Shah v. Shroff

• Decision Date: 06 April 2023
• Docket Number: CAM-L-002934-20 (CBLP)
• Parties: AMIT SHAH, individually and derivatively And on behalf of JAI S WAMINARAYAN MOUNT LAUREL, LLC, Plaintiffs, v. VIJAY SHROFF; HEMA SHROFF; 603 FELLOWSHIP, LLC; MEHUL KHATIWALA; ANTHONY J. FOSCHI; TUCKER ARENSBERG, P.C.; John Does 1-10 and XYZ Corporations 1-10, Defendants.
• Court: New Jersey Superior Court

1

AMIT SHAH, individually and derivatively And on behalf of JAI S WAMINARAYAN MOUNT LAUREL, LLC, Plaintiffs, v. VIJAY SHROFF; HEMA SHROFF; 603 FELLOWSHIP, LLC; MEHUL KHATIWALA; ANTHONY J. FOSCHI; TUCKER ARENSBERG, P.C.; John Does 1-10 and XYZ Corporations 1-10, Defendants.

No. CAM-L-002934-20 (CBLP)

Superior Court of New Jersey, Law Division, Camden

April 6, 2023

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE COMMITTEE ON OPINIONS

Natalie B, Molz, Esquire and Justin E, Proper (pro hac vice) White and Williams, LLP, Attorneys for Plaintiffs, Amit Shah individually and derivatively on behalf of Jai Swaminarayan Mount Laurel, LLC

Michael J. Lauricella, Esquire, Archer & Greiner, P.C, Attorneys for Defendants, Vijay Shroff, Hema Shroff, Mehul Khatiwala and 603 Fellowship, LLC

Marshall D. Bilder, Esquire, Jason S, Feinstein, Esquire, Eckert Seamans, Attorneys for Defendants, Anthony J. Foschi and Tucker Arensberg, P.C.

ORDER

THIS MATTER being brought before the Court by Defendants Vijay Shroff, Hema Shroff, 603 Fellowship, LLC, Mehul Khatiwala, Anthony J, Foschi and Tucker Arensberg, P.C., for an Order granting summary judgment and dismissing plaintiffs' complaint with prejudice, and the matter having been argued before the Court on December 8, 2022, and for the reasons set forth in the attached Memorandum Decision:

IT IS on this 6^th day of April, 2023 ORDERED that;

1. The motion is granted in part and denied in part;

2. Plaintiffs' claims in Count 2 of the Complaint against Defendant Vijay Shroff are dismissed;

3. Plaintiffs' claims in Count 5 of the Complaint against Defendants Hema Shroff, Anthony Foschi and Tucker Arensberg, P.C, are dismissed;

4. Plaintiffs claims in Count 7 of the Complaint are dismissed; and 5. In all other respects, the motions for summary judgment are denied.

IT IS FURTHER ORDERED that a copy of the executed Order shall be deemed served on all parties upon its posting on eCourts.

___ Opposed

____Unopposed

"Reasons Set Forth in the Attached Memorandum Decision"

MEMORANDUM DECISION

STEVEN J. POLANSKY, P.J.Cv.

I. INTRODUCTION

Defendants Vijay Shroff, Hema Shroff, 603 Fellowship, LLC and Mehul Khatiwala move for summary judgment. Defendants Anthony Foschi and Tucker Arensberg, P.C* also move for summary judgment.

II. BACKGROUND

These claims arise out of an offer to purchase a Red Roof Inn located in Mount Laurel, New Jersey. The initial purchase was to have been made by Jai Swaminarayan Mount Laurel, LLC (hereinafter referred to as JSML). Ultimately, the property was purchased by 603 Fellowship, LLC.

The following claims are asserted in plaintiffs Amended Complaint:

Count I - Usurpation of a Corporate Opportunity against Hema Shroff and Vijay Shroff

Count II - Breach of Fiduciary Duty against Hema Shroff and Vijay Shroff

Count III - Aiding and Abetting Breach of Fiduciary Duty against All Defendants

Count IV - Fraudulent Inducement on behalf of Amit Shah against Hema Shroff and Vijay Shroff

Count V - Tortious Inference with Contract and/or Inducing Breach of Contract against All Defendants

Count VI - Civil Conspiracy against All Defendants

Count VII - Breach of Contract against Defendants Anthony Foschi and Tucker Arensberg, P.C.

Count VIII - Legal Malpractice against Defendants Anthony Foschi and Tucker Arensberg, P.C.

Count IX - Breach of Fiduciary Duty against Defendants Anthony Foschi and Tucker Arensberg, P.C.

In or about August of 2014, plaintiff Amit Shah made an offer for the purchase of the Red Roof Inn in Mount Laurel, New Jersey. The purchase offer for the sum of $4.5 million dollars required a $100,000 non-refundable deposit. The initial deposit was paid for the purchase of the Red Roof Inn by an entity formed for that purpose, Jai Swaminarayan Mount Laurel, LLC.

The initial investor in the purchase was to be Peter Bhi, Shah's brother-in-law who is not a party to this litigation. Bhi brought defendant Foschi in as the attorney for structuring the deal and completing the transaction. By October of 2014, Bhi had decided not to participate in the Red Roof purchase.

