Kanengiser v. Kanengiser

• Citation: 590 A.2d 1223,248 N.J.Super. 318
• Parties: Gerold KANENGISER, Plaintiff, v. Sidney KANENGISER, Alan Jacobson, Jeanne Kanengiser, Carl Weiner, Barbara Kanengiser, Executrix of the Estate of Irving Kanengiser, Sidney Kanengiser, as sole surviving Trustee of the Estate of Fannie Kanengiser, Sidney Kanengiser, as sole surviving Trustee of the Estate of Morris Kanengiser, Rose Jacobson Revocable Trust, Lenard Jacobson, County Arena, Inc., a corporation of New Jersey in dissolution, Kendall Park Roller Rink, a corporation of New Jersey in dissolution, Bayshore Roller Rink, Inc., a corporation of New York in dissolution, Sills, Cummis, Zuckerman, Radin, Tischman, Epstein and Gross, a professional corporation, and Gerald Span, individually, Defendants.
• Decision Date: 14 March 1991
• Court: Superior Court of New Jersey

Page 318

248 N.J.Super. 318

590 A.2d 1223

Gerold KANENGISER, Plaintiff, v. Sidney KANENGISER, Alan Jacobson, Jeanne Kanengiser, Carl Weiner, Barbara Kanengiser, Executrix of the Estate of Irving Kanengiser, Sidney Kanengiser, as sole surviving Trustee of the Estate of Fannie Kanengiser, Sidney Kanengiser, as sole surviving Trustee of the Estate of Morris Kanengiser, Rose Jacobson Revocable Trust, Lenard Jacobson, County Arena, Inc., a corporation of New Jersey in dissolution, Kendall Park Roller Rink, a corporation of New Jersey in dissolution, Bayshore Roller Rink, Inc., a corporation of New York in dissolution, Sills, Cummis Zuckerman, Radin, Tischman, Epstein and Gross, a professional corporation, and Gerald Span, individually, Defendants.

Superior Court of New Jersey, Law Division Essex County.

Decided March 14, 1991.

Joseph Gordon, for plaintiff (Gordon & Kanengiser, attorneys) Millburn.

Jerald D. Baranoff, for defendants Sills, Cummis, Zuckerman, Radin, Tischman, Epstein & Gross and Gerald Span (Sills, Cummis, Zuckerman, Radin, Tischman, Epstein & Gross, attorneys; Jerald D. Baranoff of counsel and on the brief; Anthony J. Monaco on the brief) Newark.

Sheppard A. Guryan, for defendants Sidney Kanengiser and Alan Jacobson (Lasser, Hochman, Marcus, Guryan & Kuskin, attorneys) Roseland.

VILLANUEVA, J.S.C.

Plaintiff's complaint contains four causes of action, the principal one alleging that an attorney's letter seeking repayment of legal fees is "libelous and actionable per se." This letter sought the return of the excess over what the attorney alleged to have been the reasonable legal fee and questioned the propriety of a brokerage commission and stated defendants' intention to seek arbitration of the reasonableness of the legal fee before the appropriate forum and demanded the return of the "brokerage commission."

Defendants, Sidney Kanengiser, Alan Jacobson, Sills, Cummis and Gerald Span, by their two separate attorneys, have moved for summary judgment to dismiss three counts of the complaint which are based upon this letter on the grounds of absolute privilege.

The court holds that this letter clearly indicating an intention to arbitrate the reasonableness of legal fees pursuant to R.1:20A-1 et seq. was "preliminary to a proposed judicial proceeding" and, therefore, is absolutely privileged and also cannot give rise to non-libel causes of action.

The secondary issue is whether limited distribution of the letter to trustees and beneficiaries of a trust from which the payments were made and to the financial adviser to one trustee who also was the husband of a class beneficiary, was "unreasonable publication" that defeated the absolute privilege. The court holds that such distribution did not defeat the absolute privilege because all recipients of the letter had a significant interest in the matter or connection to it.

I.

Preliminary Statement.

This action revolves around correspondence dated October 4, 1990, from attorney Gerald Span to attorney Gerold Kanengiser. (Appendix A). This letter was not the first occasion when the two attorneys communicated. One year earlier Span, a partner in the Sills, Cummis, Zuckerman, Radin, Tischman, Epstein & Gross ("Sills") law firm, had been asked to represent Sidney Kanengiser ("Sidney") in an accounting action brought against him as the last surviving trustee of his father's trust by the children of his late brother Marvin. Span, in undertaking that representation, had repeated contacts with Gerold Kanengiser because the firm of Gordon & Kanengiser ("G & K"): (a) had represented the Kanengiser Trust until after Marvin's death in 1988; (b) had represented the Kanengiser Trust and the individual investors from the Kanengiser family in selling four roller rink properties in 1987; and (c) was still representing Marvin's estate and its executrix Beverlee Kanengiser, Marvin's second wife (but not the mother of his children), who were suing Sidney.

