                                NOT FOR PUBLICATION WITHOUT THE
                               APPROVAL OF THE APPELLATE DIVISION
        This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the
     internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.




                                                         SUPERIOR COURT OF NEW JERSEY
                                                         APPELLATE DIVISION
                                                         DOCKET NO. A-0149-17T2

BRUCE KAYE, Individually and
as Trustee Of The BRUCE KAYE
REVOCABLE TRUST and The
BRUCE KAYE DYNASTY TRUST,
JASON KAYE, FLAGSHIP RESORT
DEVELOPMENT CORPORATION,
and FIRST RESORTS
MANAGEMENT COMPANY, INC.,

          Plaintiffs-Appellants/
          Cross-Respondents,

and

ATLANTIC PALACE
DEVELOPMENT, LLC, and LA
SAMMANA VENTURES, LLC,

          Plaintiffs,

v.

ALAN P. ROSEFIELDE, PLUMROSE
COMPANY, INC., ROSE
ASSOCIATES, INC. OF MIAMI, LA
SAMMANA MANAGEMENT, LLC,
and BA MANAGEMENT, LLC,
     Defendants/Third-Party
     Plaintiffs-Respondents/
     Cross-Appellants,

v.

DEBORAH KAYE, 2000 BRUCE
KAYE DYNASTY TRUST, HOWARD
ALTER, SUSAN TUNNEY, MICHAEL
VALENTI, RONNIE STRANSKY,
KENNETH WOLFE, and DENNIS
RICHARD,

     Third-Party Defendants.
__________________________________

           Argued September 11, 2019 – Decided October 7, 2019

           Before Judges Koblitz, Whipple and Gooden Brown.

           On appeal from the Superior Court of New Jersey,
           Chancery Division, Atlantic County, Docket No. C-
           000017-05.

           Edwin J. Jacobs, Jr. argued the cause for appellants/
           cross-respondents (Jacobs & Barbone, PA, attorneys;
           Edwin J. Jacobs, Jr., on the briefs).

           Andrew W. Rubin argued the cause for respondents/
           cross-appellants.

PER CURIAM

     In these cross-appeals we review two Chancery Division orders dated

August 9, 2017, and March 29, 2018. We reverse.



                                                                   A-0149-17T2
                                    2
      The facts of this case were well-chronicled in our prior opinion, Kaye v.

Rosefielde (Kaye I), 432 N.J. Super. 421, 435–59 (App. Div. 2013), and in the

Supreme Court's opinion in Kaye v. Rosefielde (Kaye I), 223 N.J. 218, 222–27

(2015), and need not be fully repeated to understand the orders currently under

review. Essentially, Rosefielde, an attorney, was employed by Kaye to manage

Kaye's real estate affairs and assist in estate planning matters. Kaye I, 223 N.J.

at 221.1 Rosefielde engaged in a host of egregious actions, including breaches

of the duty of loyalty, fraud, malpractice, and sexual harassment. In 2005, Kaye

sued Rosefielde in Atlantic County, seeking, among other things, disgorgement

of $1 million in compensation paid by Kaye to Rosefielde.

      After a bench trial, the Chancery Division judge found that while

Rosefielde was a disloyal employee who improperly transferred various

ownership interests in Kaye's businesses to himself, he also increased profits

and lowered expenses. The judge ruled disgorgement was not required, because

Kaye suffered no economic injury, but did order Rosefielde's interests in Kaye's

businesses be rescinded and issued a judgment in favor of Kaye for $966,675.76.




1
   Although the caption lists a number of parties as litigants, this case has
essentially been a dispute between Kaye and Rosefielde from the beginning. 432
N.J. Super. at 429.
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                                        3
Both parties appealed. Rosefielde contested the trial verdict and damages, while

Kaye argued error in the disgorgement ruling.

