n g 1 13 . P u n i t i v e D a m a g e s / D i s s o l u t i o n W o r k 1 l 14 . I n t e r n a l S t r a t e g i z i n g and C o n f e r e n c i n g 1 1 25 . Mr. e b e n s f e l d s B i l l i n g E n t r y f o r F e b r u a r y 9, 013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1 3

E. R e c o m m en d e d Revised L o d e s t a r C a l c u l a t i o n f o r Fees 1 1 3F. Halpern Should Receive a 25 Contingency F e e Enhancement of h e

L o d e s t a r Amount 1 1 5G. H a l p e r n s R e q u e s t s f o r Cost and Expenses 1 1 8

IX. REALLOCATIONOFTHE PECIAL MASTER S E E S ANDEXPENSES . . . . . . . . . . . . 1 2 3X . EXECUTIVESUMMARY 1 2 6

i i i141737.00601 22251319v.4


7/132

APPEARANCES:

P r i c e O, i e l e n , Esq.Cynthia L. e p p e r t , Esq.Neuberger Q u i n n G i e l e n Rub in &Gibber, .A.O n e South t r e e tB a l t i m o r e , M 1202A t t o r n e y s or l a i n t i f f s Jarwick Developments,I n c . a nd A d a R e i c h m a n n

Michael B. H i m m e l , sq.Michael T.G. Long, sq.Lowenstein a n d l e r , LLP65 i v i n g s t o n A ve.Roseland,NJ 7068A t t o ~ ~ n e y s o i ~ P l a i n t i f f s Jarwick Developments,I n c . a nd A d a R e i c h m a n n

ORLOFSKY PECIALMASTER

Ala n M. e b e n s f e l d , Esq.D a v id M. rroyo, sq.L e b e n s f e l d , S h a ro n &S c h w a r t z, .C.140 Broad S t r e e tRed Bank,NJ 07701A t t o r n e y s or l a i n t i f f s Josef a l pern a nd h eJosef alpern r r e v o c a b l e T r u s t

Sheppard A. Guryan, sq.Bruce H. nyder, sq.L a s s e r H o c h m a n ,LLC75 Eisenhower P a r k w a yRoseland,NJ 07068A t t o r n e y s or e f e n d a n t s , Joseph W i l f a nd h eE s t a t e o f a r p y W i l f , d e c e a s e d , i n d i v i d u a l l ya nd as a r t n e r s i n t h e p a r t n e r s h i p k n o w n a sJ . H . W. s s o c i a t e s , Leonard . W i l f , Z y g m u n tW i l f , M a r k W i l f , Sidney W i l f , RachelA f f o r d a b l e Housing, Halwil s s o c i a t e s , ap a r t n e N s h i p , a n d ernwil s s o c i a t e s , ap a r t n e r s h i p ; a n d h e w i t n e s s , FNances C o h e n

P u r s u a n t t o p a r a g r a p h 5 o f h e Order o f eference o S p e c i a l M a s t e r , d a t e d September 4,2013 ( t h e Order o f R e f e r e n c e ) , I i s s u e t h i s Report and R e c o m m e nd a t i o n a d d r e s s i n g t h ea p p l i c a t i o n s f o r a t t o r n e y s ' f e e s and c o s t s , p u r s u a n t t o N . J . S . A . 2C:41- 4 c , f i l e d by: ( i ) P l a i n t i f f s ,J a r w i c k Developments, n c . and A d a Reichmann; and i i ) P l a i n t i f f s , J o s e f Halpern and t h e J o s e f

Halpern r r e v o c a b l e T r u s t .

141737.00601 22251319v.4


8/132

I . INTRODUCTIONT h i s h i g h l y c o n t e n t i o u s m a t t e r was i t i g a t e d f e r o c i o u s l y by h e p a r t i e s f o r o v e r 21 y e a r s .

The c a s e i n v o l v e d a v e r y c o m p l i c a t e d a c c o u n t i n g scheme d e s i g n e d t o d i v e r t money away fromt h e P l a i n t i f f s and n t o t h e hands of h e Wilf e f e n d a n t s . 1

P l a i n t i f f s p r e v a i l e d on t h e i r c l a i m s of f r a u d , c o n v e r s i o n , b r e a c h of f i d u c i a r y d u t y ,v i o l a t i o n of h e New e r s e y Uniform P a r t n e r s h i p Act NJUPA ), r e a c h of o n t r a c t , b r e a c h oft h e i m p l i e d c o v e n a n t of good f a i t h and f a i r d e a l i n g , c i v i l c o n s p i r a c y , and v i o l a t i o n of . J . S . A .2C:41- 2 c ( NJRICO ). On September 23, 2013, Judge Wilson e n t e r e d an Order awarding

P l a i n t i f f s damages, s f o l l o w s :Damages Type Jarwick Developments, n c .

and A d a ReichmannJ o s e f Halpern

Non-RICO 1 2 , 6 2 4 , 5 1 6 6 , 5 5 9 , 2 1 3Pre-Judgment n t e r e s t 1 8 , 8 0 4 , 8 0 6 9 , 7 7 3 , 3 2 6P u n i t i v e s 2 0 , 3 7 0 , 8 6 8 1 6 , 3 9 6 , 8 9 5NJRI C O b e f o r e t r e b l i n g ) 5 , 9 1 1 , 6 4 7 5 , 3 3 5 , 7 8 7TOTAL 5 1 , 8 0 0 . 1 9 0 3 2 , 7 2 9 , 4 3 4P l a i n t i f f s a r e s e e k i n g o v e r $15 m i l l i o n i n a t t o r n e y s ' f e e s and c o s t s from t h e Wilf D e f e n d a n t sunder . J . S . A . 2C:41- 4 c .

I was a p p o i n t e d a s S p e c i a l M a s t e r , p u r s u a n t t o R. 4 : 4 1 - 1 et seq., by t h e Order ofR e f e r e n c e , f o r t h e p u r p o s e of making a Report and Recommendation a d d r e s s i n g t h e P l a i n t i f f s 'motions o r an award of t t o r n e y s ' f e e s , and c o s t s of n v e s t i g a t i o n and l i t i g a t i o n i n c u r r e d i n t h e

Ihe Wilf Defendants n c l u d e a l l D e f e n d a n t s l i s t e d i n t h e c a p t i o n of h i s m a t t e r e x c e p t f o r Marvin L.Cohen,CPA nd h e a c c o u n t i n g f i r m of Mironov, l o a n a r z i a l e ,LLC / k / a Beck, Weiss Company,P.A. t o g e t h e r r e f e r r e d t o a s t h e Accountant D e f e n d a n t s ) . The Accountant D e f e n d a n t s s e t t l e d w i t hP l a i n t i f f s p r i o r t o t h e c o n c l u s i o n of h e t r i a l2he t o t a l s do not i n c l u d e t h e N J RI C O damages. While Judge Wilson o r d e r e d t h a t t h e s e N J RI C Odamages be t r e b l e d p u r s u a n t t o N . J . S . A . 2C- 4 1 - 4 c , s h e r u l e d t h a t [ t ] h e amount of h e RICO amages a st r e b l e d s h a l l n o t be c o l l e c t i b l e o r p a y a b l e b e c a u s e t h e y a r e exceeded by h e P u n i t i v e Damages e t f o r t h i nt h i s O r d e r .

14173 .00601 22251319v.4


9/132

s u c c e s s f u l p r o s e c u t i o n of h e i r r e s p e c t i v e c l a i m s p u r s u a n t t o NJRICO. (Order of e f e r e n c e , ) .I was a l s o t a s k e d w i t h making a recommendation a s t o t h e p o s s i b l e r e a l l o c a t i o n among t h ep a r t i e s r e g a r d i n g payment ofmy e e s and c o s t s i n making h i s R e p o r t , (Order of e f e r e n c e , ) .

C u r r e n t l y , h a t o b l i g a t i o n i s e n t i r e l y t h a t of efendant a l w i l . ( I d . ) .P u r s u a n t t o t h e Order of e f e r e n c e and R . 4 : 4 1 - 1 e t seq., I have r e v i e w e d t h e t r a n s c r i p t s

of Judge W i l s o n ' s O p i n i o n , t h e f e e a p p l i c a t i o n s s u b m i t t e d by P l a i n t i f f s , t h e o p p o s i t i o n p a p e r sfrom t h e Wilf D e f e n d a n t s , P l a i n t i f f s ' r e p l y b r i e f s , and t h e Wilf D e f e n d a n t s ' s u r - r e p l y b r i e f . I

a l s o r e v i e w e d t h e o t h e r docume nts and i s t s of documents s u p p l i e d t o me y t h e p a r t i e s . I have

c o n s i d e r e d a l l of h e l e g a l arguments mad e by t h e p a r t i e s , reviewed t h e f a c t s , and a n a l y z e d t h ea p p l i c a b l e law i n m a l t i n g t h e recommendations c o n t a i n e d i n t h i s R e p o r t . On c t o b e r 30, 2013,

h e a r d o r a l argument from c o u n s e l f o r a l l p a r t i e s , and have c o n s i d e r e d t h e arguments p r e s e n t e dby o u n s e l d u r i n g o r a l a r g u m e n t .

I I . BACKGROUNDAt t s c o r e , t h i s was a d i s p u t e between p a r t n e r s t h a t a r o s e o u t of h e development and

management of a 764- u n i t g a r d e n a p a r t m e n t complex i n M o n t v i l l e , New e r s e y , c a l l e d Rachel

G a r d e n s . In 1985, r o t h e r s Abe Halpern and J o s e f Halpern each became 25 partners n HalwilA s s o c i a t e s ( H a l w i l ) ; t h e o t h e r 50 was c o n t r o l l e d by t h e Wilf D e f e n d a n t s .3a l w i l wasformed i n o r d e r t o p u r c h a s e p r o p e r t y and o b t a i n a p p r o v a l s f o r what e v e n t u a l l y became Rachel

G a r d e n s .

I n J u n e , 1988, a n o t h e r p a r t n e r s h i p c a l l e d P e r n w i l A s s o c i a t e s ( P e r n w i l ) was formed i nwhich J o s e f H a l p e r n H a l p e r n ) had a 5 % i n t e r e s t . The e m a i n i n g 75 interest n P e r n w i l was

3n i t i a l l y t h a t 50 n t e r e s t was e l d by J.H.W. s s o c i a t e s , a p a r t n e r s h i p between Harry Wilf andJ o s e p h W i l f . A e a r o r s o l a t e r t h a t 50 n t e r e s t was d i v i d e d a s f o l l o w s : J.H.W. 2 5 , eonard W ilf-12.5 , and 12.5 h a r e d e q u a l l y by Zygmu nt Wilf and Sidney W i l f .

c141737.0060 1 2 2 2 5 3 v . 4


10/132

i n t h e hands of h e W i l f s .4Abe Halpern wa s n o t i n c l u d e d i n P e r n w i l . Halwil a s s i g n e d i t s e n t i r ei n t e r e s t i n Rachel Gardens o P e r n w i l f o r n o c o n s i d e r a t i o n .

Around t h a t same t i m e , Abe Halpern was e x p e r i e n c i n g f i n a n c i a l d i f f i c u l t i e s a n d wa sr e c e i v i n g a s s i s t a n c e from h i s s i s t e r , A d a Reichmann, a n d h e r husband R a l p h . I n r e t u r n , AbeHalpern a s s i g n e d h i s 25 interest n H a l w i l t o J a r w i c k Developments, n c . J a r w i c k ) , an e n t i t yformed by R a l ph Reichmann o r t h a t p u r p o s e . A d a Reichmann s J a r w i c k ' s s o l e s h a r e h o l d e r .

