Motion to Quash in M.P. Management, Llp Vs Elite Real Estate Co Ns| Trellis.Law

On November 10, 2020 a Motion,Ex Parte was filed involving a dispute between M.P. Management, Llp, Plaza Gardens, Llc, and Brian C Donegan, Elite Real Estate Consultants, Jacob Tauber, Zf Capital Holdings,Llc, for Professional Malpractice in the District Court of Essex County.

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MEYNER AND LANDIS LLP
One Gateway Center, Suite 2500
Newark, New Jersey 07102
Telephone: (973) 624-3436
Facsimile: (973) 624-0356
Javier M. Lopez, Esq.
New Jersey Attorney ID #: 080772014
Attorneys for Defendant
Jacob Tauber

SUPERIOR COURT OF NEW JERSEY
ESSEX COUNTY: LAW DIVISION
DOCKET NO. EXS-L-007713-20

M.P. MANAGEMENT, LLC and PLAZA
GARDENS, LLC
Civil Action
Plaintiff,
NOTICE OF MOTION TO QUASH
vs. SUBPOENA DUCES TECUM AND
NOTICE TO TAKE ORAL DEPOSITION
ELITE REAL ESTATE CONSULTANTS DIRECTED TO SIGNATURE BANK
LLC d/b/a ELITE COMMERCIAL
PROPERTY APPRAISALS; BRIAN C.
DONEGAN; ZF CAPITAL HOLDINGS,
LLC; AND JACOB TAUBER

Defendant(s).

TO:
Michael M. Cohen, Esq.
Law Offices of Michael M. Cohen
275 Walton Street, Suite CB
Englewood, NJ 07631
Attorneys for Plaintiffs
M.P. Management, LLC and Plaza Gardens, LLC

PLEASE TAKE NOTICE that on April 30, 2021, at 9:00 a.m. in the forenoon, or as

soon thereafter as counsel may be heard, the undersigned, attorneys for defendant Jacob Tauber

(“Tauber”), will move before the Superior Court of New Jersey, Law Division, Essex County
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Court, located at the Essex County Historic Courthouse, 470 Martin Luther King Jr. Blvd,

Newark, New Jersey, 07102, or such other place as may be designated, for an Order to Quash the

Subpoena Duces Tecum and Notice to Take Oral Deposition directed to Signature Bank.

PLEASE TAKE FURTHER NOTICE that Tauber will rely on the annexed

Certification of Javier M. Lopez and Letter Brief in support of the within application. A proposed

form of Order is also attached.

PLEASE TAKE FURTHER NOTICE that Tauber requests oral argument only if

opposition papers are filed. The motion shall be deemed uncontested unless responsive papers

are timely filed and served stating with particularity the basis of the opposition to the relief

sought.

MEYNER AND LANDIS LLP
Attorneys for Defendant
Jacob Tauber

By: /s/ Javier M. Lopez

Javier M. Lopez, Esq.
Dated: April 6, 2021

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CERTIFICATION OF SERVICE

I hereby certify that on this date the Notice of Motion and supporting documents

were sent to be filed with the Clerk of Essex County via Ecourts with a copy delivered via regular

mail, email and Ecourts to:

Michael M. Cohen, Esq.
Law Offices of Michael M. Cohen
275 Walton Street, Suite CB
Englewood, NJ 07631
Attorneys for Plaintiffs
M.P. Management, LLC and Plaza Gardens, LLC

/s/ Javier M. Lopez

Javier M. Lopez

Dated: April 8, 2021

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M.P. MANAGEMENT, LLC and PLAZA
GARDENS, LLC
Civil Action
Plaintiff,
ORDER TO QUASH SUBPOENA
vs. DUCES TECUM AND NOTICE TO
TAKE ORAL DEPOSITION DIRECTED
ELITE REAL ESTATE CONSULTANTS TO SIGNATURE BANK
LLC d/b/a ELITE COMMERCIAL
PROPERTY APPRAISALS; BRIAN C.
DONEGAN; ZF CAPITAL HOLDINGS,
LLC; AND JACOB TAUBER

Defendant(s).

THIS MATTER having come before the Court by Meyner and Landis LLP (Javier M.

Lopez, Esq. appearing), attorneys for the defendant Jacob Tauber (“Tauber”), and upon notice

to the M.P. Management, LLC and Plaza Gardens, LLC (“Plaintiffs”), through their attorney,

Michael Cohen, Esq., for an Order to Quash Subpoena Duces Tecum and Notice to Take Oral

Deposition Directed to Signature Bank, and the court having considered the submissions of the

parties, and having considered the arguments of counsel, and for good cause shown;

IT IS on this ________ day of ____________, 2021,

ORDERED that Tauber’s Motion to Quash Subpoena Duces Tecum and Notice to

Take Oral Deposition Directed to Signature Bank is hereby GRANTED; and it is further
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ORDERED that a copy of this Order shall be served by ordinary mail upon all parties

within ___ days of receipt of a filed copy of same.