      On November 24, 2012, after oral argument but before we issued our

opinion, the parties settled. The resulting settlement agreement is central to the

matter currently before us, but was not discussed either in our decision or the

Supreme Court's opinion in Kaye I. The settlement agreement referenced the

then-pending Appellate Division case by its docket number and as the "New

Jersey Action[.]" By the terms of the agreement, Kaye accepted $250,000 from

Rosefielde's malpractice carrier in satisfaction of the $966,675.76 judgment, and

provided all litigation would be dismissed. However, the parties inserted a

clawback provision allowing Rosefielde to potentially recoup the settlement

payout should Rosefielde prevail on any issue on appeal in the "New Jersey

Action." The settlement agreement includes an integration clause, and the

parties agreed that Florida law would govern, stating "[a] court of competent

jurisdiction located in the Dade County, Florida shall determine any dispute

arising hereunder."

      We affirmed the trial judge in part, reversed in part, and remanded for

further proceedings. In particular, we upheld the trial court's findings that

Rosefielde breached his fiduciary duties to Kaye, and affirmed the order


                                                                          A-0149-17T2
                                        4
rescinding Rosefielde's ownership interest in Kaye's businesses.         We also

affirmed the trial judge's disgorgement ruling.

      However, we reversed the imposition of counsel fees and punitive

damages. We concluded Kaye had not shown "Rosefielde's legal malpractice

and fraudulent conduct proximately caused any compensable damages to [him]."

We also concluded the record did not show Rosefielde's fraudulent acquisition

of an ownership interest in one of Kaye's entities, while in bad faith, caused any

compensable damages.

      Kaye filed a petition for certification on the disgorgement issue. Kaye I,

217 N.J. 586 (2014). While the petition was pending, Rosefielde filed a motion

to dismiss the petition, arguing that the parties' settlement agreement rendered

the case moot. The Supreme Court denied the motion without explanation. The

Supreme Court granted Kaye's certification petition to review "whether the

Appellate Division erred by affirming the trial court's holding that economic

damages are a necessary prerequisite for disgorgement of the employee's

salary." Kaye I, 217 N.J. at 586.

      The Supreme Court concluded "that an employer may seek disgorgement

of a disloyal employee's compensation as a remedy for the breach of the duty of

loyalty, with or without a finding of economic loss." Kaye I, 223 N.J. at 236.


                                                                          A-0149-17T2
                                        5
However, because the trial court never made a finding of economic loss related

to Rosefielde's compensation, the Supreme Court remanded the matter for such

a determination. Thus, "[t]he judgment of the Appellate Division [wa]s reversed

with respect to the remedy of equitable disgorgement, and the matter [wa]s

remanded to the trial court for further proceedings consistent with this opinion ."

Id. at 238. The opinion did not mention the settlement agreement.

      On remand to the Chancery Division, on April 15, 2016, Rosefielde

moved to dismiss, seeking enforcement of the settlement agreement and an order

dismissing Kaye's complaint with prejudice. He argued that the settlement

agreement was an enforceable contract, and once he paid the settlement, Kaye

was obligated to dismiss his complaint. Rosefielde also argued the controversy

should be dismissed as moot, notwithstanding the Supreme Court remand.

      The court heard oral argument on the motion to dismiss on June 5, 2017.

Kaye argued he was entitled to continue litigating the disgorgement issue in light

of the Supreme Court's decision, because when the Supreme Court rejected

Rosefielde's motion to dismiss the certification petition, it did not state it was

applying an exception to the mootness doctrine. Kaye argued that, because the

issue of mootness was not addressed, the Supreme Court must have viewed the

case as a live controversy notwithstanding the settlement agreement. To view


                                                                           A-0149-17T2
                                        6
the Supreme Court's disposition otherwise, according to Kaye, would be to

"pretend[]" the Supreme Court reviewed the case as a matter of public

importance, despite its mootness. On August 9, 2017, the Chancery judge issued

a written decision granting Rosefielde's motion to dismiss. The judge focused

on the scope and enforceability of the settlement agreement, but only briefly

touched on the mootness issue. He noted that while the Supreme Court's reason

for denying Rosefielde's motion to dismiss the certification petition was unclear,

"it is not critical to the immediate proceeding."