At h e t i m e of h e a s s i g n m e n t t o J a r w i c k , t h e Reichmanns were aware t h a t Abe Halpernhad been e x c l u d e d from P e r n w i l . S h o r t l y t h e r e a f t e r , on August 3, 1989, n t e r m e d i a r i e s f o r t h eReichmanns met w i t h H a n y , o s e p h , a n d Zygmunt Wil A f t e r t h e m e e t i n g , Harry Wilf r o t e al e t t e r t o R a l ph Reichmann r e c o g n i z i n g Abe H a l p e r n ' s i n t e r e s t i n t h e Halwil and P e r n w i lp r o j e c t a n d welcoming Ralp h Reichmann's i n v o l v e m e n t . The e t t e r f u r t h e r s e t f o r t h t h e t e r m sof any f u t u r e c a p i t a l i n v e s t m e n t s s h o u l d t h e need a r i s e , t o whic h R a l ph Reichmann e x p r e s s e d h i sagreement n a e t t e r , d a t e d August 4, 9 8 9 .

N e i t h e r t h e Reichmanns, n o r J a r w i c k , wa s e v e r a s k e d t o make any c a p i t a l c o n t r i b u t i o n st o H a l w i l o r P e r n w i l . Then, i n e a r l y 1992, t h e Reichmanns l e a r n e d t h a t Zygmu n t Wilf hadd e t e r m i n e d t h e y would n o o n g e r be i n v o l v e d i n t h e Rachel Gardens p r o j e c t .

On September 1 1 , 1992, J a r w i c k and A d a Reichmann ( c o l l e c t i v e l y r e f e r r e d t o a s J a r w i c k ) f i l e d a c o m p l a i n t a g a i n s t t h e D e f e n d a n t s s e e k i n g : ( i ) damages f o r d i v e r s i o n of av a l u a b l e b u s i n e s s o p p o r t u n i t y and f r a u d ; i i )judgment d e c l a r i n g t h a t J a r w i c i c had a 25 n t e r e s t

i n t h e p a r t n e r s h i p s k n o w n a s H a l w i l , P e r n w i l a n d Rachel A f f o r d a b l e Housing; i i i ) s p e c i f i cp e r f o r m a n c e t o t r e a t J a r w i c k a s a p a r t n e r ; i v ) an a c c o u n t i n g ;(v) damages f o r f r a u d and v i ) t h e

4.H.W. had a 50 n t e r e s t , Leonard Wilf had a 1 2 . 5 i n t e r e s t , and Zygmunt, Ma rk and Sidney Wilftook e q u a l s h a r e s of h e r e m a i n d e r .

141737.00601/22251319v .4


11/132

appointment of a r e c e i v e r t o m a n a g e P e r n w i l ' s a f f a i r s . J a r w i c k was r e p r e s e n t e d by Cole Schotza t t h i s t i m e .

A r i a l was conducted i n October 1999 s t o l i a b i l i t y . On a n u a r y 1 1 , 2000, h e t r i a l c o u r tf ound t h a t t h e August 1989 c o r r e s p o n d e n c e between Harry Wilf and Ralph R e i c h m a n n gave r i s et o a n e w a n d s e p a r a t e p a r t n e r s h i p , and t h a t Zyg mu n t Wilf h ad improperly excluded J a r w i c k f r o mt h e Rachel Gardens p r o j e c t . The c o u r t f u r t h e r d e t e r m i n e d t h a t a r i a l o n da m ages was n e c e s s a r y .

On une 14, 2002, h e t r i a l c o u r t r u l e d t h a t t h e August 1989 agreement was breached o nJ a n u a r y 8, 1992, a n d d e t e r m i n e d t h a t J a r w i c k ' s 25 n t e r e s t i n t h e Rachel Gardens p r o j e c t wa s

t e r m i n a t e d a t t h a t t i m e . A f t e r t h e da m ages t r i a l o n M a r c h 22, 2004, t h e c o u r t found t h a tJ a r w i c k ' s 25 n t e r e s t o n J a n u a r y 8, 1992 ha d a n e g a t i v e v a l u e . A c c o r d i n g l y , t h e c o u r tconcluded t h a t J a r w i c k was n o t e n t i t l e d t o any dama ges.

On p p e a l , t h e A p p e l l a t e D i v i s i o n i s s u e d a d e c i s i o n , d a t e d D e c e mb e r 15, 2006, i n d i n gt h a t A b e Halpern was i m p r o p e r l y e x c l u d e d f r o m t h e Pernwil p a r t n e r s h i p , and h i s i n t e r e s t i nRachel Gardens (which had been developed a n d was o p e r a t i o n a l by t h a t time) remained v i a b l ea n d c o n t i n u i n g . Jarwick D e v s . , I n c . v . W i l f , 2006 N . J . S u p e r . U n p u b. LEXIS 2221 ( Ap p . Div.Dec. 15, 2006). Thus, t h e l d t h a t t h e v a l u a t i o n of h i s i n t e r e s t a t a f i x e d m o m e n t i n time wa si n a d e q u a t e a s a n a p p r o p r i a t e remedy. T h e c o u n t a l s o concluded t h a t A b e H a l p e r n ' s assignmento f i s p a r t n e r s h i p i n t e r e s t t o J a r w i c i c was v a l i d , and re m a n de d t h e m a t t e r f o r a n a c c o u n t i n g ofJ a r w i c k ' s 25 interest n Rachel Gardens.

In Octo ber 2007, a r w i c k r e t a i n e d Neuberger, Quinn, i e l e n , Rubin &Gibber, .A. s i t sc o u n s e l , r e p l a c i n g Cole S c h o t z . ( C e r t i f i c a t i o n o f r i c e O . G i e l e n , E s q . , d a t e d August 22, 2013( ( G i e l e n C e r t . ) , 15 6 ) . S h o r t l y t h e r e a f t e r , t h e Lowenstein S a n d l e r f i r m was r e t a i n e d a sl o c a l c o u n s e l because n o Neuberger a t t o r n e y s a r e a d m i t t e d t o t h e b a r of New J e r s e y .

5141737.00601/2225 3 9v.4


12/132

( D e c l a r a t i o n of Michael B. Himmel , d a t e d August 21, 2013 ( Himmel D e c l . ) , ) . P r i c eG i e l e n , E s q . , and o t h e r Neuberger firm a t t o r n e y s were then a d m i t t e d pro hac i c e . ( I d . ) .

In A p r i l 2008, e f f r e y D. arsky, CPA, o r e n s i c a c c o u n t a n t , was r e t a i n e d on behalf ofJ a r w i c k . ( C e r t i f i c a t i o n of e f f r e y D. arsky, d a t e d August 19, 2013 ( Barsky C e r t . ) , a t ) .Barsky r e p l a c e d William Morrison, CPA,who had i s s u e d r e p o r t s concerning t h e o p e r a t i o n s ofRachel Gardens, nd h e f i n a n c i a l a f f a i r s of alwil through 1999. (Gielen C e r t . , 8 ) .

Through J u l y 2009, counsel f o r Jarwick reviewed the d i s c o v e r y o b t a i n e d p r i o r t o t h e i rr e t e n t i o n , t o o l s t h e d e p o s i t i o n s of 1 9 w i t n e s s e s , defended t h e d e p o s i t i o n s of t h e Reichmanns,

pursued the p r o d u c t i o n of documents, a s s i s t e d Barsky with h i s i n i t i a l accounting r e p o r t , andprepared o r t h e t r i a l scheduled o r October 2009. (Gielen C e r t . , 5 - 2 9 ) .

In J u l y 2009, h e Wilf efendants moved o j o i n Halpern as a Defendant, which Jarwickopposed. S h o r t l y t h e r e a f t e r , Halpern r e t a i n e d t h e firm of ebensfeld Borker Sussman SharonLLP ( t h e Lebensfeld Firm ), and became a a r t y t o t h e case a s a co- p l a i n t i f f n s t e a d . The JosefHalpern I r r e v o c a b l e T r u s t , which r e c e i v e d an assignment of Halpern's i n t e r e s t s i n t h ep a r t n e r s h i p s , was l s o named as a co- p l a i n t i f f .

On October 1 , 2009, Jarwick f i l e d an amended complaint and Halpern f i l e d h i s initialcomplaint c o n t a i n i n g claims f o r breach of f i d u c i a r y d u t y , c o n v e r s i o n , f r a u d and N J R IC0 .6A d d i t i o n a l l y , Marvin Cohen,CPA nd i s accounting firm were added a s Defendants.

5 Now e b e n s f e l d , S h a r o n &Schwartz, . C .6 S p e c i f i c a l l y , J a r w i c k ' s Amended C o m p l a i n t a l l e g e d : (1) Breach of i d u c i a r y Duty a g a i n s t t h e V ~ i l fD e f e n d a n t s and t h e A c c o u n t a n t D e f e n d a n t s ; (2) r e a c h of C o n t ~ a c t a g a i n s t t h e Wilf D e f e n d a n t s ; (3)Breach of h e I m p l i e d Covenant of Good a i t h and F a i r D e a l i n g a g a i n s t t h e Wilf e f e n d a n t s :(4) n j u s tEnrichment a g a i n s t t h e Wilf D e f e n d a n t s ; (5) Common L a w and E q u i t a b l e Fraud a g a i n s t t h e WilfD e f e n d a n t s and h e A c c o u n t a n t D e f e n d a n t s ;(6) o n v e r s i o n a g a i n s t t h e Wilf e f e n d a n t s ;(7) r o f e s s i o n a lM a l p r a c t i c e a g a i n s t t h e A c c o u n t a n t D e f e n d a n t s ;(8) i v i l C o n s p i r a c y a g a i n s t t h e Wilf e f e n d a n t s a n d t h eA c c o u n t a n t D e f e n d a n t s ;(9) i o l a t i o n s of h e Uniform P a r t n e r s h i p L a w a g a i n s t t h e Wilf e f e n d a n t s ;(10)V i o l a t i o n of NJRICO, N . J . S . A . 2C41-2C, a g a i n s t t h e Wilf D e f e n d a n t s ; (11) V i o l a t i o n of NJRICO,

614173 . 0 0 6 0 1 22251319v.4


13/132

S u b s e q u e n t l y , h e r e were over 40 more days of e p o s i t i o n s and e x t e n s i v e paper d i s c o v e r yw a s exchanged. (Gielen C e r t . , 34-40, and Ex. ) . I n a d d i t i o n , t h e r e were a t l e a s t 3 0 s e p a r a t em o t i o n s / a p p l i c a t i o n s f i l e d between October 2009 and c omm en cem en t o f h e t r i a l i n May 011.( L e b e n s f e l d e - m a i l submission o f September 18, 2013, e n t i t l e d L i s t o f M o t i o n s / A p p l i c a t i o n sF i l e d ) . Many f h e s e motions were r e l a t e d t o d i s c o v e r y d i s p u t e s . ( I d . ) . There were a l s o q u i t evoluminous motions o d i s m i s s and o r s u mm a ry udgment, a m o n g o t h e r s . ( I d . ) .

In t h e meantime, l a i n t i f f s ' f o r e n s i c a c c o u n t a n t , J e f f r e y Barsky, reviewed and a n a l y z e df i n a n c i a l s t a t e m e n t s , g e n e r a l l e d g e r s , and t a x r e t u r n s s t a r t i n g from 1989. (Barsky C e r t . , - 8 ) .

Mr. Barsky a l s o c r e a t e d a computer d a t a b a s e with a l l t h i s i n f o r m a t i o n , and o r g a n i z e d t h e paperdocuments i n t o 20 l a r g e notebooks, wh ic h were used t o c r e a t e h i s e x p e r t r e p o r t s andc e r t i f i c a t i o n s . (Barsky C e r t . , - 4 0 ) .