Honorable Thomas M. Moore, J.S.C.

( ) Opposed
( ) Unopposed

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SUPERIOR COURT OF NEW JERSEY
ESSEX COUNTY: LAW DIVISION
DOCKET NO. ESX-L-007713-20

M.P. MANAGEMENT, LLC and PLAZA
GARDENS, LLC
Civil Action
Plaintiff,
CERTIFICATION OF JAVIER M. LOPEZ,
vs. ESQ. IN SUPPORT OF MOTION TO
QUASH SUBPOENA DUCES TECUM
ELITE REAL ESTATE CONSULTANTS AND NOTICE TO TAKE ORAL
LLC d/b/a ELITE COMMERCIAL DEPOSITION DIRECTED TO
PROPERTY APPRAISALS; BRIAN C. SIGNATURE BANK
DONEGAN; ZF CAPITAL HOLDINGS,
LLC; AND JACOB TAUBER

Defendant(s).

I, Javier M. Lopez, Esq., of full age certify as follows:

1. I am an associate with the law firm of Meyner and Landis LLP and counsel to

defendant Jacob Tauber (“Tauber”). I am familiar with the facts of this matter and make this

Certification in support of Tauber’s “Motion to Quash Subpoena Duces Tecum and Notice to

Take Oral Deposition Directed to Signature Bank” (the “Motion”).

2. Our firm was recently retained with respect to this matter and entered an

appearance on behalf on Tauber on March 31, 2021.
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3. On or about November 10, 2020, M.P. Management, LLC and Plaza Gardens,

LLC (“Plaintiffs”) filed a complaint against Elite Real Estate Consultants LLC d/b/a Elite

Commercial Property Appraisals (“Elite”), Brian C. Donegan (“Donegan”), ZF Capital

Holdings, LLC (“ZF Capital”) and Tauber. A true copy of the Complaint is attached hereto as

Exhibit A.

4. The crux of the Complaint, as against Tauber, relies on Plaintiffs’ baseless

allegation that Tauber made material misrepresentations to the appraisal company performing an

appraisal for property located at 770-778 Mt. Prospect Ave., Newark, NJ, and that Plaintiffs’

relied on that appraisal to their detriment.

5. Incredibly, Plaintiffs’ allege that they relied on the appraisal despite the fact that

the appraisal was prepared for a third-party, and despite the fact that the appraisal specifically

did not authorize Plaintiffs to rely on it.

6. On April 6, 2021, Plaintiffs entered into a Stipulation extending Tauber’s time to

respond to the Complaint to April 16, 2021.

7. Also on April 6, 2021, Signature Bank (“Signature”) provided Tauber with a

“Subpoena Duces Tecum And Notice To Take Oral Deposition” (the “Subpoena”), which it

received on or about March 26, 2021. A true copy of the Subpoena is attached hereto as Exhibit

8. Notably, Plaintiffs’ counsel never provided our office with a copy of the Subpoena

despite the fact that an appearance was entered on behalf of Tauber.

9. The Subpoena does not seek any information related to the underlying claims

against Tauber, but rather is more akin to a post-judgment information subpoena. Specifically,

the Subpoena demands that Signature provide copies of the following documents with respect to

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Tauber and Mount Prospect Lofts, LLC (a non-party): (i) a list of bank accounts; (ii) copies of

bank statements from 12/1/2018 – 3/30/2019; (iii) copies of checks/wire transfers coming into or

leaving Tauber’s bank accounts.

10. Tauber maintains that Plaintiffs have no valid basis to request his banking

information, especially in light of the fact that Plaintiffs’ claims do not, in any way, implicate

Tauber’s finances. As such, the Subpoena is overbroad, unduly burdensome and not calculated

to lead to the discovery of admissible evidence.

CERTIFICATION

I certify that the foregoing statements made by me are true. I am aware that if any of

the foregoing statements made by me are willfully false, I am subject to punishment.

/s/ Javier M. Lopez

Javier M. Lopez

Dated: April 8, 2021

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EXHIBIT A

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SUPERIOR COURT OF
M.P. MANAGEMENT, LLC and PLAZA NEW JERSEY
GARDENS, LLC, LAW DIVISION
Plaintiff
ESSEX COUNTY
against -
DOCKET NO. HUD-L-007713-20

ELITE REAL ESTATE CONSULTANTS
LLC d/b/a ELITE COMMERCIAL
PROPERTY APPRAISALS, BRIAN C.
DONEGAN, ZF CAPITAL HOLDINGS,
LLC, and JACOB TAUBER,

Defendants.