      Rather, the judge found the settlement agreement foreclosed further

litigation to the extent Rosefielde did not prevail on appeal. The trial court

reviewed the particular clauses in the settlement agreement and noted the parties

intended to settle the New Jersey action for $250,000. The judge determined

the agreement "manifest[ed] a clear intent to resolve all disputes between the

parties including the New Jersey Action and 'The Judgment.'" Moreover, the

comprehensive release language demonstrated Kaye agreed to waive his right to

pursue current and future claims against Rosefielde, including disgorgement.

This general release was only qualified by a clawback provision, which involved

Rosefielde's—not Kaye's—right to recoup the settlement payout. Thus, the

court granted Rosefielde's motion to dismiss with prejudice.


                                                                          A-0149-17T2
                                        7
      Kaye appealed the court's order, but the parties consented to a temporary

remand to address indemnification. On January 30, 2018, Rosefielde filed a

motion for mandatory indemnification pursuant to N.J.S.A. 14A:3 -5(4)2. Oral

argument was held on March 22, 2018, before a different judge.

      Rosefielde sought indemnification for all legal fees incurred since the

settlement agreement was signed. The court granted in part and denied in part

Rosefielde's indemnification application in a March 29, 2018, written order.

The judge found the only matter wherein Rosefielde prevailed on the merits,

relative to the fees for which he sought indemnification, was his motion to

dismiss after the Supreme Court remand.        Therefore, the judge concluded

Rosefielde was entitled to indemnification for the fees incurred litigating the

motion to dismiss. Rosefielde's application for all other fees was denied. This

appeal followed.

      We first address the August 9, 2017 order regarding the settlement

agreement. The Chancery Division judge only briefly addressed whether the

settlement agreement rendered the case moot, thereby obviating a remand



2
   N.J.S.A. 14A:3-5(4) states that "Any corporation . . . shall indemnify a
corporate agent against expenses to the extent that such corporate agent has been
successful on the merits or otherwise in any proceeding referred to in [N.J.S.A.]
14A:3-5(2) and 14A:3-5(3) or in defense of any claim, issue or matter therein."
                                                                         A-0149-17T2
                                       8
hearing consistent with the Appellate Division's and Supreme Court's opinions

in Kaye I. However, as a trial court, the Chancery Division was bound to follow

the Supreme Court's instructions, even if it thought them erroneous. See In re

Plainfield-Union Water Co., 14 N.J. 296, 303 (1954).

      Notwithstanding the argument that the settlement agreement foreclosed

further litigation, our Supreme Court did not specify whether it considered the

case a live controversy or whether it was deciding the case under the public

interest exception to the mootness doctrine. If the former, Kaye was entitled to

a disgorgement hearing. But if the settlement agreement did moot this case,

Kaye is precluded from obtaining relief. See Reilly v. AAA Mid-Atl. Ins., Co.

of N.J., 194 N.J. 474, 484–85 (2008) ("Because we have concluded that the

questions raised in this appeal qualify as important matters of public interest,

we will address their merits notwithstanding the fact that the plaintiff can derive

no relief as a result.").

      Thus, we are constrained to reverse both orders and remand for

proceedings consistent with Kaye I.

      Moreover, we cannot reach the second order, which was premised on

Rosefielde's success on his motion to dismiss, because we cannot determine

whether Rosefielde was "vindicated" on the disgorgement issue. We need not


                                                                           A-0149-17T2
                                        9
reach the other arguments raised by the parties. Both the August 9, 2017, and

March 29, 2018, orders are reversed and the former is remanded for further

proceedings consistent with this opinion.

      Reversed.




                                                                     A-0149-17T2
                                     10