T r i a l c omm en ce d o n May , 2011, and d i d not conclude u n t i l March 6, 2013 207 r i a ldays l a t e r . (Gielen C e r t . , 2 ) . There were 40 w i t n e s s e s w h o t e s t i f i e d a t t r i a l and 1 , 4 8 5e x h i b i t s a d m i t t e d i n t o e v i d e n c e . ( C e r t i f i c a t i o n o f Alan M. e b e n s f e l d , E s q , , d a t e d Aug ust 19,2013 ( L e b e n s f e l d C e r t . ) , 6 ) . Half of t h e t e s t i m o n y p r e s e n t e d a t t r i a l w a s from t h ea c c o u n t i n g e x p e r t s . ( T r a n s c r i p t o f Judge W i l s o n ' s D e c i s i o n ( T r . ) , A u g . 5, 2013, p . 2 6 ) .Moreover, h e Wilf Defendants produced a cache o f over 21,000 e- m a i l s almost 9 onth s i n t ot h e t r i a l . ( L e b e n s f e l d C e r t . , 1 ) . A t h e c o n c l u s i o n o f h i s e p i c t r i a l t h e r e were over 25,000pages o f r i a l t r a n s c r i p t s , and 18 days o f l o s i n g a r g u m e n t s . ( T r . , A u g . 5, 2013, . 2 7 ) . F i n a l l y ,

N.J.S.A. 2A:41-2A, a g a i n s t the Wilf Defendants and t h e Accountant Defendants; (12) V i o l a t i o n o fNJRICO .J.S.A. 2C:41-2B, g a i n s t t h e W i l f efendants and the Accountant Defendants; 13) i o l a t i o no f NJRICO .J.S,A. 2C:41- 2 D , a g a i n s t the W i l f Defendants and the Accountant Defendants; (14)T o i ~ t i o u s I n t e r f e r e n c e with Contract a g a i n s t the Accountant Defendants; and ( 1 5) o r t i o u s I n t e r f e r e n c ewith P r o s p e c t i v e E c o n o m i c Advantage a g a i n s t t h e Accountant Defendants. Halpern s Complaintc o n t a i n e d a l l o f he s a m e causes o f c t i o n except o r the c i v i l conspiracy c l a i m .

14173 .00601 2251319v.4


14/132

Judge Wilson r e n d e r e d h e r o r a l bench o p i n i o n o n t h e r e c o r d over t h e c o u r s e of 14 d a y s ,c o n s i s t i n g of p p r o x i m a t e l y 1 , 5 0 0 pages of r a n s c r i p t .

Judge Wilson r u l e d t h a t t h e Wilf Defendants v i o l a t e d t h e Uniform P a r t n e r s h i p Act,b r e a c h e d t h e i r f i d u c i a r y duty t o P l a i n t i f f s , b r e a c h e d t h e i r c o n t r a c t s with P l a i n t i f f s , b r e a c h e d t h e i rduty of good f a i t h and f a i r d e a l i n g , committed f r a u d , w ere l i a b l e f o r c o n v e r s i o n a nd c i v i lc o n s p i r a c y , and v i o l a t e d t h e New e r s e y RI O c t . ( I d . a t 3 1 - 7 6 ) . The improper conduct by h eWilf Defendants u n d e r l y i n g Judge Wilson's f i n d i n g s i n f a v o r of t h e P l a i n t i f f s i n c l u d e d , i n t e ra l i a , u n j u s t i f i a b l e o v e r c h a r g e s t o t h e p a r t n e r s h i p f o r i n s u r a n c e , c a b l e s e r v i c e s , r e p a i r s a nd

maintenance, m a n a g e m e n t e e s , and computer s e r v i c e s ; c h a r g e s f o r r e n t on p r o p e r t y not o w n e dby Halwil o r P e r n w i l ; d i s t r i b u t i o n s t o Wilf employees w h o had no c o n n e c t i o n t o RachelGardens; d v e r t i s i n g k i c k b a c k s ; and r e t e n t i o n of e b a t e s from Home epot and General E l e c t r i cfrom l a r g e p u r c h a s e s of a p p l i a n c es . ( I d . a t 8 8 - 1 0 3 ) . Judge Wilson opined r e g a r d i n g t h e s eimproper c h a r g e s , t h a t t w a s Zygi W i l f ' s obvious o p i n i o n t h a t he i s e n t i t l e d t o charge whateverhe wants o c h a r g e . ( T r . , A u g. 23, 2013, . 8 7 ) .

Judge Wilson's f i n d i n g s r e g a r d i n g each of t h e P l a i n t i f f ' s c l a i m s a r e summarized, a sf o l l o w s :

Judge Wilson r e j e c t e d l l of t h e Wilf Defendants' a f f i r m a t i v e d e f e n s e s . The c l a i m t h a t t h e WilfDefendants s h o u l d be p a i d because they performed v a l u a b l e s e r v i c e s f o r t h e p a r t n e r s h i p , c h a r a c t e r i z e d a s t h e o r e t i c a l and h y p o t h e t i c a l f e e s , w a s d e n i e d because t h e Wilf efendants a i l e d t o q u a n t i f y a n y suchf e e s , h e r e w a s no agreement r e g a r d i n g m a n a g e m e n t e e s , nor w e r e they e v e r d i s c u s s e d . Moreover, o s e fHalpern r a n t h e d a y - t o - d a y o p e r a t i o n of Rachel Gardens, not t h e W i l f s . ( T r . , A u g. 5 , 2013, pp. 8 8 - 9 0 ) .The c l a i m f o r i n t e r e s t on r e l a t e d- p a r t y l o a n s w a s d e n i e d because t h e r e w a s no agreement, no l o a ndocument, and i n t e r e s t w a s t a k e n o n r e l a t e d- p a r t y l o a n s t h a t w e r e n ' t r e a l l y r e l a t e d- p a r t y l o a n s . ( I d . a t9 2 - 9 3 ) .

141737.00601 22251319v.4


15/132

Uniform Partnership ActBreach of iduciary D u t y .Judge Wilson o p i n e d t h a t t h e number of r e a c h e s of i d u c i a r y d u t y i n t h i s c a s e a r e r e a l l y

q u i t e u n p r e c e d e n t e d .... ( T r . , A u g . , 013, . 8 ) . Th e Wilf e f e n d a n t s were i n c o n t r o l of h ep a r t n e r s h i p f u n d s , and t h e y had a i d u c i a r y duty t o u s e t h e a s s e t s of Rachel Gardens s o l e l y f o rt h e b e n e f i t of h e p a r t n e r s h i p and t s p a r t n e r s .... ( I d . a t 1 0 ) . However, h e W i l f s took u n d sfrom Rachel Gardens w i t h o u t a u t h o r i z a t i o n , w i t h o u t r a t i o n a l e , a t l e a s t w i t h o u t an a c c o u n t i n gr a t i o n a l e o r a i n a n c i a l r a t i o n a l e , o r d i s c l o s u r e . ( I d . ) .

Regarding t h e v i o l a t i o n s of h e Uniform P a r t n e r s h i p Act, which r e q u i r e s t h a t p a r t n e r s

r e c e i v e c e r t a i n i n f o r m a t i o n a b o u t t h e b u s i n e s s and a f f a i r s of h e p a r t n e r s h i p , Judge Wilson foundt h a t f i n a n c i a l s t a t e m e n t s were n e v e r p r o v i d e d t o J a r w i c k , and H a l p e r n s t o p p e d r e c e i v i n g t h em i n1989. ( T r . , Aug. 5 , 2013, p . 3 5 ) . Moreover, Judge Wilson o p i n e d t h a t s h e h a d not s e e n ones i n g l e f i n a n c i a l s t a t e m e n t t h a t r e f l e c t e d t h e t r u e and a c c u r a t e p o s i t i o n of h e p a r t n e r s h i p ....andt h a t i s a e r i o u s b r e a c h of i d u c i a r y d u t y . ( I d . a t 3 4 - 3 5 ) .Breach of o n t r a c t .$

There were s e v e r a l v a l i d and e n f o r c e a b l e c o n t r a c t s between P l a i n t i f f s and t h e WilfD e f e n d a n t s , and t h e W i l f s b r e a c h e d a l l of h o s e a g r e e m e n t s . T r . , Au g. , 2013, p . 3 9 - 4 0 ) .Judge Wilson found h a t :

At no time d i d J a r w i c i c r e c e i v e a n y t h i n g w i t h r e s p e c t t o i t s 25s h a r e , and I c o u l d not f i n d a y e a r a f t e r 1 9 9 0 i n which, b e l i e v e

gJudge Wilson r u l e d t h a t P l a i n t i f f s ' u n j u s t e n r i c h m e n t c l a i m d i d n o t a p p l y b e c a u s e t h e p a r t i e s e n t e r e di n t o b i n d i n g c o n t r a c t s , ( T r . , Aug. , 2013, t 4 6 : 1 1 - 2 0 ) .9i r s t , t h e r e w a s a a l i d handshake agreement n 1 9 8 4 w h er e e a c h Halpern w a s o r e c e i v e 2 5 p e r c e n tof h e p r o f i t s from t h e [ H a l w i l ] p a r t n e r s h i p . ( T r . , Aug. , 2013, . 3 9 ) . Two e a r s l a t e r t h a t agreementw a s committed t o w r i t i n g . ( I d . , p . 4 0 ) . Three y e a r s a f t e r t h a t , t h e P e r n w i l p a r t n e r s h i p agreement camei n t o e f f e c t , which d i d n o t i n c l u d e Ab e H a l p e r n , H a l w i l t h e n t r a n s f e r r e d i t s a s s e t s t o P e r n w i l . ( I d . ) .J a r w i c k l a t e r e n t e r e d i n t o a e t t e r agreement w i t h t h e W i l f s , which i n e f f e c t r e i n s t a t e d Ab e H a l p e r n ' s 2 5p e r c e n t i n t e r e s t i n Rachel G a r d e n s . ( I d . ) .

141737.00601 22251319v.4


16/132

1990 was t h e l a s t y e a r o r i t c o u l d have been 1989 i n which J o eHalpern r e c e i v e d h i s 25 h a r e . Th e c l e a r terms of h o s e v a l i dc o n t r a c t s were b r o k e n . They were not o n o r e d .

( I d . a t 4 0 - 4 1 ) . Not o n l y d i d t h e Wilf D e f e n d a n t s not d i s t r i b u t e p a r t n e r s h i p e a r n i n g s t o t h eP l a i n t i f f s , t h e y engaged i n numerous c c o u n t i n g schemes o h i d e t h o s e monies b y r e c l a s s i f y i n gand o b f u s c a t [ i n g ] t h e n a t u r e of what h e y were o make t a p p e a r t h e p a r t n e r s h i p simply hadm o r e e x p e n s e s i n t h e way of o n s t r u c t i on f e e s , i n t e r e s t on o a n s , repayment of o a n s , e t c . ( T r . ,Aug. , 013, p . 2 2 - 2 3 ) .

E s s e n t i a l l y , Zygi and h i s f a t h e r d e c i d e d , h i s f a t h e r J o s e p h W i l f , d e c i d e d t h a t t h e

Reichmann's had g o t t e n t o o good a d e a l . A n d so t h e y were s i m p l y n o t g o i n g t o honor t . ( T r . ,Aug. , 013, . 3 6 ) .Breach of he Covenant of Goo d F a i t h an d Fair D e a l i n g .