Span's representation of Sidney caused him not only to investigate whether monies flowing from the Kanengiser Trust to Marvin or Beverlee went beyond permitted "income" and reached into proscribed distribution of corpus (which was to be left entirely for the grandchildren), but also to determine whether Sidney had unwittingly engaged in any transaction involving the Kanengiser Trust for which he might be surcharged as the last fiduciary of the trust. As a result thereof, Sidney turned over to his attorneys, documents relating to the sale by the family entities of four roller rink properties in 1987 out of which attorney Gerold Kanengiser claimed entitlement not only to $100,000 in legal fees, but also a separate brokerage commission amounting to approximately 3% of the $6,400,000 selling price (actually $200,000).

Installment payments from that 1987 sale were still being received for distribution to the former owners (including the Kanengiser Trust) by Sidney as one of the two persons acting for the now dissolved entities. Therefore, Sidney believed that his conduct in continuing to pay (and failing to demand return of payments from) G & K could be questioned by the beneficiaries because the Kanengiser Trust, from which Marvin's children demanded an accounting, had owned a substantial interest in the roller rinks which had been sold.

After obtaining the concurrence of the Jacobson family, who also had an interest in the roller rink proceeds, Sidney authorized Span to send a demand letter to G & K requesting justification of what appeared to be excessive legal fees and of the claim for a real estate commission which is violative of the well-settled public policy limiting the receipt of commissions to those specially licensed as brokers.

By September 1990, Sills had already commenced a separate legal action on Sidney's behalf against Beverlee and the estate of Marvin to recover the allegedly improper prior distributions of corpus to Marvin and Beverlee, which were made without the acquiescence or consent of Marvin's children. Having been unable for more than a year to resolve this matter privately with G & K (who represented Marvin's estate and his widow), Sidney's attorneys had no choice but to commence formal litigation against the clients of G & K. Hence, by the time of the Span letter of October 4, 1990, two civil actions had already been commenced regarding the conduct of members of the Kanengiser family who were at one time represented by G & K.

The letter of October 4, 1990, read in the overall context of communications with G & K, could be described as "the opening salvo" of what would have been, absent plaintiff's preemptive filing of this complaint, ¹ the third and fourth legal proceedings regarding the affairs of the Kanengiser family entities.

In these motions for summary judgment defendants contend that the statements contained in the Span letter, made while there were two pending judicial proceedings and as a preliminary to the commencement of two others (for return of legal fees in fee arbitration and an action to declare the "commission" agreement void as against public policy), are clothed with an absolute privilege.

II.

Statement of Facts.

Plaintiff's allegations against the Sills defendants arise out of the statements in the Span letter concerning the operation of a family trust as well as family business investments over three decades and the litigation that payments from these investments to family members has spawned. Knowledge of these prior affairs is vital to place the statements in the Span letter in their proper context.

A. The Kanengiser Trust.

Morris Kanengiser, who died in 1952, created the "Kanengiser Trust" in his will. ² He named his three sons (Irving, Marvin and Sidney) as co-trustees of this trust and also named his three sons and one daughter (Esther Weiner) as income beneficiaries of the trust, all to receive equal one-fourth shares of the income produced by the trust. Morris further provided that the Kanengiser Trust would terminate upon the death of his last child, at which time the entire corpus of the trust would be distributed per stirpes among the children of Irving, Marvin, Sidney and Esther Weiner. Irving, Marvin and Esther Weiner are deceased; Sidney (now the client of the Sills law firm) is the sole surviving child and sole remaining trustee of the Kanengiser Trust. Until February 1989, plaintiff and his law firm, G & K, provided legal services to the Kanengiser Trust and to a variety of family-dominated entities.

Plaintiff is the nephew of Morris and a first cousin of Irving, Marvin, Sidney and Esther Weiner. He is not a beneficiary of Morris' will.

B. The Assets of the Kanengiser Trust.

After the death of Morris, the Kanengiser Trust, along with individual members of the Kanengiser and Jacobson families, purchased interests in various entities that operated roller skating rinks and owned the land upon which they were located. Through the years, G & K provided legal services to these corporations in connection with their ownership and operation of the rinks. Eventually the entities, still represented by G & K, began to divest themselves of their ownership interests in the roller skating rinks.

C. The Four Rinks Transaction.

By late 1987, Kanengiser family members, the Kanengiser Trust, and the Jacobson family shared interests in four corporations, each of which owned one roller skating rink. In the four rinks transaction they sold these four corporations to one buyer for $6,400,000, most of which was received in the form of purchase-money mortgages taken back by the sellers. The four corporations were represented in this transaction by G & K, who charged a $100,000 legal fee. Defendants contend that plaintiff purported to act as the real estate broker for this sale, for which he claims entitlement to a commission of approximately 3% of the total sales price. Plaintiff denies that he either acted as a broker or was paid as a broker. A letter dated ...