From: The State of New Jersey
To: The Defendant(s) Named Above

The plaintiff, named above, has filed a lawsuit against you in the Superior Court of New Jersey. The complaint attached to this summons
states the basis for this lawsuit. If you dispute this complaint, you or your attorney must file a written answer or motion and proof of
service with the deputy clerk of the Superior Court in the county listed above within 35 days from the date you received this summons,
not counting the date you received it. (A directory of the addresses of each deputy clerk of the Superior Court is available in the Civil
Division Management Office in the county listed above and online at http://www.njcourts.gov/forms/l0l53 deptyclerklawref.pdf.) If
the complaint is one in foreclosure, tben you must file your written answer or motion and proof of service with the Clerk of the Superior
Court, Hughes Justice Complex, P.O. Box 971, Trenton, NJ 08625-0971. A filing fee payable to the Treasurer, State of New Jersey and
a completed Case Information Statement (available from the deputy clerk oftbe Superior Court) must acco.mpany your answer or motion
when it is filc:d. You must also send a copy of your answer or motion to plaintiff's attorney whose name and address appe.ar above, or to
plaintifl:: if no attorney is named above. A telephone call will not protect your rights; you must file and serve a written answer or motion
(with fee of $175.00 and completed Case Information Statement) if you want the court to hear your defense.

If you do not file and serve a written answer or motion within 35 days, the court may enter a judgment against you for the relief plaintiff
demands, plus interest and costs of suit. Ifjudgment is entered against you, the Sheriff may seize your money, wages or property to pay
all or part of the judgment.
If you cannot afford an attorney, you may call the Legal Services office in the county where you live or the Legal Services of New
Jersey Statewide Hotline at 1-888-LSNJ-LAW (l-888-576-5529). If you do not have au attorney and are not eligible for free legal
assistance, you may obtain a referral to an attorney by calling one of the Lawyer Referral Services. A directory with contact inforn1ation
for local Legal Services Offices and Lawyer Referral Services is available in the Civil Division Management Office in the county listed
above and online at http://www.njcourts.gov/forms/10153 deptyclerklawref.pdf.

Dated: November 10, 2020

Persons being served:

ELITE REAL ESTATE CONSULTANTS LLC d/b/a ELITE BRIAN C. DONEGAN
COMMERCIAL PROPERTY APPRAISALS 112 West 34'' Street, 17"' Floor, New York, NY 10120
112 West 34" Street, 17th Floor, New York, NY 101 20

!/;;CAPITAL HOLDINGS, LLC ~ JACOB TAU13ER
8 Amanda Court, Airmont, New York 10952
( 2233 Nostrand Avenue, 3rd Floor, Brookly~, N'f II~
'-
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LAW OFFICES OF MICHAEL M. COHEN
275 Walton Street, Suite CB
. Englewood, New Jersey 07631
347.921.2804 Phone I 347.921.2805 Facsimile
Attorneys for Plaintiffs

SUPERIOR COURT OF
M.P. MANAGEMENT, LLC and PLAZA NEW JERSEY
GARDENS, LLC, LAWDMSION
Plaintiff
ESSEX COUNTY
- against -
DOC.KET NO. ESX-L-007713-20

ELITE REAL ESTATE CONSULTANTS
LLC d/b/a ELITE COMMERCIAL
PROPERTY APPRAISALS, BRIAN C.
DONEGAN, ZF CAPITAL BOLDIN~,
LLC, and JACOB TAUBER,
•.•,•••••
CORRECTED

Defendants.

INTRODUCTION

1. This action arises out of a wink-and-nod appraisal done on a property that is

actually worth 17% the amount of the appraised value. Such mammoth gaps in valuation are

extremely rare and are usually the result of collusive fraud, malpractice and/or negligent

misrepresentation.

2. Plaintiff M.P. Management, LLC ("MP Mgmt.") brings this action after sustaining

losses in the value of his secured property after lending money to a real estate· developer based on

an appraisal.

3. Plaintiff is a third party intended beneficiary of an appraisal commissioned by ZF

Capital Holdings, LLC ("ZF Capital") which hired Defendant Elite Real Estate Consultants LLC
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d/b/a Elite Commercial Property Appraisals, Brian C. Donegan (collectively "Elite") to conduct

an appraisal on a property located at 770-778 Mount Prospect Avenue, Newark, NJ 07104 ("Mount

Prospect").

4. Mount Prospect is owned by a real estate developer by the name of Jacob Tauber

who borrowed sizable amounts of money from Plaintiff and who intended on using Mount

Prospect as collateral.