Judge Wilson h e l d t h a t t h e bad f a i t h r e q u i r e m e n t of l a i n t i f f s ' b r e a c h of h e c o v e n a n t ofgood f a i t h and f a i r d e a l i n g c l a i m was e v i d e n c e d b y [ t h e ] d e l i b e r a t e and i r r e s p o n s i b l e a t t i t u d et h a t y o u r p a r t n e r w i t h whom ou have a o n t r a c t i s n o t e n t i t l e d t o t h e b e n e f i t of h e i r b a r g a i n an dyou a r e e n t i t l e d t o more. ( T r . , Aug. 5, 2013, . 4 4 ) . I t was f u r t h e r d e m o n s t r a t e d b y t h e WilfD e f e n d a n t s ' s u b t e r f u g e i n t h e o b f u s c a t i o n and r e c l a s s i f i c a t i o n s [of p a r t n e r s h i p a c c o u n t i n ge n t r i e s ] , and e v a s i o n i n t h e c o n t i n u i n g f i n a n c i a l s t a t e m e n t s t h a t f a i l e d t o d i s c l o s e r e a l i t y . ( I d . a t4 6 ) .Fraud.l o

Judge Wilson h e l d t h a t t h e p r o m i s e s m a d e t o t h e P l a i n t i f f s were not k e p t by t h e WilfD e f e n d a n t s . ( I d . a t 4 8 ) . A n d n o t g i v i n g P l a i n t i f f s t h e i r due s p a r t n e r s was h e way t h e W i l f salways n t e n d e d t o run h e p a r t n e r s h i p . . . . ( I d . a t 4 9 ) .t o T h e Court d i d not a d d r e s s t h e e q u i t a b l e f r a u d c l a i m s because t h a t i s simply f r a u d w i t h o u t t h es c i e n t e r . ( T r . , Au g . , 2013, . 5 0 ) .

S 1 7

141737.00601122251319v.4


17/132


18/132


19/132

r e v e r s a l of h a t d e c i s i o n from any award of NJRICO damages, . e . June 1 4 , 2002 o December1 6 , 2006. ( I d . ) .P u n i t i v e D a ma g e s .

Judge Wilson found t h a t p u n i t i v e damages were w a r r a n t e d a g a i n s t D e f e n d a n t s Zyg m untW i l f , Mark W i l f , and Sydney Wilf a s e d upon h e i r c o n d u c t , which was:

n o t w i t h a r e c k l e s s , b u t a w i l l f u l d i s r e g a r d of t h e r i g h t s of t h ep a r t n e r s , J a r w i c k and J o s e f H a l p e r n , And i t w a s c l e a r l y n o tn e g l i g e n t . I t was n o t even g r o s s l y n e g l i g e n t . I t w a s g r o s s l yw i l l f u l . An d i t w a s done repeatedly.... And i f compensatorydamages a r e t o be t h e o n l y damages awarded i n t h i s c a s e , t h e nt h e r e i s a b s o l u t e l y no m o t i v a t i o n f o r any managing p a r t n e r t o run ap a r t n e r s h i p e q u i t a b l y b e c a u s e , i f somebody c a t c h e s h im o r h e r ,t h e y w i l l j u s t b r i n g them t o c o u r t and t h e n t h e y w i l l have t ocompensate w i t h no a d d i t i o n a l damage. So h e r e i s a e t e r r e n t oft h e f t t h a t i s a t t e n d a n t t o p u n i t i v e damages.

( T r , , Aug. 5, 2013, p . 7 7 - 7 8 ) . Judge Wilson c o n c l u d e d by o p i n i n g t h a t t h e e x t e n t t o which t h eW i l f s have so c l e a r l y v i o l a t e d . . . t h e i r ] o b l i g a t i o n of r u s t t o . . . t h e i r ] p a r t n e r s , t o me wassimply e x t r a o r d i n a r y . ( T r . , Aug. 26, 2013, . 7 0 ) .

P e r h a p s t h e f i n d i n g of Judge Wilson t h a t b e s t c a p t u r e s t h e e s s e n c e of h i s c a s e i s t h a tZygi was s i m p l y u s i n g P e r n w i l a s h i s o w n p e r s o n a l p i g g y bank, r t h e p i g g y bank of h e Wilfo r g a n i z a t i o n . ( T r . , Aug. 23, 2013, . 8 8 ) .

I I I . OVERVIEWOFTHEFEE PPLIC TIONSOn August 1 9 , 2013, c o u n s e l f o r H a l p e r n f i l e d an a p p l i c a t i o n fo r a t t o r n e y s ' f e e s and

c o s t s , p u r s u a n t t o N . J . . A . 2C:41 - 4 c and R. : 4 2 - 9 ( a ) ( 8 ) . Counsel f o r J a r w i c k f o l l o w e d w i t h i t sown p p l i c a t i o n f o r f e e s and c o s t s on August 23, 2013.

Although t h i s m a t t e r began w i t h t h e f i l i n g of a c o m p l a i n t by P l a i n t i f f s J a r w i c kDevelopments, n c . , and Ada Reichmann 21 y e a r s ago h i s p a s t September, h e i r f e e r e q u e s t o n l ygoes back o O c t o b e r 2007, w h e n h e y r e t a i n e d t h e i r c u r r e n t a t t o r n e y s . J a r w i c k i s r e p r e s e n t e d by

13141737.00601/22251319v.4


20/132

two law f i r m s : Neuberger, Quinn, G i e l e n , Rubin &G i b b e r , P.A. N e u b e r g e r ) , l o c a t e d i nB a l t i m o r e , Maryland, and Lowenstein S a n d l e r LLP L o w e n s t e i n ) , t h e i r l o c a l New J e r s e yc o u n s e l .

J a r w i c k s e e k s t h e t o t a l amount of 8 , 4 6 2 , 8 0 3 . 0 1 i n a t t o r n e y s ' f e e s and c o s t s , a s f o l l o w s :Fi r m Fees Disbursements Attorney Hrs. P a r a l e g a l Hrs.Neuberger $ 5 , 1 7 4 , 3 5 1 . 5 5 $ 4 1 8 , 9 8 9 . 3 6 1 4 , 2 4 7 . 5 0 3 , 8 5 5 . 7 0Lowenstein $ 2 , 7 4 0 , 2 5 2 . 1 2 $ 1 2 9 , 2 0 9 . 9 8 4 , 8 9 8 . 6 0 615.10

J a r w i c k d i d n o t i n c l u d e c e r t a i n c h a r g e s t h a t i t d e t e r m i n e d were u n r e l a t e d t o t h e c a s e , a sw e l l a s t h e f e e s and c o s t s of Cole S c h o t z , t h e law f i r m t h a t r e p r e s e n t e d i t i n t h i s m a t t e r from1992 t o 1 9 9 7 . 1 2oreover, t h e f e e s c h a r g e d b y Lowenstein a t t o r n e y s who b i l l e d l e s s t h a n$ 6 , 0 0 0 , and t h e f e e s c h a r g e d b y Neuberger a t t o r n e y s who b i l l e d l e s s t h a n 6,500 weree l i m i n a t e d . F i n a l l y , t h e f e e s c h a r g e d b y Michael Long, s q . , a a r t n e r a t L o w e n s t e i n , when hea t t e n d e d t r i l i n tandem w i t h h i s p a r t n e r , Michael Himmel, s q . , were l s o e x c l u d e d .

J a r w i c k i s s e e k i n g r e c o v e r y of t s c o s t s of n v e s t i g a t i o n and l i t i g a t i o n i n t h e t o t a l amountof 1 , 5 8 6 , 4 7 5 . 2 2 , a s f o l l o w s :J e f f r e y Barsky Accountant 1 , 2 1 8 , 5 9 0 . 0 9M a g n a Legal e r v i c e s E l e c t r o n i c Evidence r e s e n t a t i o n 1 7 6 , 3 2 4 . 6 8Bederson Company Court- a p p o i n t e d a c c o u n t a n t , 25 of228,000.00 a i d b y a r t n e r s h i p

5 7 , 0 0 0 . 0 0

Hon . H a r r i e t D e r m a n M e d i a t o r , 25 of $ 4 3 , 4 0 0 . 0 0 p a i d b yP a r t n e r s h i p

1 0 , 8 5 0 . 0 0

Hon . Robert M a r g u l i e s M e d i a t o r , 25 of $ 7 , 0 0 0 . 0 0 p a i d b y 1 , 7 5 0 . 0 0

1 2 Although Cole Schotz e p r e s e n t e d J a r w i c k on a o n t i n g e n t f e e b a s i s , t s t i l l m a i n t a i n e d h o u r l y b i l l i n gr e c o r d s showing t h a t t h e t o t a l of t s f e e s and c o s t s d e v o t e d t o t h i s m a t t e r amounted t o a p p r o x i m a t e l y$ 5 6 4 , 0 0 0 . ( G i e l e n C e r t . , 0 ) . J a r w i c k does o t s e e k t o r e c o v e r any e e s o r c o s t s f o r t h e work e r f o r m e db y Cole S c h o t z .

1 4141737.00601 22251319v.4


21/132

P a r t n e r s h i pL a u r i e Engemann Court e p o r t e rFor i n a l T r a n s c r i p t s 25 f 63,263.87 a i d by a r t n e r s h i p 1 5 , 8 1 5 . 9 7For Real-Time and Rough r a n s c r i p t s 49,609.12

P a t r i c i a Niemiec Court e p o r t e rFor i n a l T r a n s c r i p t s , 25 f 52,938.28 p a i d by a r t n e r s h i p 1 3 , 2 3 4 . 5 7For Real-Time and Rough r a n s c r i p t s 43,300.79

TOTALCOSTSOF NVESTIGATIONANDLITIGATION 1,5 86,475 .22J a r w i c k s p e c i f i c a l l y excluded from i t s c o s t s of n v e s t i g a t i o n and l i t i g a t i o n , monies i t

s p e n t on: ( i ) e x p e r t w i t n e s s e s i t r e t a i n e d , b u t d i d not c a l l t o t e s t i f y a t t r i a l and ( i i ) i t s f i r s tf o r e n s i c a c c o u n t a n t , a s f o l l o w s :Thomas l b e r t P o t e n t i a l e x p e r t w i t n e s s r e : T h e o r e t i c a l Fees 6 , 8 0 0 . 0 0Richard Chaiken Appraiser 45,000.00Wil liam Morrison Accountant o r i r s t t r i a l 1 7 7 , 7 9 3 . 5 8Dennis Roberts P o t e n t i a l r e b u t t a l e x p e r t r e : v a l u a t i o n 25,000.00Doris Topel Potential r e b u t t a l e x p e r t r e ; management f e e s andi n s u r a n c e c h a r g e s

5 , 0 0 0 . 0 0

TOTAL COSTS OFINVESTIGATION AND LITIGATION NOTINCLUDEDINTHISFEEAPPLICATION 259,593.58

P l a i n t i f f s Joseph Halpern and t h e J o s e f Halpern I r r e v o c a b l e T r u s t a r e r e p r e s e n t e d by h eL e b e n s f e l d Firm. Halpern i n c u r r e d a t o t a l amount of 5 , 2 0 1 , 0 8 1 i n a t t o r n e y s ' f e e s( 4 , 7 6 5 , 3 6 0 . 2 5 )13and c o s t s ( 435,720.75)14i n t h i s m a t t e r , a s t h e L e b e n s f e l d Firm worked more

1 3This t o t a l i s 36.15 l e s s than t h e amount s e t f o r t h i n Mr . L e b e n s f e l d ' s C e r t i f i c a t i o n , which wase v i d e n t l y m i s - c a l c u l a t e d . ( L e b e n s f e l d C e r t . , 4 ) .

1 51 4 1 7 .00601 22251319v.4


22/132

t h a n 1 1 , 7 0 0 h o u r s . H a l p e r n d e d u c t e d $100,000 from t h i s t o t a l i n h i s f e e r e q u e s t t o a c c o u n t f o r m a t t e r s not d i r e c t l y r e l a t e d t o t h e l i t i g a t i o n a g a i n s t t h e Wilf d e f e n d a n t s . ( L e b e n s f e l d C e r t . , 5 6 ) .

