RUGA v. OAKLEY et al
Filing
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MEMORANDUM OPINION and ORDER, Pltf Daniel Ruga shall be AWARDED a default judgment in the amount of $893,786.06 against Defts Oakley and Perrine, etc.; ORDERED that the Clerk is directed to mark this matter as CLOSED. Signed by Judge Noel L. Hillman on 9/22/2014. (dmr)
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
DANIEL RUGA,
Plaintiff,
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Civil Action No.
09-cv-5347 (NLH/KMW)
v.
ANNETTE MARIA OAKLEY, DANIEL
SCOTT PERRINE, et al.,
Defendants.
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MEMORANDUM OPINION AND
ORDER
HILLMAN, District Judge
THIS MATTER having been raised by the motion filed by
Plaintiff, Daniel Ruga, on or around September 14, 2010, seeking
default judgment against Defendants, Annette Maria Oakley and
Daniel Scott Perrine; and
The Court noting that Plaintiff filed the complaint in this
action on October 19, 2009 alleging claims for legal malpractice
against Defendants Oakley and Perrine, attorneys whom Plaintiff
originally retained to represent Plaintiff in a New Jersey state
court litigation regarding Plaintiff’s former business Vineland
Metal Works (“VMW”), captioned as Daniel Ruga v. HSD Developers,
et al., Superior Court of New Jersey, Law Division, Atlantic
County, No. ATL-L-17209; and
The Court further noting that Plaintiff alleges that
Defendants Oakley and Perrine committed legal malpractice in the
underlying New Jersey state court litigation by, among other
things, failing to conduct timely discovery resulting in
Plaintiff’s inability to prosecute the underlying case at trial,
by failing to appear at trial without explanation which resulted
in the dismissal of Plaintiff’s underlying case, by failing to
file a proper and timely motion for reinstatement of Plaintiff’s
underlying case, by withdrawing from the representation without
explanation, and by refusing to produce a copy of Plaintiff’s
original file to Plaintiff’s current counsel in this action; and
The Court having granted Plaintiff’s motion for default
judgment against Defendants Oakley and Perrine by Order dated
June 8, 2011; and
The Court, in that Order, instructing Plaintiff to submit
whatever documentation or evidence he may have to demonstrate
the merits of his case for legal malpractice against Defendants
Oakley and Perrine and the amount of damages to which he is
entitled; and
Plaintiff having provided such documentation to the Court,
including: (1) a sworn and notarized Affidavit by Plaintiff
demonstrating the merits of his case and his entitlement to
damages, (2) a brief and analysis on the issue of damages
prepared by Plaintiff’s counsel, explaining the method by which
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damages were calculated, (3) exhibits supporting the calculation
of damages; and
The Court, accepting Plaintiff’s representations, which
were not opposed by Defendants Oakley and Perrine with respect
to this motion, finds that Plaintiff is entitled to receive
$893,786.06.
This value was reached by calculating the
following values, and then totaling them: (1) the projected loss
of income related to the VMW business for a ten (10) year time
period; (2) the reversion value of VMW after ten years; (3) the
claimed diminution in value of R-Way Tooling based on
incorrectly inflated liabilities; (4) court-ordered counsel fees
and costs Plaintiff was required to pay to HSD Developers and
Zurich American Insurance Company, the defendants in the
underlying New Jersey state court litigation, as a result of the
alleged misconduct by Defendants Oakley and Perrine; (5) legal
fees Plaintiff paid to Defendants Oakley and Perrine related to
the underlying New Jersey state court litigation, during
Defendants’ representation of Plaintiff; (6) legal fees
Plaintiff incurred and paid to Plaintiff’s current counsel in
order to reinstate the underlying New Jersey state court
litigation; (7) cleanup costs associated with the VMW property;
and (8) a nominal settlement Plaintiff received from HSD
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Developers and Zurich American Insurance Company, the defendants
in the underlying New Jersey state court litigation.
The Court
will treat each of these in turn.
First, using the net present value (“NPV”) method to
calculate the present value of future income streams from
Plaintiff’s VMW business, the Court arrives at the same number
as Plaintiff: $377,655.70.
This value is achieved by using the
formula: NPV = Net Income / (1 + R)t.
“Net income” is derived
from each particular year of the 10-year projected income
statement that Plaintiff attached as Exhibit A.
the Issue of Damages [Doc. 12] Ex. A.)
(Pl.’s Aff. on
“R” is derived from the
average rate of return of the State of New Jersey Cash
Management Fund for each relevant year in the 10-year period;
this is the same rate used when assessing post-judgment interest
on civil judgments in New Jersey state court. 1
the time period, in years.
“T” represents
Thus, the NPV of the first-year
income stream is $39,298 / (1 + .02)1, or $38,527.45.
The NPV of
the second-year income stream is $39,691 / (1 + .04)2, or
$36,696.56.
This calculation is iterated through the expected
life of the business, which was determined to be ten (10) years.
Next, these values are added to arrive at the total NPV of the
1.