5. Elite's appraisal indeed acknowledged that the appraisal was going to be used for

the specific purpose of "utilizing the subject as collateral."

6. The appraisal used methods of valuation that deviate from the standards of the

appraisal industry and expressed a value that far exceeded its actual value.

7. Based on the erroneous value of the appraisal report, Plaintiff extended credit to the

owner of Mount Prospect which he would not have done had he lmown the actual accurate value

of Mount Prospect.

THE PARTIES, JURISDICTION, AND VENUE

8. M.P. Management LLC is a is a corporation organized and registered under the

laws of New York with a primary office address of 1274 49th Street, Suite 175, Brooklyn NY

11219.

9. Plaza Gardens, LLC (''Plaza Gardens") is a corporation organized and registered

under the laws of New Jersey with a primary office address at One University Plaza, Suite 507,

Hackensack, New Jersey 07601.

10. Defendant Brian C. Donegan ("Donegan") is a resident of New York State and

maintains an office at 112 West 34th Street, 17th Floor, New York, NY 10120. Donegan holds a

New Jersey state certified general re~l estate appraiser license #RCG.0001508.
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11. Defend~t Elite Commercial Property Appraisals is a corporation organized and

registered under the laws ofNew York with offices at 112 West 34th St, New York, NY 10120.

12. Defendant ZF Capital Holdings, LLC is a corporation organized and registered

under the laws of New York with offices at 2233 Nostrand Avenue, 3rd Floor, Brooklyn, NY

11210. Upon infonnation and belief, ZF Capital is a single member company whose managing

member is David Fleischmann, Esq., the developer's attorney.

13. Jurisdiction is proper since Plaintiff Plaza Gardens is a New Jersey corporation that

owns property, specifically Mount Prospect, that is located in New Jersey and all the relevant land

documents are filed in Essex County, New Jersey.

14. Venue is proper in Essex County because (i) Plaintiff Plaza Gardens is a New Jersey

corporation that owns Mount Prospect located in Essex County, (ii) since the subject matter of the

appraisal and a substantial amount of work related to such was perfonned in Essex County, and

(iii) Defendants transacts business in this county.

FACTS COMMON TO ALL CAUSES OF ACTION

15. Jacob Tauber ("Tauber" or the "Developer") is the real estate developer that owned

Mount Prospect through an entity by the name of Mt Prospect Lofts LLC.

16. Tauber owns numerous properties in Essex County.

17. On March 7, 2019, MP Mgmt. loaned Tauber $2,000,000 for property in Essex

County that was secured by a mortgage, promissory note and Confession of Judgment. The

property was identified as 770-778 Mount Prospect Avenue, Newark, New Jersey. David

Fleischmann, Esq., ZF Capital's managing member, was Tauber's attorney for this transaction.

18. The loan maturity date was September 6, 2019.
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19. On April 1, 2019, MP Mgmt. loaned Tauber an additional $250,000 for the Mount

Prospect property which was secured by a mortgage, promissory note and Confession of Judgment.

David Fleischmann, Esq., ZF Capital's managing member, was Tauber's attorney for this

transaction.

20. The loan maturity date was September 6, 2019.

21. Prior to MP Mgmt. loaning Tauber any of the monies on Mount Prospect, Tauber

gave MP Mgmt. an Appraisal conducted by Elite signed and dated January 28, 2019 (the

"Appraisal") upon which MP Mgmt. relied in using Mount Prospect as collateral for the loans.

The Appraisal

22. Elite's appraisal stated that it was going to be used to assess the market value of

Mount Prospect for a "mortgage financing decision utilizing the subject as collateral."

23. In other words, Elite was aware that the appraisal would be used by a financier to

asses the value of the property as collateral in anticipation of a loan.

24. As such, lenders such as MP Mgmt. are foreseeable third-party beneficiaries of the

Appraisal.

25. The appraisal was a sham. It valued the property at $5,850,000.00, which

represented an overvaluation of $4,850,000, or almost 6 times the actual value

26. This is true notwithstanding the fact that the appraisal stated "The intended user of

this appraisal ZF Capital Holdings, LLC; we are not responsible for unauthorized use of this

report." The report did not specify what constitutes ''unauthorized use."

27. In fact, it is well understood in the real estate and appraisal world that appraisals

that are used to establish value for financing purposes will be used by other financial institutions

and lenders other than the specific one commissioning the appraisal.
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28. Appraisals are expensive to commission and cost several thousand dollars.

29. Appraisers understand that nobody commissions different appraisals for different

lenders.

30. Appraisers also understand this it is commonplace for a real estate developer or

owner that has an appraisal to show it to numerous lenders in an attempt to secure financing and

that it is usually not the first lender that is presented with an appraisal to ultimately lend on the

property for which they were commissioned to valuate.