I n o r a b o u t October 2010, Halpern was a p p a r e n t l y n o l o n g e r i n a p o s i t i o n t o c o n t i n u e t op a y t h e L e b e n s f e l d Firm on a n h o u r l y b a s i s . I n o r d e r t o m ov e f o r w a r d w i t h t h e c a s e , t h eL e b e n s f e l d Firm a g r e e d t o change t h e t e r m s of t s r e p r e s e n t a t i o n t o a c o n t i n g e n t f e e engagement,i n c u r r i n g mor e t h a n $ 3 . 4 m i l l i o n i n f e e s t h e r e a f t e r . H a l p e r n i s s e e k i n g a 25 o n t i n g e n c y f e ee nh a n c emen t n l i g h t of h e r i s k s t h e L e b e n s f e l d Firm took i n c o n t i n u i n g t o r e p r e s e n t h i m a f t e r

h e c o u l d n o l o n g e r a f f o r d i t s f e e s on a n h o u r l y b a s i s . ( I d . a t 1 1 - 1 3 .Th e Wilf e f e n d a n t s oppose t h e s e f e e a p p l i c a t i o n s on a n u m b e r of r o u n d s . T h e i r m a i n

o b j e c t i o n i s t h a t P l a i n t i f f s d i d not c u l l b i l l i n g e n t r i e s t h a t do n o t s p e c i f i c a l l y r e l a t e t o t h e i rNJRICO c l a i m s from t h e i r a p p l i c a t i o n s . Th e Wilf e f e n d a n t s a l s o oppose t h e f e e a p p l i c a t i o n s a su n r e a s o n a b l e b a s e d upon P l a i n t i f f s ' a t t o r n e y s ' u s e of l o c k - b i l l i n g , a nd t h e y p o i n t t o examplesof i l l i n g e n t r i e s t h a t t h e y d e e m t o b e e x c e s s i v e and d u p l i c a t i v e . As a r a s t h e r e a s o n a b l e n e s s ofP l a i n t i f f s ' a t t o r n e y s ' b i l l i n g r a t e s , t h e Wilf D e f e n d a n t s r a i s e v a r i o u s o b j e c t i o n s t o t h eC e r t i f i c a t i o n of Edward Dauber, E s q . , b u t o n l y d i r e c t l y c h a l l e n g e t h e h o u r l y r a t e s of MichaelH i m m e l , s q . , and h i s p a r a l e g a l , E l i z a b e t h E s p o s i t o . (Wilf O p p . B r . a t 42-43; Wilf Sur- R e p l yB r . a t 3 - 4 ) . T h e Wilf D e f e n d a n t s a l s o s e e k t h e e x c l u s i o n of [ a ] n y and a l l e x c e s s e x p e n s ei n c u r r e d a s a r e s u l t of J a r w i c k ' s d e c i s i o n t o u s e B a l t i m o r e c o u n s e l and a B a l t i m o r e f o r e n s i c

a c c o u n t a n t , i n c l u d i n g t h e c o s t s i n c u r r e d i n h i r i n g Lowenstein a s l o c a l c o u n s e l . (Wilf O p p . r . ,p . 3 8 ) . F i n a l l y , t h e Wilf e f e n d a n t s a r g u e t h a t : ( i ) t h e e l e c t i o n of a p u n i t i v e dama ges remedy

l a I n h i s moving p a p e r s , Halpern s o u g h t $ 4 4 8 , 8 3 8 . 2 4 i n c o s t s . I n h i s r e p l y b r i e f , however, H a l p e r nacknowledged t h a t two c o s t i t e m s (hockey t i c k e t s - $355; b a n k s e r v i c e c h a r g e s 1 2 , 7 6 2 . 4 9 ) h o u l d n o thave been i n c l u d e d i n i t s f e e a p p l i c a t i o n .

16141737.00601 22251319v.4


23/132

p r e c l u d e s any award of t t o r n e y s ' f e e s under NJRICO; and i i ) Halpern i s not e n t i t l e d t o a e eenhancement because t h i s wa s not t h e t y p e of c a s e t h a t w a r r a n t s such a w i n d f a l l and t h ep u n i t i v e damages awarded o Halpern should b e d e em ed a s enough. I d . 4 7 ) .

IV. PLAINTIFFSSHOULDRECOVERTHEATTORNEYS' EESANDCOSTSINCURREDINLITIGATINGTHEIRNON-RICOCLAIMS, HEIR

UNSUCCESSFUL NJRICO CLAIMS, NDTHEIRCLAIMSAGAINSTTHEACCOUNTANTDEFENDANTS

Before t u r n i n g t o t h e s p e c i f i c f e e a p p l i c a t i o n s , I w i l l a d d r e s s t h e Wilf Defendants'arguments t h a t J a r w i c k and Halpern m u s t e x c l u d e from t h e i r l o d e s t a r c a l c u l a t i o n s t h e a t t o r n e y s '

f e e s and c o s t s t h a t they i n c u r r e d i n l i t i g a t i n g : ( i ) P l a i n t i f f s ' non-RICO c l a i m s ; ( i i ) P l a i n t i f f s ' u n s u c c e s s f u l NJRICO claimsnamely, l l NJRICO l a i m s a c c r u i n g b e f o r e J a n u a r y 1 , 2000and J a r w i c k ' s NJRICO l a i m s a c c r u i n g betwee n June 14, 2002 and D e c e m b e r 15, 2006; and i i i )P l a i n t i f f s ' c l a i m s a g a i n s t t h e s e t t l i n g Accountant D e f e n d a n t s . I t i s a p p r o p r i a t e t o a d d r e s s t h e s earguments a t t h e o u t s e t because they a p p l y t o t h e f e e a p p l i c a t i o n s of o t h J a r w i c k and H a l p e r n .For t h e r e a s o n s s e t f o r t h below, I recommend t h a t none of h e s e c a t e g o r i e s of e e s b e excludedfrom l a i n t i f f s ' l o d e s t a r c a l c u l a t i o n s .A. Governing- L e g a l Standards

The law s w e l l s e t t l e d t h a t w h e n a p l a i n t i f f p r e s e n t s d i s t i n c t l y d i f f e r e n t c l a i m s f o r r e l i e ft h a t a r e based on d i f f e r e n t f a c t s and l e g a l t h e o r i e s . . . no f e e should b e awarded f o r s e r v i c e s ont h e u n s u c c e s s f u l c l a i m s . Hensley . E c k e r h a r t , 4 6 1 U.S. 424, 34-35 1983); Lerman v . JoyceI n t l , I n c . , 1 0 F.3d 106, 1 1 4 ( 3 d C i r . 1 9 9 3 ) . However, s h e r e , w h e n a p l a i n t i f f p r e v a i l s on ac l a i m t h a t p r o v i d e s f o r f e e s h i f t i n g , he o r she can a l s o r e c o v e r t h e a t t o r n e y s ' f e e s and c o s t si n c u r r e d i n l i t i g a t i n g a l l r e l a t e d c l a i m s t h a t i n v o l v e d a common o r e of a c t s o r were based on r e l a t e d l e g a l t h e o r i e s . Hensley, 4 6 1 U.S. a t 435; Northeast W om en ' s C t r . v . McMonagle, 8 8 9F.2d 466, 76-77 3d C i r . 1 9 8 9 ) .

1 7141737.00601 22251319x.4


24/132

The United S t a t e s Supreme Court has u l e d t h a t , when a l a i n t i f f a s s e r t s m u l t i p l e , r e l a t e dc l a i m s i n a i n g l e l a w s u i t :

Much of o u n s e l ' s time w i l l be devoted g e n e r a l l y t o t h e l i t i g a t i o na s a whole, making t d i f f i c u l t t o d i v i d e t h e hours expended o n ac l a i m -by- c l a i m b a s i s . Such a a w s u i t cannot be viewed a s a e r i e sof i s c r e t e c l a i m s . I n s t e a d t h e d i s t r i c t c o u r t should focus o n t h es i g n i f i c a n c e of h e o v e r a l l r e l i e f o b t a i n e d by h e p l a i n t i f f n r e l a t i o nt o t h e hours e a s o n a b l y expended o n h e l i t i g a t i o n .Where a p l a i n t i f f ha s o b t ~ r i n e c l e x c e l l e n t r e s u l t s , h i s a t t o r n e yshould r e c o v e r ~ f u l l y compensatory fee. N o r m n c l l y t h i s t i v i l lencomp~rss a l l hours r e a s o n a b l y expended o n t l a e l i t i g a t i o n , a n dindeed i n s o me c a s e s of x c e p t i o n a l s u c c e s s a n enhanced awardm a y be u s t i f i e d . In t h e s e c i r c u m s t a n c e s , t h e f e e award should notbe reduced simply because t h e p l a i n t i f f f a i l e d t o p r e v a i l o n everyc o n t e n t i o n r a i s e d i n t h e l a w s u i t .

Hensley, 61 U.S. t 435 emphasis d d e d ) .New e r s e y c o u r t s have ad optedan d o u t i n e l y applyth ensley a n a l y s i s . I n S i l v a v .

Autos ofAmboy, n c . , 267 . J . S u p e r . 546, 558 App. i v. 9 9 3 ) , p l a i n t i f f a s s e r t e d a New e r s e yCon sumer Fraud A c t ( NJCFA ) c l a i m , an d s i x r e l a t e d common law an d s t a t u t o r y c l a i m s ,

a g a i n s t d e f e n d a n t s based upon h e i r a l l e g e d l y d e c e p t i v e p r a c t i c e s i n c o n n e c t i o n w i t h p l a i n t i f f ' sp u r c h a s e a n d i n a n c i n g of a r . A t r i a l t h e p l a i n t i f f p r e v a i l e d o n only h e r NJCFA l a i m . Thet r i a l c o u r t awarded p l a i n t i f f a t t o r n e y s ' f e e s a n d c o s t s p u r s u a n t t o t h e NJCFA ut d i v i d e d t h el o d e s t a r a m ou n t by seven because l a i n t i f f p r e v a i l e d o n only one of e r seven l a i m s .

The A p p e l l a t e D i v i s i o n r e v e r s e d a n d r u l e d t h a t p l a i n t i f f c o u l d r e c o v e r f o r time s p e n tl i t i g a t i n g h e r u n s u c c e s s f u l c l a i m s because they were u f f i c i e n t l y r e l a t e d t o h e r NJCFA l a i m :

[T]he r i a l judge e r r e d i n d i v i d i n g t h e l o d e s t a r f i g u r e by s e v e n ,r e p r e s e n t i n g t h e number of c o u n t s i n p l a i n t i f f ' s c o m p l a i n t . Thecounts shared a common cope o f o p e r a t i v e facts a n d werebottomed o n r e l a t e d l e g a l t / t e o r i e s . . . . Our review of o u n s e l ' sc e r t i f i c a t i o n s a t i s f i e d us t h a t much, f not a l l of h e p r e t r i a l timeexpended by o u n s e l i n v o l v e d t h e consumer r a u d a n d o v e r l a p p i n gc l a i m s .

