                                NOT FOR PUBLICATION WITHOUT THE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-4917-17T4

LAUREN D. BURGER IRREVOCABLE
TRUST, HOWARD J. BURGER, Trustee,
and SUZANNE J. BURGER IRREVOCABLE
TRUST, HOWARD J. BURGER, Trustee,
and HOWARD J. BURGER, Individually,

          Plaintiffs-Respondents,

v.

AL AMJADY,

     Defendant-Appellant.
_____________________________________

                    Submitted April 30, 2019 – Decided May 24, 2019

                    Before Judges Hoffman and Enright.

                    On appeal from Superior Court of New Jersey,
                    Chancery Division, Union County, Docket No.
                    F-001533-17.

                    Mackevich Burke & Stanicki, attorneys for appellant
                    (James E. Mackevich, on the briefs).

                    Burger & Petino, LLC, attorneys for respondents
                    (Howard J. Burger, of counsel and on the brief; Randi
                    S. Greenberg, on the brief).
PER CURIAM

      This case concerns an attorney's attempt to enforce a mortgage loan made

to a longtime friend and client. For the reasons that follow, we affirm the trial

court's bench decision granting a final judgment of foreclosure.

                                       I.

      We derive the facts from the trial court's decision. Defendant Al Amjady

owned and operated a liquor store in the 1980s. Plaintiff Howard J. Burger

represented defendant in the purchase and subsequent sale of his liquor store.

Since that time, plaintiff has represented defendant and his family in numerous

cases. Over the course of their relationship, the parties became close friends.

      In 1992, defendant lost his home to foreclosure and declared personal

bankruptcy.   Since then, defendant has worked in the used car business,

beginning as a salesman before starting his own used car company with his

brother. When defendant's brother left the company, defendant formed All Cars

Corporation, which plaintiff incorporated.

      As part of the business, defendant obtained financing for his customers,

helped complete automobile loan applications, financed down payments, and

financed the purchase of used vehicles. Based on this background, the trial

judge determined defendant had complete familiarity "with the terms of finance,


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                                        2
including promissory notes which he assisted customers in signing and . . . which

he signed when purchasing at auctions." Defendant's business also required a

banking license in order to operate.

      In 1997, defendant decided to purchase the lot where he operated his used

car business. Plaintiff represented defendant in this transaction, but did not

require defendant to pay legal fees. In fact, defendant did not pay plaintiff legal

fees for any matter after 1990.        Plaintiff counseled defendant to make the

purchase, noting he could rent out portions of the property to pay off the

financing costs.

      However, defendant could not obtain financing due to his credit history,

which included a bankruptcy and a foreclosure, and because there had not been

an environmental study conducted on the property.           He therefore sought

plaintiff's help. Plaintiff agreed to lend him $150,000.

      On May 9, 1997, plaintiff sent defendant a letter describing the change in

their relationship from that of attorney-client to lender-borrower and outlining

the terms of the loan. The letter also advised defendant to seek independent

counsel. The trial court later determined the letter, while it complied with Rules

of Profession Conduct (RPC) 1.8(a)(1) and (2), failed to comply with (3) since

plaintiff did not confirm defendant's informed consent to the transaction by


                                                                           A-4917-17T4
                                          3
having him sign the letter. The purchase and the loan were completed on

September 16, 1997.       Plaintiff also made several other mortgage loans to

defendant related to purchasing the lot and running the business.

        Central to this dispute is a loan for $45,000 from plaintiff and two trusts

controlled by him. Although the note was a twelve percent, interest only note,

payable on demand, the parties appear to agree that only eight percent interest

was actually charged and paid. Plaintiff drafted the loan documents using "plain

language forms by All State Office Supply." Plaintiff did not advise defendant

of the conflict in writing as he had previously done, but did urge defendant to

retain independent counsel.

        On April 20, 2015, plaintiff and defendant again signed additional forms

outlining each of the loans with defendant acknowledging the debt. Defendant

does not deny signing the acknowledgment, but claims he signed everything

plaintiff requested him to sign.