31. Therefore, it was foreseeable that the appraisal was given to Plaintiff.

32. The appraisal aclmowledges that it received information from both ZF Capital and

Tauber, the developer. Specifically, the appraisal states that "We have been provided with a

construction budget by the developer of $6,155,087.00 inclusive of hard and soft costs,

contingency and entrepreneurial profit.

33. Elite conducted its own Construction Cost Analysis and found that the construction

budget provided by the developer was inaccurate and that Elite projected a significantly higher

construction budget of $8,015,494.00. In fact, the finding that the construction budget was off by

a margin of almost 25% should have alarmed the Elite that any of the other representations of

either the developer or its client was suspicious.

34. The appraisal also states that:

"We have been informed that the subject project has received all
necessary approvals, but have received no documentation and our
valuation is predicated upon the extraordinary assumption that the
project is approved as described."

35. The appraisal states:

We have inspected and photographed the subject property and
independently collected and analyzed relevant government,
zoning and real estate tax data pertaining to the subject. Market
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participants and other real estate professionals were consulted and
we reviewed public records, real estate publications, our office
files and appraisals of similar type properties that we previously
prepared. A conclusion was detennined from the analysis.

(Emphasis added).

36. Based upon Elite's representation that they "independently" reviewed zoning and

public records, the "extraordinary assumption" disclaimer that approvals were obtained for Mount

Prospect was contradicted and rendered either moot or misleading.

37. The appraisal ultimate gave the following value for Mount Prospect:

The "as is" value indication produced by the income capitalization
approach, was:

$5,850,000.00

The "prospective as completed and stabilized" value indication
produced by the income capitalization approach, will be:

$13,850,000.00

* * * *
The "as is" value indication produced by the sales comparison
approach, was:

$6,050,000.00

The "prospective as completed and stabilized" value indication
produced by the sales comparison approach, will be:

$14,100,000.00

RECONCILIATION AND FINAL VALUE CHOICE

Primary reliance was placed on the income capitalization approach
in our final conclusion of market value; strong support was provided
by the sales comparison approach.

We are of the opinion that the "as is" market value of the fee simple
estate of the subject property, as of January 23, 2019, was:
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FIVE MILLION EIGHT HUNDRED
FIFTY THOUSAND DOLLARS*
($5,850,000.00)*

We are of the opinion that the "prospectively as completed and
stabilized" market value of the fee simple estate of the subject
property, as of May 1, 2020, the projected date of completion and
stabilization, will be:

TlllRTEEN MILLION EIGHT HUNDRED
FIFTY THOUSAND DOLLARS*
($13,850,000.00)*

*Predicated upon all assumptions, limiting conditions and
extraordinary assumptions contained herein.

38. The "as is" value indication of $5,850,000.00 produced by the income

capitalization approach was not predicated upon all of the "assumptions, limiting conditions and

extraordinary assumptions" contained in the appraisal report.

39. The "as is" value indication of $6,050,000.00 produced by the sales comparison

approach was not predicated upon all of the "assumptions, limiting conditions and extraordinary

assumptions" contained in the appraisal report.

40. In fact, since the "FINAL VALUE CHOICE" used an "as-is" value as opposed to

as "as-if' value it mislead the reader as to the property's true "as-is" present value.

41. The appraisal is so flawed and misleading that it can only be considered a deception.

42. Defendants Donegan and Elite acted knowingly or recklessly and violated the duty

they owed to plaintiff to exercise reasonable diligence.

The Professional Standards for Appraisals

43. The Uniform Standards of Professional Appraisal Practice (the "USPAP") is the

generally recognized ethical and performance standards for the appraisal profession in the United

States.
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44. The USPAP was adopted by Congress in 1989, and contains standards for all types

of appraisal services, including real estate, personal property, business and mass appraisal.

45. UPAP, Rule 2-1 provides:

Each written or oral real property appraisal report must:

(a) clearly and accurately set forth the appraisal in a manner that will
not be misleading;

(b) contain sufficient information to enable the person(s) who are
expected to receive or rely on the report to understand it properly;

(c) clearly and accurately disclose any extraordinary assumption or
limiting condition that directly affects the appraisal and indicate its
impact on value.

46. According to Appraisal Institute, Guide Note 15 Assumptions and Hypothetical

Conditions:

Care must be taken when using the phrase "as is" to describe a value
opinion. It is misleading to identify a value premised on a
hypothetical condition as an "as is" value, because the use of a
hypothetical condition makes the value "as if' and contrary to
what exists. If a value is premised on a special or extraordinary
assumption, it may or may not be an "as is" value. Unless and until
the uncertainty that created the need for the special or
extraordinary assumption is removed, the value should not be
characterized as "as is."