181 4 1 ' 7 3 7 . 0 0 6 0 1 l 2 2 2 5 1 3 1 9 v . 4


25/132

267 N . J . S u p e r . a t 559 (emphasis a d d e d ) . See a l s o S i n g e r v . S t a t e , 95 N . J . 487, 500 (1984)( r e l y i n g on Hensley and r u l i ng t h a t a p r e v a i l i n g p l a i n t i f f can r e c o v e r f e e s i n c u r r e d i n l i t i g a t i n gu n s u c c e s s f u l c l a i m s t h a t a r e r e l a t e d t o t h e s u c c e s s f u l c l a i m s , e i t h e r by a `common o r e of a c t s 'o r ` r e l a t e d l e g a l t h e o r i e s, ' so l o n g a s t h e r e s u l t s o b t a i n e d a r e f u l l y e f f e c t iv e i n v i n d i c a t i n gp l a i n t i f f ' s r i g h t s c i t a t i o n o m i t t e d ) ) ; DeP al m a . B l d g . I n s p e c t i o n U n d e r w r i t e r s , 350 . J . S u p e r .195, 218-19 (App. Div. 2002) r u l i n g t h a t t r i a l c o u r t p r o p e r l y awarded f e e s f o r t i m e s p e n tl i t i g a t i n g s u c c e s s f u l and u n s u c c e s s f u l c l a i m s b e c a u s e a l l of h e c l a i m s p r e s e n t e d t o t h e j u r y ..were a s e d on a c o m m o n e t of a c t s and c o m m o n r o o f s ) .

As e x p l a i n e d below, b a s e d upon t h e s e s t a n d a r d s , I r e c o m m end t h a t P l a i n t i f f s bep e r m i t t e d t o r e c o v e r t h e a t t o r n e y s ' f e e s and c o s t s t h a t t h e y i n c u r r e d i n l i t i g a t i n g : ( i ) t h e i r non-RICO l a i m s ; i i ) t h e i r u n s u c c e s s f u l NJRICO c l a i m s ; and i i i ) t h e i r c l a i m s a g a i n s t t h e s e t t l i n gAccountant D e f e n d a n t s . A l l of t h e s e c l a i m s were i n e x t r i c a b l y i n t e r t w i n e d w i t h P l a i n t i f f s 's u c c e s s f u l NJRICO l a i m s , and l a i n t i f f s were overwhelmingly u c c e s s f u l a t r i a l .

B. P l a i n t i f f s Should Recover the A t t o r n e y s ' . Fees an d Costs Incurred In L i t i g a t i n gTheir NonRICO Claims1 . A l l of l a i n t i f f s ' Claims W e r e Based Upon the S a m e FactsT h e Wilf e f e n d a n t s a r g u e t h a t m a n y f n o t most of h e i s s u e s and c l a i m s i n t h i s l a w s u i t

were s e p a r a t e and d i s t i n c t from h e RICO l a i m s . (Wilf Opp. r . a t 3 5 ) . According o t h e WilfD e f e n d a n t s , P l a i n t i f f s ' NJRICO and non-RICO c l a i m s were c l e a r l y u n r e l a t e d b e c a u s e P l a i n t i f f s a d d r e s s e d a l l of h e s e c l a i m s s e p a r a t e l y i n t h e i r r e s p e c t i v e c l o s i n g s , and h e Court d d r e s s e d a l lof h e s e c l a i m s s e p a r a t e l y i n i t s d e c i s i o n . ( I d . a t 3 5 - 3 6 ) . Howev er, l a i n t i f f s ' NJRICO c l a i m s ,and t h e i r non-RICO c l a i m s ( b r e a c h of i d u c i a r y d u t y , v i o l a t i o n of h e Uniform P a r t n e r s h i p A c t ,b r e a c h of c o n t r a c t , b r e a c h of t h e i m p l i e d c o v e n a n t of good f a i t h and f a i r d e a l i n g , f r a u d ,c o n v e r s i o n , and c i v i l c o n s p i r a c y ) , were a l l b a s e d upon t h e s a m e u n d e r l y i n g f a c t s : t h e Wilf

1914173 .00601 22251319x.4


26/132

Defendants' m i s a p p r o p r i a t i o n of a r t n e r s h i p funds a n d i s s u a n c e of a l s e f i n a n c i a l documents t oconceal h e i r wrongdoing.

P r i o r t o opposing t h e P l a i n t i f f s ' f e e a p p l i c a t i o n s , throughout t h i s l i t i g a t i o n , t h e WilfDefendants acknowledged t h a t l l of l a i n t i f f s ' claims a r e based upon t h e s a m e u n d e r l y i n g f a c t s .In t h e Wilf Defendants' b r i e f i n support of t h e i r motion f o r p a r t i a l s um m a ry judgment, d a t e dNovember 19, 2010, h e Wilf efendants s t a t e d :

Th e claims of f r a u d , v i o l a t i o n of New e r s e y C i v i l RICO ndc i v i l c o n s p i r a c y which p l a i n t i f f s have sought o i n s e r t i n t o t h i s c a s et o r e i l l b a s e d u po n the premise t h a t t h e Wilf d e f e n d a n t s f r a u d u l e n t l y maintained P e r n w i l ' s books and r e c o r d s , and f r a u d u l e n t l y i s s u e d f i n a n c i a l s t a t e m e n t s , which i n v a r i o u s waysf a i l s t o a c c u r a t e l y r e f l e c t moneys which were being paid t o t h eWilfs whether i n t h e form of m a n a g e m e n t f e e s , d i s t r i b u t i o n s , o rsupposedly i n f l a t e d payments f o r i n s u r a n c e , p a y r o l l , o r o t h e ri t e m s .

(Reply C e r t i f i c a t i o n of Ala n M. e b e n s f e l d , E s q . , dated October 21, 2013 ( Lebensfeld R ep lyC e r t . ) , Ex. 19) emphasis a d d e d ) .

Almos t t h r e e y e a r s l a t e r , i n t h e i r b r i e f a d d r e s s i n g t h e a mo u n t of u n i t i v e d ama g e s t o b eawarded, t h e Wilf Defendants a g a i n recognized t h a t P l a i n t i f f s ' claims a r e a l l based upon t h es a m e u n d e r l y i n g f a c t s :

[E]very b ad a c t of which t h e Wilfs a r e accused i s a l l e g e d t oc o n s t i t u t e a RICO r e d i c a t e a c t . Ho w ev e r the W i l f s ' su p posedmisconduct i s c l z a r a c t e r i z e ~ l , i t u l t i m a t e l y c o n s i s t s of c s i n g l e s e tof a c t i o n s - - m a k i n g payme n t s t o themselves or ~ e l ~ c t e d e n t i t i e sout of the partnership which shou ld t a a v e r ema i n e d t o bed i s t r i b u t e d t o the a r t n e r s . ~Yo m ~ c t t e r I z o 3 v many i f f e r e n t l a b e l saye placed on t l e i d e n t i c a l conduct, the Court l e a s f o u n d s uchconduct o c o n s t i t u t e RICO r e d i c a t e a c t s .

(M e m o r a n d u m of Law on Behalf of Wilf Defendants with Respect t o Qua n t um of P u n i t i v eDamage w a r d , t p . 32) emphasis a d d e d ) .

2 014173 .00601 22251319v.4


27/132

At r i a l P l a i n t i f f s r e l i e d upon h e same v i d e n c e t o p r o v e t h e i r non-RICO c l a i m s a s t h e yused o p r o v e t h e i r NJRICO l a i m s . Judge Wilson made h e f o l l o w i n g f a c t u a l f i n d i n g s i n r u l i n gt h a t t h e Wilf e f e n d a n t s were i a b l e t o P l a i n t i f f s under NJRICO:

The W i l f s were e n t r u s t e d w i t h t h e p a r t n e r s h i p funds p u r s u a n t t o t h ea g r e e m e n t s t h a t ...Harry Wilf made w i t h J o e Halpern and w i t h J a r w i c k .A n d though t h a t agreement s h o u l d have been f o l l o w e d b y t h e W i l f s ) , t h e yhad o know h a t i t was h e i r l e g a l o b l i g a t i o n t o d o o . An d h e y simply a i l e dt o d o t . . . . [T]he W i l f s u s e d t h e p a r t n e r s h i p p r o p e r t y a s t h e i r own. ( T r . ,Aug. , 013, t 8 2 : 4 - 2 1 ) ;

The Wilf e f e n d a n t s i m p r o p e r l y c h a r a c t e r i z e d d i s t r i b u t i o n s a s managementf e e s on P e r n w i l ' s books and r e c o r d s ( i d . a t 7 3 : 1 4 - 1 5 ) ; made r e n t a lpayments o e n t i t i e s t h a t had no c o n n e c t i o n t o P e r n w i l ( i d . a t 7 6 : 8 - 2 1 ) ; made i n t e r e s t payments on o a n s t o e n t i t i e s from whom o o a n had been taken( i d . a t 7 7 : 3 - 2 2 ) ; made a c o m p l e t e l y i n a c c u r a t e c l a i m t h a t P e r n w i l owed h eW i l f s m i l l i o n s of o l l a r s i n i n t e r e s t on a o a n ( i d , a t 7 7 : 3 - 1 4 ) ; removed fundsfrom h e p a r t n e r s h i p t o pay s a l a r i e s and bonuses o p e r s o n n e l w h o i d l i t t l eand i n many n s t a n c e s , no work f o r Rachel Gar dens i d . a t 7 9 : 1 2 - 1 6 ) ; andp o c k e t e d a d v e r t i s i n g d i s c o u n t s t h a t t h e p a r t n e r s h i p r e c e i v e d from newspapersand magazines i d . a t 8 0 : 2 - 2 2 ) ;

While c h e a t i n g t h e P l a i n t i f f s o u t of m i l l i o n s of d o l l a r s , Zygi Wilf r e i n f o r c e [ d ] a f a l s e i m p r e s s i o n t h a t he .and t h e o t h e r W i l f s weret r u s t w o r t h y . ( I d . a t 8 7 : 6 - 8 ) . In f a c t , [m]any of h e checks w r i t t e n t o J o eHalpern i n d i c a t e d t h a t he was e c e i v i n g 25 f h e d i s t r i b u t i o n s . . . . Thatn o t a t i o n was b v i o u s l y meant o r e i n f o r c e J o e H a l p e r n ' s f a l s e i m p r e s s i o n t h a the was, n f a c t , r e c e i v i n g 25 e r c e n t of h e d i s t r i b u t i o n s , p r o f i t s . ( I d . a t 8 7 ; 9 -1 6 ) ; and

The Wilf e f e n d a n t s c o n c e a l e d t h e i r f r a u d u l e n t and d e c e p t i v e p r a c t i c e s fromP l a i n t i f f s b y s s u i n g f a l s e f i n a n c i a l s t a t e m e n t s , income t a x r e t u r n s , and s t a t ep a y r o l l f o r m s . ( I d . a t 7 4 : 5 - 7 , 9 2 : 7 - 1 5 ) .

These same a c t u a l f i n d i n g s formed t h e b a s i s f o r Judge W i l s o n ' s d e t e r m i n a t i o n t h a t t h e

Wilf e f e n d a n t s were i a b l e on each of l a i n t i f f s ' nonRICO l a i m s : Breach of F i d u c i a r y Duty: I d o n o t b e l i e v e t h a t I have s e e n one s i n g l e

f i n a n c i a l s t a t e m e n t t h a t r e f l e c t e d t h e t r u e and a c c u r a t e p o s i t i o n of t h ep a r t n e r s h i p , P e r n w i l o r H a l w i l i n t h i s c a s e . An d h a t i s a e r i o u s b r e a c h off i d u c i a r y d u t y . I'm a l s o f i n d i n g t h a t t h e f i n a n c i a l s t a t e m e n t s were n o t g i v e na f t e r 1989 t o J o s e f H a l p e r n , and of c o u r s e i t i s u n d i s p u t e d t h a t t h e y were

2114173 .00601122251319 . 4


28/132


29/132

C i v i l ConspiracX: The Wilf Defendants committed t h e unlawful a c t s t o g e t h e r by c o n s e n t , a n d w he n t h e e n t i t y i s engaging i n improper conduct,t h e l i a b i l i t y f o r t h e improper conduct s p r e a d s t o a l l o f h o s e who onsent t o i tunder the c i v i l c o n s p i r a c y t h e o r y . ( I d . a t 5 3 : 1 8 - 5 4 : 7 ) ,l s

Indeed, Judge Wilson e x p r e s s l y s t a t e d , d u r i n g o r a l argument o n t h e Wilf Defendants'm o t i o n t o d i s m i s s , t h a t P l a i n t i f f s ' NJRI O claims a n d n o n-RICO claims were based u p o n t h es a me p r o o f s :

[E]ven i f RI O ere not p a n t o f h i s case a nd never had been a p a r to f h i s c a s e , never w a s going t o be a p a r t o f h i s c a s e , we t i l l havethe s a m e r o o f s . . . . I ' m saying / i a t o n ce the Appellate D i v i s i o ndecided that we had o have a n a c c o u n t i ~ z g , t r e a l l y d i d n ' t m u t e rt i v h c ~ t the causes o f c t i o n were. The roofs were the s a me.