        In September 2014, plaintiff told defendant he planned to retire and

demanded payment of the principal of the loan. Defendant told plaintiff he did

not have the money, but offered to pay $6000 per month beginning September

2016.    Plaintiff agreed to wait.    However, sometime between October and

December 2016, defendant advised plaintiff he would not make the payments.


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                                         4
Plaintiff attempted to resolve the dispute with defendant, but defendant refused

to make any payments at all. In January 2017, plaintiff filed this foreclosure

proceeding.

      The matter proceeded to trial, where an expert for each side testified. The

experts relied on the same underlying facts, but reached differing conclusions

about the fairness of the loans. The main facts relied upon were:

              [1)] defendant was a poor risk; 2) there was no loan
              application; 3) the property did not have an
              environmental study; 4) the loan was an on demand
              loan; 5) the interest rate was 12 percent [1] . . . 6) the
              defendant's income tax return showing $39,000 showed
              that the defendant did not have sufficient income to pay
              the loan. The defendant's business gross income was
              between $1.2 million and $1.8 million and his markup
              was 10 percent, that's between $120,000 and $180,000.

      Each expert viewed the transaction as unfair to the interests of the party

who retained him. Ultimately, the trial court rejected defendant's arguments and

found the transaction weighed heavily in defendant's favor. As a result, the court

entered the foreclosure judgment under review. This appeal followed.




1
  Both parties conceded that the interest paid was only eight percent, rather than
twelve.
                                                                           A-4917-17T4
                                          5
                                        II.

      The parties do not dispute an attorney-client relationship existed at the

time of the loan. Courts hold attorneys to a high standard of fairness, good faith,

and fidelity. See Estate of Spencer v. Gavin, 400 N.J. Super. 220, 242 (App.

Div. 2008). Because of this high duty, "an attorney's freedom to contract with

a client is subject to the constraints of ethical considerations and the Supreme

Court's supervision." Cohen v. Radio-Elecs. Officers Union, 146 N.J. 140, 155

(1996).

      Our RPC expressly forbid an attorney from entering a "business

transaction with a client or knowingly acquir[ing] an ownership, possessory,

security or other pecuniary interest adverse to a client unless" the attorney meets

the following three requirements:

            (1) the transaction and terms in which the lawyer
            acquires the interest are fair and reasonable to the client
            and are fully disclosed and transmitted in writing to the
            client in a manner that can be understood by the client;

            (2) the client is advised in writing of the desirability of
            seeking and is given a reasonable opportunity to seek
            the advice of independent legal counsel of the client's
            choice concerning the transaction; and

            (3) the client gives informed consent, in a writing
            signed by the client, to the essential terms of the
            transaction and the lawyer's role in the transaction,


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                                        6
             including whether the lawyer is representing the client
             in the transaction.

             [RPC 1.8(a).]

      In Milo Fields Trust v. Britz, 378 N.J. Super. 137, 148-49 (App. Div.

2005), we explained "business transaction[s] between an attorney and client

[are] not prohibited" by RPC 1.8(a), but rather are deemed "presumptively

invalid . . . ." An attorney may overcome the presumption of invalidity by

showing: "[(1)] full and complete disclosure of all facts known to the attorney,

[(2)] absolute independence of action on the part of the client, [(3)] the f airness

and equity of the transaction, [(4)] the lack of overreaching, and [(5)] the client's

understanding of the importance of independent representation." Ibid. (citing

P & M Enters. v. Murray, 293 N.J. Super. 310, 314 (App. Div. 1996)).

The party seeking to affirm the transaction must prove each element by "the

clearest and most convincing evidence . . . ." P & M Enters., 293 N.J. Super. at

314. The failure to rebut the presumption usually results in the invalidation of

the transaction. Van Horn v. Van Horn, 415 N.J. Super. 398, 415 (App. Div.

2010) (citing Milo Fields Tr., 378 N.J. Super. at 154).

