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

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

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

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The Wilf Defendants argue that Plaintiffs should not recover the fees incurred in pursuing

their punitive damages claims because they were "based upon common law torts and not RICO

claims." (Wilf Opp. Br. at 33-34; Wilf Sur-Reply Br. at 8). I disagree. To establish their

entitlement to punitive damages, Plaintiffs were required to prove the identical facts that

supported their NJRICO and intertwined common-law claims. Moreover, I agree with Jarwick's

contention that Plaintiffs' NJRICO and punitive damage claims were "parallel claims," which

both sought to "punish the Wilfs for the same wrongdoing." (Jarwick Reply Br. at 15). See, e.g.,

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Bruno v. Western Elec. Co., 618 F. Supp. 398, 403-04 (D. Colo. 1985) (ruling that plaintiff who

prevailed on ADEA claim could recover fees incurred pursuing his punitive damages claim

(which was rejected) because "whether [plaintiff] could recover punitive damages turned on the

same `common core of facts' as the issue of whether [plaintiffs could recover lost wages or

liquidated damages [under ADEA]")

I am not persuaded by the Wilf Defendants' reliance on Brokerage Concepts, Inc. v. U.S.

Healthcare, Inc,, 1996 U.S. Dist. LEXIS 18519 (E.D. Pa. Dec. 10, 1996)—an unpublished

decision from the Eastern District of Pennsylvania. The Brokerage Concepts court declined to

award plaintiff the attorneys' fees incurred in pursuing its punitive damages claim, ruling that

that claim was "distinct" from plaintiff's RICO claims. Id, at * 17. However, Brokerage

Concepts is not controlling in this case and, in any event, the Third Circuit reversed and

remanded, with instructions to grant judgment for defendants on plaintiff's RICO claim.

Brokerage Concepts, Inc. v. U.S. Healthcare, Inc., 140 F.3d 494, 535 (3d Cir. 1998).

For these reasons, I recommend that Plaintiffs be permitted to recover the attorneys' fees

and costs that they incurred in litigating their non-RICO claims.

C. Plaintiffs Should Recover the Attorneys' Fees and Costs Incurred In Litigating

Their "Unsuccessful" NJRICO Claims

Judge Wilson limited Plaintiffs' NJRICO claims by ruling that. (i) the statute of

limitations barred all NJRICO claims accruing before January 1, 2000; and (ii) Jarwick could not

pursue NJRICO claims accruing between June 14, 2002 and December 15, 2006 because, during

that time period, the Wilf Defendants were entitled to rely on the trial court's ruling that Jarwick

had no viable partnership interest in the Rachel Gardens project. (Tr., Aug. 5, 2013, at 67:22-

75:9).

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The Wilf Defendants argue that Plaintiffs cannot recover the fees incurred in litigating

these "unsuccessful" NJRICO claims. (See Certification of Frank C. Razzano, Esq. dated

October 3, 2013 (the "Razzano Cert."), at ¶ 8 (""[T]he plaintiffs were unsuccessful on a

substantial portion of their RICO claims, and their fee application should have accordingly

allocated fees and expenses between fees attributable to successful and unsuccessful RICO

claims.")). I respectfully disagree. The so-called "unsuccessful" NJRICO claims were not

"distinctly different claims for relief," Lerman, 10 F.3d at 114, but rather narrow limitations

placed on the time periods during which Plaintiffs could recover NJRICO damages. Indeed, all

of Plaintiffs' NJRICO claims were based upon the same underlying conduct: the Wilf

Defendants' "consistent, pervasive method of removing funds from [the partnership]" over the

course of many years, (Tr., Aug. 5, 2013, at 62:5-7), and issuing false financial documents to

conceal their wrongdoing.

The Third Circuit Court of Appeals' decision in Lerman is directly on point. In that case,

defendant company asserted a RICO counterclaim against plaintiff, a former salesman of

defendant, alleging that plaintiff bribed customers and sold goods from defendant's inventory for

cash without defendant's knowledge. The District Court found plaintiff liable on defendant's

RICO counterclaim in the amount of $1,445,987.77 (after trebling and interest), and awarded

attorneys' fees and expenses under RICO in the amount of $1,133,863.68. Id. at 109.

On appeal, plaintiff argued that the District Court's attorneys' fee award was excessive

because defendant's RICO claim was based upon "three, distinct racketeering schemes," but it

prevailed on only one of those schemes. 10 F.3d at 113. The Third Circuit Court of Appeals

rejected that argument and ruled that defendant could recover the fees incurred in litigating its

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"unsuccessful" RICO claims because they were "based on overlapping facts" and did not involve

"distinctly different claims for relief':

[T]he district court concluded that [defenclant'sJ RICO

counterclaims had not presented "distinctly different claims for

relief," but rather related legal theories based on overlapping

fiats. The court stated that it would be artificial to sever the

factual allegations when each of the three scenarios aided in the

development of [defendant's] successful case. Moreover, the court

found that when [defendant's] RICO counterclaims are viewed in

terms of the litigation as a whole, their results must be judged as

very successful.

In awarding fees in this case, the district court applied the correct

legal standards, and the court's application of those standards was

not an abuse of discretion.

Id. at 114 (internal quotations, citations, and alterations omitted) (emphasis added); see also

Northeast Women's Ctf•., 889 F.2d at 476-77 ("In cases in which the plaintiff's, successful and

unsuccessful claims involve a common core of facts or related legal theories, or where much of

counsel's time is dedicated to the litigation as a whole, it is often impossible to divide counsel's

time on a precise claim-by-claim basis."); Blakey v. Continental Airlines, Inc., 2 F. Supp. 2d 598,

606 (D.N.J. 1998) ("[W]here the claims are interrelated, a court should not attempt to identify

specific hours spent on related, but unsuccessful claims and exclude them from the lodestar.").

As in Lerman, this is simply not a case in

which Plaintiffs presented "distinctly different

claims for relief," and obtained only limited success at trial. Lerman, 10 F.3d at 114. Plaintiffs'

"unsuccessful" NJRICO claims were based upon the same facts and legal theories as their

successful NJRICO claims, and were proven at trial using the same evidence. Importantly, as

explained above, Plaintiffs achieved overwhelming success on their NJRICO claims. See

Hensley, 461 U.S. at 435 ("Where a plaintiff has obtained excellent results, his attorney should

recover a fully compensatory fee.").

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Moreover, I agree with Jarwick's argument that "[w]here certain predicate acts are

outside the statute of limitations,. although those predicate acts cannot be used as a basis for

awarding damages, those acts can be considered for the purpose of finding that there was a RICO

violation, i.e., that there was an enterprise and that the defendants' actions were predicate acts

committed by the conspirators." (Jarwick Reply Br. at 65). Indeed, Judge Wilson ruled that:

You have an act, a predicate act within the limitations period, and

you may base your cause of action on it. It does not vitiate that

predicate act if another occurred outside the limitations period, and

you can use the act occurring autsicle the limitations period to

demonstrate ~n enterprise. But you will not receive damages, you

cannot claim damages, or you will not be awarded damages on that

act outside the limitations period.

(Tr., Aug. 13, 2013, at 76:25-77:5) (emphasis added). Thus, the Wilf Defendants' conduct prior

to 2000, and between June 14, 2002 and December 15, 2006 (as to Jarwick), was relevant to

Plaintiffs' NJRICO claims.

For these reasons, I recommend that Plaintiffs be permitted to recover the attorneys' fees

and costs incurred in litigating their "unsuccessful" NJRICO claims.

D. Plaintiffs Should Recover the Attorneys' Fees and Costs Incurred In Litigating

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