( T r . , O c t . 25, 2012, t 71:13-75:07) emphasis added).This c a s e i s s i m i l a r t o t h e Third C i r c u i t Court o f Appeals' e c i s i o n i n Northeast W o me n ' s

C t r . v McMon agle, 889 F,2d 466 3 d C i r . 1989). In t h a t c a s e , p l a i n t i f f W o m e n ' s Center a s s e r t e da F e d e r a l RI O claim, a n d r e l a t e d s t a t e l a w c l a i m s , a g a i n s t defendant a n t i- a b o r t i o n p r o t e s t o r s ,based o n m u l t i p l e i n s t a n c e s i n which d e f e n d a n t s u n l a w f u l l y e n t e r e d p l a i n t i f f ' s premises t o s t a g ep r o t e s t s a n d h a r a s s p a t i e n t s . Before r i a l s e v e r a l o f l a i n t i f f ' s n o n-RICO claims were dismissedo n s u m m a r y judgment, o r v o l u n t a r i l y withdrawn. A f t e r t r i a l t h e j u r y fou nd m a n y o f t h ed e f e n d a n t s l i a b l e under RI O r i t h e a m o u n t o f $887 t r e b l e d t o $2,661), a nd o n p l a i n t i f f ' s s t a t el a w t r e s p a s s claim i n t h e a m o u n t o f $42,087.95. The D i s t r i c t Court aw a rded p l a i n t i f f $64,946.11

1 5 P l a i n t i f f s a l s o a s s e r t e d u n j u s t e m i c h m e n t and e q u i t a b l e f r a u d c l a i m s a g a i n s t t h e Wilf D e f e n d a n t s .J u d g e Wilson r u l e d t h a t P l a i n t i f f s ' u n j u s t e n r i c h m e n t c l a i m d i d n o t a p p l y b e c a u s e t h e p a r t i e s e n t e r e d i n t ob i n d i n g c o n t r a c t s ( T r . , A u g . 5 , 2013, a t 4 6 : 1 1 - 2 0 ) , and d e c l i n e d t o a d d r e s s P l a i n t i f f s ' e q u i t a b l e f r a u dc l a i m b e c a u s e s h e found i n P l a i n t i f f s ' f a v o r o n t h e i r l e g a l f r a u d c l a i m ( i d . a t 5 0 : 2 1 - 2 5 ) . P l a i n t i f f s ' f e eaward s h o u l d n o t b e r e d u c e d b a s e d u p o n t h e s e c l a i m s , See H e n s l e y , 461 U.S. t 435 L i t i g a n t s i n goodf a i t h may r a i s e a l t e r n a t i v e g r o u n d s f o r a d e s i r e d outcome, n d t h e c o u r t ' s r e j e c t i o n of r f a i l u r e t o r e a c hc e r t a i n g r o u n d s i s n o t a s u f f i c i e n t r e a s o n f o r r e d u c i n g a f e e . The r e s u l t i s what a t t e r s , ) .

2 3141737.00601 22251319v.4


30/132

i n a t t o r n e y s ' f e e s and c o s t s under RICO, f t e r excluding $22,264.35 f o r f e e s t h a t were r e l a t e de x c l u s i v e l y o p l a i n t i f f ' s non-RICO c l a i m s . I d . a t 469-70,

On p p e a l , d e f e n d a n t s argued t h a t t h e D i s t r i c t Court improperly f a i l e d t o exclude a l l oft h e time t h a t p l a i n t i f f s p e n t l i t i g a t i n g i t s non-RICO c l a i m s . 889 F.2d a t 470-71. The ThirdC i r c u i t Court of Appeals r e j e c t e d t h a t argument and held t h a t the i n t e r r e l a t e d n e s s of t h ep l a i n t i f f ' s claims m a d e u r t h e r d e d u c t i o n s unwarranted :

The [ d i s t r i c t ] c o u r t found t h a t t h e RICO claims and t h e pendentt r e s p a s s . . . c l a i m s m a d e u p t h e bulk of h e l i t i g a t i o n ; t h a t thet r e s p a s s a n d RICO laims were r o v e ~ z by the s a m e evidence; andt h a t m u c h of o u n s e l ' s time was devoted t o t h e development of h eevidence and h e l i t i g a t i o n a s a whole. . .In c a s e s i n which t h e p l a i n t i f f ' s s u c c e s s f u l and u n s u c c e s s f u l claimsi n v o l v e a common ore of a c t s o r r e l a t e d l e g a l t h e o r i e s , o r wherem u c h of o u n s e l ' s time i s d e d i c a t e d t o t h e l i t i g a t i o n as a whole, ti s o f t e n i m p o s s i b l e t o d i v i d e c o u n s e l ' s time on a p r e c i s e claim-by-claim b a s i s . Here, f t e r making s u b s t a n t i a l d e d u c t i o n s i n t h e hoursclaimed r e l a t i n g t o non-RICO claims and determining t h a t t h ei n t e r r e l a t e d n e s s of t h e p l a i n t i f f ' s claims m a d e f u r t h e r d e d u c t i o n sunwarranted, t h e c o u r t found t h a t t h e remaining hours werer e a s o n a b l e i n l i g h t of the n a t u r e and complexity of h e p l a i n t i f f ' sRICO c l a i m . Our review of t h e r e c o r d provides no b a s i s f o rs e t t i n g a s i d e t h e f i n d i n g s of he r i a l c o u r t .

I d . a t 476-77 i n t e r n a l q u o t a t i o n s and c i t a t i o n s omitted) emphasis added).In t h i s c a s e as i n Northeast Women's C e n t e r P l a i n t i f f s ' non-RICO claims p l a i n l y

s h a r e d a common core of f a c t s with t h e i r RICO c l a i m s , and were based on r e l a t e d l e g a lt h e o r i e s . Hensley, 4 6 1 U.S. t 4 3 5 ; Northeast Women's C t r . , 889 F.2d a t 476-77. I agree with

Halpern's c o n t e n t i o n t h a t [ v ] i r t u a l l y every i s s u e p r e s e n t e d a t t r i a l r e g a r d l e s s of t s u n d e r l y i n gl e g a l t h e o r y , r e q u i r e d t h e Court t o c o n s i d e r and a n a l y z e t h e i d e n t i c a l f a c t s and t h e i d e n t i c a ldocuments. (Halpern Mov i n g Br. a t 1 8 ) . Moreover, t h e r e c o r d demonstrates t h a t m u c h ofP l a i n t i f f s ' c o u n s e l ' s time was devoted t o t h e development of h e evidence and t h e l i t i g a t i o n as a

2 414 173 .0060 2225 3 9v .4


31/132

whole, N o r t h e a s t Women's C t r . , 889 F.2d a t 477, and t h a t P l a i n t i f f s a c h i e v e d overwhelmings u c c e s s a t trialan awar d of p p r o x i m a t e l y $34 m i l l i o n o n t h e i r NJRI O l a i m s . See H e n s l e y ,461 U.S. a t 435 ( W h e r e a p l a i n t i f f has o b t a i n e d e x c e l l e n t r e s u l t s , h i s a t t o r n e y should r e c o v e r af u l l y compensatory e e . ) .

2. Th e Fact that NJRI O Was o t Alleged Until October of 2009 s I r r e l e v a n tThe Wilf Defendants a r g u e t h a t J a r w i c k s h o u l d not be p e r m i t t e d t o r e c o v e r t h e f e e s

i n c u r r e d by h e Lowenstein Firm, h e Neuberger Firm, r Mr . Barsky b e f o r e October 2009 w h e nt h e i r s t RI O c l a i m s wer e a l l e g e d ) . (Wilf Op p . Br. a t 30; Wilf Sur-Reply Br. a t 5 - 6 ) .

According t o t h e Wilf D e f e n d a n t s , the v e r y i r s t r e f e r e n c e t o RI O i n t h e Neuberger Firm'sb i l l s ] w a s September 29, 2009, h u s , [ i ] t i s d i f f i c u l t t o t a k e s e r i o u s l y any c o n t e n t i o n t h a t RI Oc l a i m s wer e b e i n g pursued b e f o r e t h a t . ( I d . a t 3 0 - 3 1 ) . B u t between October 200716andOctober 2009, J a r w i c k ' s c o u n s e l w as i n v e s t i g a t i n g t h e conduct t h a t u l t i m a t e l y formed t h e b a s i so f t s NJRI O l a i m s , and l i t i g a t i n g i t s common aw c l a i m s , whi c h wer e n e x t r i c a b l y i n t e r t w i n e dwith i t s NJRI O l a i m s . See H e n s l e y , 461 U .S . a t 435; N o r t h e a s t Women's C t r . , 889 F.2d a t476-77. Thus, r e j e c t t h e Wilf Defendants' argument h a t J a r w i c k cannot r e c o v e r t h e f e e s t h a t ti n c u r r e d b e f o r e t a s s e r t e d i t s NJRI O l a i m s .

3 . Th e Forensic Accounting I n v e s t i g a t i o n Was elated t o P l a i n t i f f s ' NJRI OClaims

The Wilf Defendants a r g u e t h a t a l l of h e w o r k t h a t Mr. Barsky d i d , i k e t h e w o r k whi c hMr . Morrison d i d , w as simply a c c o u n t i n g r e l a t e d . (Wilf Op p . Br. a t 3 1 ) . However, a l t h o u g hJ a r w i c k r e t a i n e d Mr. Barsky b e f o r e i t a s s e r t e d i t s NJRI O c l a i m s , h i s w o r k w as e s s e n t i a l t op r o v i n g J a r w i c k ' s NJRI O c l a i m s . I n d e e d , Judge Wilson has s t a t e d t h a t t h e a c c o u n t i n g had e v e r y t h i n g t o d o with RICO :16 J a r w i c k ' s f e e r e q u e s t o n l y g o e s b a c k t o O c t o b e r 2 0 0 7 .

2 514173 .00601 22251319v.4


32/132

MR GURYAN: The conduct, some o f t h e conduct, may ber e l a t e d t o RICO. B u t h e a c c o u n t i n g g e n e r a l l y has nothing t o d owith RICO.

THE COURT: P l e a s e , s t o p . S t o p . The accounting ha se v e r y t h i n g t o t l o w i t h RICO. Because without a n a c c o u n t i n g o fwh a t happened o the money, heRICO l ~ c i m e ~ l causes o f c t i o ncould not be proven. So he accounting w as kin d o f he sine q u ~ cn o n , he l t ~ e s l i o l d i s s u e / s e r e . . . .

THECOURT: T J l i e c o n d u c t c a n n o t be proven without a na c c o u n t o f he monies t h a t were taken, because the monies thatwere taken was l a e essence o f he misconduct. e a n , on'tk n o w laow t o say t I t i s so b v i o u s . I t i sjust b v i o u s .