(Emphasis added).

Professionals Owe a Duty to Foreseeable Recipients of Their Work Product

47. In New Jersey, the lack of a contractual relationship between a claimant and a

professional, what is commonly referred to as "privity," does not defeat a claim.

48. In fact, the New Jersey Supreme Court has held that a professional owes a duty of

care even to persons who did not retain, engage or otherwise pay the professional. Carter Lincoln-

Mercury v. EMAR Group, 135 N.J. 182,638 A.2d 1288 (1994).
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49. In a subsequent case commenting on Carter the Appellate Division in Ranier v.

Frieman, 294 NJ.Super. 182,188,682 A.2d 1220 {App. Div.1996), expressed:

... the Court has effectively eliminated privity as a prerequisite
for the imposition of liability. As the Court explained in Carter
Lincoln-Mercury v. EMAR Group, 135 N.J. 182, 196, 638 A.2d
1288 (1994), 'duty is defined not by the contractual relationship
between the parties but by considerations of foreseeability and
fairness .... ' ...

. . . The Court has, moreover, extended this principle to professional
negligence, eliminating the prerequisite of a patient or client
relationship as a necessary element of professional malpractice.
Consequently, the Court has expressly recognized that a
professional's duty of care is owed not only to his patient or client
but also to those third parties who will foreseeably and
reasonably rely on his skill and care in the performance of a
particular professional undertaking.

(Emphasis added).

50. Other Courts have since affirmed this precedent. Rosenblum v. Adler, 93 N.J. 324,

352,461 A.2d 138 (1983); Petrillo v. Bachenberg, 139 N.J. 472,487, 655 A.2d 1354 1135 (1995);

Carvalho v. Toll Bros. and Developers, 143 N.J. 565, 573-74, 675 A.2d 209 (1996); R.J. Longo

Const. Co. v. Schragger, 218 N.J.Super. 206, 209-10, 527 A.2d 480 (App.Div. 1987); Albright v.

Bums, 206 N.J.Super. 625, 632-33, 503 A.2d 386 (App.Div.1986).

51. Zielinski v. Professional Appraisal Assoc., 740 A.2d1131, 1134 (App.Div. 1999)

applied these very same principles to a real estate appraisal and stated "We agree with Zielinski

that the mere fact that she had no contractual relationship with PAA does not necessarily bar her

from recovery. The lack of a contractual relationship or privity does not automatically defeat a

claim." 1

The Plaintiff in Zielinski was ultimately unable to recover for professional malpractice, not because of issues
ofprivity, but because Plaintiff admitted that they did not receive the appraisal report prior to their purchase the Court
found that Zielinski "could not reasonably have relied upon it" and "Under the circumstances, considerations of
foreseeability and fairness preclude the imposition of a duty."
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The Defendants' Actions Caused a Loss to MP Mgmt.

52. Based on Elite's appraisal, MP Mgmt. extended credit to the developer.

53. After making the loan and Tauber defaulting, MP Mgmt. began efforts to either

foreclose upon or sell his interest in Mount Prospect.

54. After speaking with several members of the Newark real estate community, MP

Mgmt. realized that Mount Prospect's as-is value was approximately $1M - not the whopping

$5,850,000.00 that Elite stated it was valued.

55. In fact, the appraisal should have specified the difference between the as-is value

($1,850,000) the as-if value ($5,850,000.00-$6,050,000.00), and the prospective as completed and

stabilized" value (13,850,000.00).

56. Based on the standards of the Appraisal community, Elite's appraisal was

inherently "misleading."

57. Additionally, while Elite was told by the developer that the construction budget was

$6,155,087.00, Elite did not blindly trust these figures and undertook the due diligence to verify

the construction budget by conducting its own Construction Cost Analysis and arrived at a budget

of $8,015,494.00.

58. However, the appraisal also states that ''we have been infonned of the approvals"

but as it turns out that Elite did absolutely nothing to verify whether or not such approvals were,

in fact accurate.

59. It was simply reckless to blindly rely on such information when Elite could have

very easily verified its truth especially since verifying whether or not approval had actually been

given would have been considerably easier than conducting an independent construction cost

budget analysis.
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60. Moreover, considering that Elite stated that it "independently collected and

analyzed relevant government, zoning and real estate tax data ... reviewed public records" either

such is untrue or Elite was able to determine that approvals were not obtained but failed to report

that in its appraisal.

61. Specifically, Elite played hot-and-cold in its appraisal by stated that ''we have been

informed of the approvals, but have received no documentation" and then also represented that

Elite "independently collected and analyzed relevant government, zoning and real estate tax data

... reviewed public records." In essence, Elite's representations were contradictory and acted to

nullify and/or neutralize the "extraordinary assumption."