The Red Roof property was involved in litigation related to a proposed Walmart on an adjacent tract of land. Foschi as counsel raised serious concerns about the impact that litigation would have on the value and viability of the Red Roof Inn property.

In September 2014, shortly after Bhi had withdrawn from the transaction, Vijay Shroff expressed an interest in participating in the purchase of the Red Roof Inn. Ultimately, an undated Operating Agreement for JSML was executed in February 2015 between Amit Shah and Hema Shroff. A separate Power of Attorney Agreement was executed giving Vijay Shroff the power to act on behalf of Hema Shroff with respect to the Red Roof Inn property and the operation of JSML. While undated, there is no dispute that the agreement was signed in February 2015.

The Purchase and Sale Agreement between FMW RRI II, LLC and JSML was signed on November 26, 2014. Under the signed agreement, email notifications to Jai Swaminarayan were to be provided to SSN Hotel Management in Wilmington, Delaware. The email address for notification was that of Peter Bhi.

Sometime in February 2015 a dispute arose between Shah and Vijay Shroff. The dispute purportedly involved a request by Shah that Shroff contribute money towards a counsel fee bill. Plaintiff asserts that Vijay Shroff backed out of the deal during the exchange, Shroff asserts that it was plaintiff who backed out of the deal during this exchange. This unresolved dispute involves an issue of fact for a jury, Following this exchange between Shah and Vijay Shroff, Shah requested that Foschi obtain a refund of the $100,000.00 non-refundable deposit made by JSML. There does not appear to have been a vote by the members of JSML, nor is there any documentation that Shroff withdrew from JSML. Foschi as counsel followed the instructions of Shah and was successful in obtaining a refund of the deposit. On or about February 23, 2015, Foschi received the returned deposit and forwarded the same to Shah with a reduction for counsel fees.

On February 19, 2015, the seller wrote to Foschi asking that he call to discuss whether they could still proceed with the sale. Foschi then sent an email to Vijay Shroff and Shah reading "thanks Vijay. It's up to you if you want to call her but don't let her play you". On February 20, 2015, Peter Bhi wrote asking "what happened". On February 23,2015, Foschi again wrote to plaintiff Shah asking "do you want the deal?"

On February 24, the seller wrote to Vijay Shroff asking whether he planned to proceed with the deal and reinstate the contract. Khatiwala responded to Sue Eastman on February 24, 2015 indicating they were in agreement to move forward and to reinstate. Subsequently, on April 20, 2015 Khatiwala wrote to Foschi and Vijay Shroff indicating that the lender requires a release from Shah so that he can be reimbursed at closing for the Spring Bank deposit of $7,852.00, the survey fee of $3,000.00 and attorney's fees of $9,093.00.

Foschi then wrote to Shah on April 21, 2015 asking him to confirm the amounts owed, stating "I want to get you paid at closing, but you will have to sign a release attached". In response, Shah signed the release both on behalf of himself and JSML providing as follows:

Amit Shah and Jai Swaminarayan Mount Laurel, LLC hereby release and discharge, and by these presents do for ourselves, our heirs, executors, administrators, successors and assigns, release 603 Fellowship, LLC, their successors, assigns, members, partners and affiliates, of and from any and all past, present and future actions, causes of action, claims, demands, damages, costs, expenses, suits at law or in equity, of whatever nature, and all consequential damage on account of, or in any way growing out of the purchase of the Red Roof Inn, 603 Fellowship Road, Mount Laurel, NJ,

It is further understood, and agreed, that this is the complete release, and that there are no written oral understandings, or agreements, directly or indirectly connected with this Release and settlement that are not incorporated herein. THE UNDERSIGNED HEREBY DECLARES that the terms of this Release have been completely read and are fully understood and voluntarily accepted for the purpose of making a full and final compromise of any and all claims.

While the record is not completely clear, a new entity, 603 Fellowship LLC, completed the purchase of the Red Roof Inn. Members of that LLC are identified as Hema Shroff, Kishor Shroff, Ashish Shroff, Sima Patel and Neel Parikh. It is unclear whether this was a continuation of the same deal negotiated by JSML, or a new deal for the purchase of the Red Roof Inn.

The involvement of Khatiwala is unclear. The documents reflect that Khatiwala wrote to Sue Eastman who was representing Red Roof Inn on behalf of Delaware Hotel Group indicating his interest in purchasing the Red Roof Inn if they had not formalized a deal with a buyer. He submitted a letter of intent for the purchase of the Red Roof Inn for $4.75 million dollars on October 6, 2014, On January 22, 2015, Khatiwala wrote to an attorney at the Fox Rothschild firm inquiring about having the attorney review the JSML Operating Agreement on behalf of Vijay Shroff. Shroff is copied on the email, On March 3, 2015, Sue Eastman on behalf of Red Roof Inn sent an email which read in relevant part:

Amit is out. New principals are Vijay Shroff and Mike Khatiwala, and the buyer is 603 Fellowship LLC, a Delaware Limited Liability Company.

Khatiwala despite not being identified as a principal of 603 Fellowship, was involved in the transaction in some aspect. He sent an email to Foschi with a copy to Vijay Shroff on April 20, 2015 asking Foschi...