( T r . , Aug. 9, 013, t 15:11-16:14) emphasis d d e d ) .4. All of he Moti o ns that the Wilf efendants Challenge Were elated t o

P l a i n t i f f s ' NJRICO laimsThe Wilf Defendants argue t h a t many f h e motions t h a t P l a i n t i f f s f i l e d were wholly

u n r e l a t e d t o t h e i r NJRICO l a i m s . (Wilf Opp. Br. a t 31-32; Wilf Sur-Reply Br. a t 6 - 7 ) . Ir e s p e c t f u l l y d i s a g r e e .

Halpern's motion f o r e q u i t a b l e a n d s t a t u t o r y r e l i e f t o r e q u i r e t h e p a r t n e r s h i pt o resume payments o him: The Wilf Defendants argue t h a t t h i s motion w a su n r e l a t e d t o Halpern's NJRICO laims because the Court made n o mentiono fRICO n g r a n t i n g t h e r e l i e f (Wilf Opp. Br, t 3 1 ) . B u t h i s motion, an dHalpern's NJRICO c l a i m s , were both based u p o n t h e same u n d e r l y i n gconduct: t h e Wilf Defendants' t h e f t o f a r t n e r s h i p a s s e t s a n d f a i l u r e t o payHalpern t h e d i s t r i b u t i o n s t o which he w as e n t i t l e d . (See Lebensfeld C e r t . , 2 9 ( The Wilf Defendants' p r e c i p i t o u s a n d unlawful a c t i o n s ...includingt h e i r t h e f t o f a r t n e r s h i p ' s a s s e t s a n d funds i n v i o l a t i o n o f NJRICO whichi n c i d e n t a l l y c o n t i n u e d a f t e r Joe Halpern's o i n d e r i n t h e c a s e ... r e q u i r e d myp r e p a r a t i o n a n d i l i n g o f n emergent mo t i o n o r s t a t u t o r y a n d e q u i t a b l e r e l i e fi n December 2 0 0 9 . ) ; Jarwick Reply Br. a t 30-31 ( s t a t i n g t h a t Jarwickp a r t i c i p a t e d i n t h i s motion to p r o t e c t t h e r e c o r d with r e s p e c t t o t h e proof o ft h e W i l f s ' t h e f t s , a n d as an n t e g r a l p a r t o f h e p r o c e s s o f nforming h e Courtabout t h e Wilfs' a c t i o n s , i n t h e f a c e o f a l s e r e p r e s e n t a t i o n s t h a t t h e Wilfswere maki ng o mislead a n d confuse h e C o u r t ) ) .

14173 .00601 22251319v.4


33/132

J a r w i c k ' s and Halpern's j o i n t a p p l i c a t i o n t o r e q u i r e t h e p a r t n e r s h i p t o p av~~roximately $660 000 o them i n o r d e r t o match~avments of e g a l f e e s andc o s t s p r e v i o u s l y m a d e by Pernwil o r t h e d e f e n s e of h i s c a s e : This motionw a s r e l a t e d t o P l a i n t i f f s ' NJRICO claims because P l a i n t i f f s sought t o r e c o v e rt h e funds h a t t h e Wilf Defendants had improperly taken from t h e p a r t n e r s h i pt o defend a g a i n s t P l a i n t i f f s ' NJRICO (and i n t e r t w i n e d non-RICO) c l a i m s .(See Gielen C e r t . , ~ 5 ) . As arwick argued, h i s motion allowed P l a i n t i f f s t o r e c o v e r [ ] a r e l a t i v e l y small amount of h e funds taken by t h e Wilfs' RICOe n t e r p r i s e , because t h e $660,000 a t i s s u e c o n s t i t u t e [ d ] a p o r t i o n of t h eRICO amage s found by h e C o u r t . ( J a r w i c i c Reply Br. t 3 2 ) .J a r w i c k ' s motion f o r p a r t i a l s u mma r ~jud ~m e n t d e c l a r i n g t h a t t h e Wilfs w er enot e n t i t l e d t o a manag ement e e o r t h e o r e t i c a l f e e s : This motion w a s r e l a t e dt o P l a i n t i f f s ' NJRICO claims because they could not prove t h e i r NJRICOclaims without debunking t h e Wilf Defendants' claim t o manag ement and t h e o r e t i c a l f e e s . Mr . Lebensfeld c e r t i f i e d t h a t : T h e s i g n i f i c a n c e t o t h ec a s e of h e W i l f s ' claimed ` e n t i t l e m e n t ' t o m i l l i o n s of o l l a r s i n t h e o r e t i c a l o rh y p o t h e t i c a l f e e s could not be o v e r s t a t e d i n terms of Joe Halpern's a b i l i t y t oe s t a b l i s h h i s NJRICO claims and p a r t i c u l a r l y , t h e p r e d i c a t e a c t s of h e f t andembezzlement, (Lebensfeld C e r t . , 4 ) . Indeed, Mr . Lebensfeld e x p l a i n e dt h a t he (and J a r w i c k ' s counsel) w e r e r e q u i r e d t o prove t h a t the WilfDefendants' claimed e n t i t l e m e n t t o t h o s e f e e s w e r e p u r e l y f a b r i c a t e d claimswith r e s p e c t t o which Zygi d i d not p o s s e s s an ` h o n e s t b e l i e f ' o r claim ofr i g h t . ( I d . ) , ~ (See a l s o Jarwick Reply Br. t 33 I f h e Wilf efendants hadbeen s u c c e s s f u l with t h e i r claim f o r ` T h e o r e t i c a l F e e s , ' t h e RICO damage swould have been i r t u a l l y e l i m i n a t e d . ) ) .Jarwick should r e c o v e r t h e f e e s i n c u r r e d on t h i s motion even though i t w asnot s u c c e s s f u l . Judge Wilson r u l e d t h a t , a t t h e time she denied p r e t r i a lmotions f o r s u m m a r y judgment, he r e a l l y d i d not understand what h i s c a s ew a s about d e s p i t e c o u n s e l ' s v a l i a n t a t t e m p t s t o g i v e me f l a v o r of what w asgoing on. ( T r . , Au g . 5, 2013; a t 2 3 : 2 0 - 2 2 ) . A f t e r the t r i a l Judge Wilsona g r e e d t h a t t h e Wilf Defendants w e r e not e n t i t l e d t o manag ement f e e s o rt h e o r e t i c a l f e e s , f i n d i n g t h a t : T h e s e agreements had no p r o v i s i o n s f o r any oft h e s e payments. None. T h e o r e t i c a l f e e s , manag ement e e s , h y p o t h e t i c al f e e s .. . . I m e a n , I d o n ' t know here t h e language i n the f i n a n c i a l s t a t e m e n t s camefrom. ( T r . , A u g . , 2013, t 8 7 : 1 6 - 2 0 ) .

a r w i c k ' s motion t o i n c l u d e J a r w i c i c as a pro r a t a r e c i p i e n t of a l l f u t u r ed i s t r i b u t i o n s bX h e p a r t n e r s h i p : This motion w a s i r e c t l y r e l a t e d t o J a r w i c k ' sNJRICO c l a i m s : both w e r e based on t h e Wilf Defendants' improper

1 7 For t h e same r e a s o n s , J a r w i c k ' s m o t i o n t o p r e c l u d e t h e W i l f s from t a k i n g management f e e s o ri n c u r r i n g c e r t a i n e x p e n s e s on b e h a l f of e r n w i l , (Wilf Opp, r . a t 3 2 ) , was a l s o r e l a t e d t o i t s NJRICOc l a i m s .

7

141737.00601 22251319v.4


34/132

e x c l u s i o n of J a r w i c k from t h e p a r t n e r s h i p , and f a i l u r e t o pay J a r w i c k t sp r o p e r d i s t r i b u t i o n s . I a g r e e w i t h J a r w i c k ' s argument h a t t h i s motion was ane f f o r t t o s t o p t h e W i l f s from committing RI O r e d i c a t e a c t s i n t h e form o fs t e a l i n g J a r w i c k ' s s h a r e of h e e x c e s s cash flow g e n e r a t e d by h e P a r t n e r s h i p .( J a r w i c k Reply Br. t 3 2 ) .J a r w i c k ' s motion f o r p a r t i a l suinmar~iudgment t h a t J a r w i c k was a p a r t n e r ,t h a t t h e Halwil Agreement c o n t r o l l e d and t h a t Zy~i W i l f , Leonard Wilf andMark Wilf were not p a r t n e r s : This motion was n e c e s s i t a t e d by t h e WilfDefendants' improper a t t e m p t s t o e x c l u d e J a r w i c k from t h e p a r t n e r s h i p and t odeny t t h e d i s t r i b u t i o n s t o which t was e n t i t l e d . Indeed, Mr. G i e l e ne x p l a i n e d t h a t J a r w i c i c f i l e d t h i s motion f o r p a r t i a l summary judgment i no r d e r t o e l i m i n a t e f r i v o l o u s arguments r e p e a t e d l y m a d e by t h e WilfDefendants t h a t d e s p i t e t h e A p p e l l a t e D i v i s i o n ' s r u l i n g s , J a r w i c k only h e l d aneconomic i n t e r e s t i n t h e P a r t n e r s h i p , and t h e Halwil A s s o c i a t e s Agreementwas n o t t h e o p e r a t i v e p a r t n e r s h i p a g r e e m e n t . (Gielen C e r t . , 6 ) . Thus, h i smotion was a l s o r e l a t e d t o P l a i n t i f f s ' NJRI O l a i m s .T h e Wilf Defendants' motion t o r e c u s e Jude Wilson and t o d i s q u a l i f y t h ec o u r t-anointed a c c o u n t a n t , Bederson o . : T h e Wilf efendants moved or e c u s e Judge Wilson and d i s q u a l i f y Bederson o, a r g u i n g t h a t ana c c o u n t a n t with t h e Bederson f i r m [ ] d i s c l o s e d a t d e p o s i t i o n s t h a t Bedersonhad engaged i n ex parte d i s c u s s i o n s with t h e Judge c o n c e r n i n g t h e i r d r a f tr e p o r t . ( G i e l e n C e r t . , 7 ) . However, a g r e e with Mr. G i e l e n ' s a s s e r t i o nt h a t Bederson &Co.'s e f f o r t s were d i r e c t l y r e l a t e d t o t h e Accounting, andwere deemed n e c e s s a r y by t h e Court i n l a r g e measure due t o t h e i n t e n t i o n a l [ ]m i s r e p r e s e n t a t i o n s by t h e Wilf Defendants and t h e u n i n t e n t i o n a l l y m i s l e a d i n gs t a t e m e n t s by t h e i r f o r e n s i c a c c o u n t i n g e x p e r t , Mr. Hoberman. (SecondG i e l e n C e r t . , 4 ) . Thus, h e f e e s t h a t P l a i n t i f f s i n c u r r e d i n d e f e n d i n g t h eWilf efendants' a t t e m p t t o remove Bederson o. and Judge Wilson) werea l s o r e l a t e d t o t h e i r NJRI O l a i m s .

A c c o r d i n g l y , I re c ommend h a t P l a i n t i f f s s h o u l d r e c o v e r t h e f e e s i n c u r r e d i n l i t i g a t i n g t h emotions t h a t t h e Wilf Defendants c h a l l e n g e because each motion was r e l a t e d t o P l a i n t i f f s 'NJRI O l a i m s .

5. A l l of l a i n t i f f s ' Witnesses' Testimony Was elated t o P l a i n t i f f s ' NJRI OClaimsT h e Wilf Defendants a r g u e t h a t m a n y of l a i n t i f f s ' w i t n e s s e s t e s

Date post:	04-Jun-2018
Category:	Documents
Upload:	kstptv
View:	221 times
Download:	0 times

Jarwick v. Wilf Report and Recommendation 11-5-13.pdf

Documents