62. As a direct result of Defendants' neglect, MP Mgmt. made a loan that he otherwise

would have not made.

63. As a direct and proximate cause of Elite's negligence MP. Mgmt. suffered

substantial financial loss.

The Troublesome Relationship Between the Defendants

64. Ostensibly, the appraisal was conducted by Elite for ZF Capital Holdings, LLC.

65. The appraisal references communications between Elite and Tauber.

66. The appraisal also is based on facts provided by ZF Capital.

67. The appraisal also states that Tauber provided a grossly underestimated value for

the construction budget on Mount Prospect.

68. Upon information and belief, Tauber and ZF Capital made critical and material

misrepresentations to Elite that they lmew were false when they were made in an effort to enable

Elite to over-inflate Mount Prospect's value.

69. Specifically, Tauber undervalued the costs of construction.
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70. Tauber and/or ZF Capital misrepresented the truth about approvals on the property

when they knew that such representations were false when made and that such misrepresentations

would have a substantial effect on Elite's valuation of Mount Prospect.

71. Tauber and/or ZF Capital lmew, or should have !mown, that their

misrepresentations would cause the appraisal to be inflated and that investors would likely use the

appraisal to va~e Mount Prospect.

72. Tauber gave the appraisal to MP Mgmt. !mowing it would rely on the appraisal in

an attempt to fraudulently induce MP Mgmt. into loaning monies he would otherwise not loaned

but for the appraisal.

FIRST CAUSE OF ACTION
Against Elite Commercial Property Appraisals
FOR PROFESSIONAL NEGLIGENCE-LEGAL MALPRACTICE

73. Plaintiff ii;icorporates by reference all preceding paragraphs as if fully set forth

herein.

74. Plaintiffs are intended, or foreseeable, beneficiaries of Elite's professional product.

75. Elite owes a duty to any foreseeable user of its appraiser including Plaintiffs.

76. Defendant breached these duties in the following ways:

a) It relied on critical information that it failed to verify, i.e., that approvals
were obtained;

b) It stated that it "we have been informed of the approvals, but have received
no documentation" but separately stated that Elite "independently collected
and analyzed relevant government, zoning and real estate tax data . . .
reviewed public records" but either (i) never really did such, (ii) Elite was
able to determine that approvals were not obtained but failed to report that
in its appraisal, and/or (iii) the language it used was contradictory, nullifying,
misleading and confusing.

c) It used an as-if valuation which deviated from the standard for appraisals.
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77. Defendants violated UPAP, Rule 2-l(a) by using an as-is, as opposed to an as-if,

value which is inherently "misleading."

78. The very fact that the misleading appraisal is so far off the actual value of Mount

Prospect is evident of negligence; res ipsa loquitur.

79. But for Defendant' negligence, Plaintiff would not have suffered avoidable losses.

80. It was foreseeable to Defendant that Plaintiff would rely upon the appraisal

81. Defendant' negligence was a material element and a substantial factor in bringing

about damage to Plaintiff as MP Mgmt. relied solely on the Appraisal in making the loans.

82. Plaintiff has suffered damages in an amount to be proven at trial, but in an amount

no less than $4,850,000.

SECOND CAUSE OF ACTION
Against All Defendants
FOR VIOLATION OF THE CONSUMER FRAUD ACT

83. Plaintiff incorporates by reference all preceding paragraphs as if fully set forth

herein.

84. New Jersey's Consumer Fraud Act (the "CFA"), N.J.S.A. 56:8-1 et seq., has been

adopted to control the various forms of consumer abuse in business.

85. The CFA defines a "person" as including "any natural person or his legal

representative, partnership, corporation, company, trust, business entity or association.". N.J.S.A.

56:8-l(d).

86. New Jersey courts have held that under this broad definition of "person" a

corporation may maintain an action for a violation of the CFA. 2

2 See, e.g., Coastal Group, Inc., v. Dryvit Systems, Inc., 274 N.J. Super. 171, 179-180 (App. Div. 1994); Perth
Amboy Iron Works, Inc. v. American Home Assurance Co., 226 N.J. Super. 200, 209 n. 7 (App. Div. 1988), ajf'd, 118
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87. The CFA, N.J.S.A. 56:8-2, defines "consumer fraud" as "any unconscionable

commercial practice, deception, fraud, false pretense, false promise, misrepresentation, or the

lrnowing, concealment, suppression, or omission of any material fact with intent that others rely

upon such concealment, suppression or omission, in connection with the sale or advertisement of

any merchandise or real estate." (Emphasis added).

88. The CFA, N.J.S.A. 56:8-19, specifically provides for the award of treble damages

plus costs and attorney's fees.