See N.J. Ct. R. 4:42-11(b).
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projected lost income from the VMW business: $377,655.70.
Second, Plaintiff claims a loss for being unable to sell or
liquidate the business at the end of its useful life.
called the “reversion value.”
This is
According to the projected cash
flow analysis prepared for the underlying state court
litigation, attached as Exhibit B, the expected reversion value
of the business at the end of its ten-year life is $185,757.
(Pl.’s Aff. on the Issue of Damages [Doc. 12] Ex. B.)
Applying
the NPV method of valuation, and using a one-percent (1%)
discount rate, the reversion value is: $185,757 / (1 + .01)10 =
$168,163.39.
This value is different than the $180,293.91
claimed by Plaintiff.
It appears as if Plaintiff erroneously
calculated the reversion value using the time period “t” as
three, rather than ten, years.
Third, Plaintiff claims a loss based on an allegedly
fraudulent misrepresentation of liabilities on the balance sheet
in the underlying state court litigation.
The allegedly
incorrectly inflated liabilities resulted in a diminution in
value of the defendant company in the underlying litigation.
The value of this diminution, according to Exhibit C, is
$262,103.34.
C.)
(Pl.’s Aff. on the Issue of Damages [Doc. 12] Ex.
According to Plaintiff, this amount was due to him no later
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than 2008, when the incorrect balance sheet was produced.
Using
an average interest rate of two point eight percent (2.8%), the
average of the published rates as set forth above for the
relevant four-year time period, the calculation for compound
interest is: $262,103.34 x (1.028)4 = $292,715.02.
This value is
concordant with that reached by Plaintiff.
Fourth, Plaintiff was ordered to pay counsel fees and costs
to Zurich American Insurance Company and HSD Developers, the
defendants in the underlying state court litigation.
This value
is determined by adding the counsel fees and costs associated
with both defendants in the underlying litigation, as evidenced
by Exhibit D.
D.)
(Pl.’s Aff. on the Issue of Damages [Doc. 12] Ex.
In November 2009, Plaintiff was ordered to pay $22,700 in
legal fees and $434.39 in costs for defendant Zurich American
Insurance Company.
Also in November 2009, Plaintiff was ordered
to pay $7,000 in legal fees and $54.26 in costs for defendant
HSD Developers.
$30,188.65.
Adding these values results in a total of
Plaintiff appears to have erroneously computed this
amount, using the incorrect figures on page one of Exhibit D,
rather than the accurate, actual figures on page two.
Fifth, Plaintiff seeks legal fees previously paid to his
former attorneys, Defendants Oakley and Perrine, in the
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underlying state court litigation.
Attached as Exhibit E,
Defendants’ invoice to Plaintiff indicates that Plaintiff paid a
total of $11,000 in attorneys’ fees to Defendants, and not the
$12,355.87 that Plaintiff claims.
(Pl.’s Aff. on the Issue of
Damages [Doc. 12] Ex. E.)
Sixth, Plaintiff seeks compensation for the legal fees paid
to his present counsel which Plaintiff incurred in attempting to
reinstate the underlying state court action.
Exhibit F
indicates that Plaintiff made three payments to his present
counsel for this purpose: $5,000, $5,000, and $3.433.60.
Aff. on the Issue of Damages [Doc. 12] Ex. F.)
(Pl.’s
Adding these
values, Plaintiff incurred $13,433.60 in legal fees in order to
reinstate the underlying state court action.
This value is
concordant with that reached by Plaintiff.
Seventh, Plaintiff seeks cleanup costs associated with the
VMW property, costs which would have allegedly been paid in the
underlying litigation.
costs total $15,629.70.
Attached as Exhibit G, property cleanup
(Pl.’s Aff. on the Issue of Damages
[Doc. 12] Ex. G.)
Eighth, Plaintiff received a nominal $15,000 settlement in
the underlying state court litigation after it was reinstated.
(Pl.’s Aff. on the Issue of Damages [Doc. 12] ¶ 19.) This amount
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should be credited to the instant Defendants for purposes of
this default judgment.
Adding the first seven values and subtracting the
settlement results in the following calculation: $377,655.70 +
$168,163.39 + $292,715.02 + $30,188.65 + $11,000 + $13,433.60 +
$15,629.70 - $15,000 = $893,786.06.
Therefore, Plaintiff’s
total default judgment equals $893,786.06; accordingly
IT IS on this
22nd
day of
September
, 2014, hereby
ORDERED that Plaintiff, Daniel Ruga, shall be AWARDED a
default judgment in the amount of $893,786.06 against Defendants
Oakley and Perrine; and it is further
ORDERED that, along with filing on the electronic docket, a
copy of this Order shall be sent to Defendants’ addresses, as
listed by the Motion for Default Judgment [Doc. No. 11], by
first-class standard mail; and it is further
ORDERED that the Clerk is directed to mark this matter as
CLOSED.
s/ Noel L. Hillman
HON. NOEL L. HILLMAN, U.S.D.J.
At Camden, New Jersey
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