89. Jacob Tauber and ZF Capital each and collectively had an incentive to finding

someone to loan the developer on Mount Prospect.

90. Jacob Tauber needed money to keep Mount Prospect afloat.

91. Jacob Tauber owed ZF Capital considerable amounts of money on multiple real

estate ventures.

92. Jacob Tauber's ability to raise additional money from MP Mgmt. directly benefitted

ZF Capital who was a creditor of Jacob Tauber.

93. ZF Capital's managing member is and was Jacob Tauber's attorney.

94. Both ZF Capital and Jacob Tauber knew the material facts relating to Mount

Prospect's value.

95. These facts included (i) whether approvals were in fact granted, (ii) the construction

budget, and (iii) the actual value of Mount Prospect.

96. Jacob Tauber and ZF Capital concealed material infonnation that would have

grossly affected the appraised value of Mount Prospect.

N.J. 249 ( 1990); Hundred E. Credit Corp. v. Eric Schuster Corp., 212 N.J. Super. 350, 354-357 (App. Div. 1986), cert.
denied, 107 N.J. 60 (1986).
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97. Jacob Tauber and ZF Capital affirmatively misrepresented material information

that grossly affected the appraised value of Mount Prospect.

98. Jacob Tauber and ZF Capital each had a duty to correct material information that

grossly affected the appraised value of Mount Prospect.

99. Instead, Jacob Tauber and ZF Capital fraudulently induced Plaintiff to extend credit

based on an appraisal they knew was inaccurate.

100. Jacob Tauber and ZF Capital fraudulently induced Plaintiff into extending credit

for the sole purpose of obtaining a benefit and for self-interest.

101. Elite knew, or should have known, that its appraisal was misleading.

102. Elite could not have possibly believed in the bona fide nature of its valuation which

was almost 6 times the actual value of the property.

103. Elite, Jacob Tauber and ZF Capital's actions constitute fraud under the CFA,

N.J.S.A. 56:8-2.

104. Plaintiff would have never extended credit without the overinflated appraisal.

105. As a direct and proximate consequence of Defendant's fraud, Plaintiff has suffered

damages in an amount to be proven at trial, but in an amount no less than $4,850,000.

106. Plaintiff is entitled to Treble Damages under the CFA an amount to be determined

at trial pursuant to N.J.S.A. 56:8-19.
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TIDRD CAUSE OF ACTION
Against All Defendants
FRAUDULENT MISREPRESENTATION

107. Plaintiff incorporates by reference all preceding paragraphs as if fully set forth

herein.

108. Defendants made material misrepresentations of fact that overvalued the property

of Mount Prospect.

109. Defendants made the misrepresentations intentionally in order to defraud or

mislead a potential lender.

110. Plaintiff reasonably relied on the misrepresentations of the Defendants prior to

lending on Mount Prospect.

111. Plaintiff suffered damages as a result of their reliance on the Defendants'

misrepresentations.

112. Defendants had no genuine belief in the adequacy of their appraisal.

113. In its appraisal, defendants made false representations of material facts with an

intent to deceive and it knew that the appraisal would be relied upon by a lender which would

benefit, directly or indirectly, its client.

114. Inasmuch as the appraisal overvalued the Property by almost six times its actual

value, defendants could not have had a genuine Qelief in the legitimacy or adequacy of the appraisal

and thereby acted with scienter.

115~ Plaintiff would have never extended credit without the overinflated appraisal.

116. As a direct and proximate consequence of Defendant's :fraudulent

misrepresentation(s), Plaintiff has suffered damages in an amount to be proven at trial, but in an

amount no less than $4,850,000.
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FOURTH CAUSE OF ACTION
Against all Defendants
FOR BREACH OF THE IMPLIBD COVENANT
OF GOOD FAITH AND FAIR DEALING

117. Plaintiff incorporates by reference all preceding paragraphs as if fully set forth

herein.

118. By law, every transaction has an implied covenant of good faith and fair dealing

that requires each party to exercise care and perform its obligations fairly so as not to unreasonably

deny the other party the benefits of good faith and fairness.

119. Under New Jersey law, good faith is defined as "honesty in fact and the observance

of reasonable commercial standards of fair dealing in the trade".

120. The Defendants breached the implied covenant by engaging in an implicit

relationship that generated an appraisal that it is less than upright.

121. Specifically, the very fact that the misleading appraisal is so far off the actual value

of Mount Prospect is indicative of the lack of good faith.

122. Plaintiff has suffered damages in an amo

Case Info

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Thomas M Moore Track Judge’s New Case

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Document Filed Date

April 08, 2021

Case Filing Date

November 10, 2020

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Motion,Ex Parte: M.P. Management, Llp Vs Elite Real Estate Co Ns

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