      We do not disturb the factual findings and legal conclusions of the trial

judge unless "they are so manifestly unsupported by or inconsistent with the

competent, relevant and reasonably credible evidence as to offend the interests

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                                         7
of justice . . . ." Rova Farms Resort, Inc. v. Inv'rs Ins. Co., 65 N.J. 474, 478

(1974). We therefore examine whether "there is substantial evidence in support

of the trial judge's findings and conclusions." Ibid.

      Here, the trial judge made specific findings of fact regarding the propriety

of the transaction:

            1) that the defendant was a sophisticated businessman
            as a borrower; 2) that the client asked the lawyer for the
            loan because he couldn't get the money elsewhere; 3)
            that the loan was made out of friendship; 4) that the
            client signed the loan documents; 5) that the client paid
            interest only and knew it was interest only . . . from the
            existence of the loan . . . without complaint; 6) [that]
            the loan was fair and reasonable to the client. He could
            not get the same loan elsewhere, but plaintiff could've
            invested elsewhere for better results; 7) [that] the
            credibility of the client, Mr. Amjady, was stretched
            beyond the limits of credulity.

      The trial court's factual findings support its legal conclusion finding the

agreement legally enforceable. Plaintiff fully disclosed the facts underlying the

transaction and avoided interdependence of action. In his May 1997 letter,

plaintiff advised defendant that the loan "would alter our relationship of attorney

and client to that of borrower and lender." The same letter also spelled out the

terms of the arrangement, and "urge[d defendant] to seek independent legal

counsel and financial advice before going ahead with this transaction." The

parties memorialized the transaction using "plain language" forms. Defendant

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                                        8
had dealt with financial transactions, loans, lending agreements, and had even

obtained a banking license for his business.

       There was also independence of action because defendant sought out

plaintiff's help. This case did not involve an instance in which an attorney

sought to take advantage of a vulnerable client. Defendant could not obtain

other financial support for his business due to his poor credit, bankruptcy, and

previous foreclosure. Because of this, defendant turned to his attorney, who was

also his friend and "angel," to get the money he needed. Defendant's business

sophistication also factors into the analysis, since sophisticated parties are less

susceptible to being taken advantage of. See Milo Fields Tr., 378 N.J. Super. at

149.

       The trial judge concluded the loan agreement was fair and equitable.

Defendant had no other viable options for obtaining funds. As the trial court

determined, based on plaintiff's expert, the loans contained favorable interest

rates to defendant. A commercial lender would have required around eighteen

percent interest, whereas plaintiff lent at a maximum of twelve percent. Plaintiff

also could have earned greater returns on his money by investing conservatively

with the Standard and Poor's Index. Based on these facts, the trial court correctly




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                                        9
determined "all of these claims lead to the conclusion that it was the defendant

who took advantage of the plaintiff . . . ."

      RPC 1.8(a)(3) requires an attorney entering into a business transaction

with a client to obtain the client's "informed consent, in a writing signed by the

client . . . ." As noted, plaintiff did not obtain this writing at the outset of the

business transaction.

      Nevertheless, "[if] the attorney can demonstrate that the intent and

purpose of the rule was met, the transaction should not be disturbed." Milo

Fields Tr., 378 N.J. Super. at 149 (citing P & M Enters., 293 N.J. Super. at 314).

We have defined that intent as: to avoid "the hoodwinking of helpless clients

out of funds in a business venture that is essentially for the benefit of the lawyer

. . . ." Id. at 147-48 (quoting In re Wolk, 82 N.J. 326, 335 (1980)). Here, plaintiff

did not "hoodwink" a "helpless" client in a venture "essentially for the benefit

of the lawyer."

      Further, the trial court's findings explain the fairness of the deal to

defendant. Defendant received a loan he could not otherwise obtain. Even if he

had obtained another loan, the record demonstrates the interest rate would have

greatly exceeded the rate plaintiff charged defendant.          As the trial court

explained, if anyone received an unfair deal, it was plaintiff. Lastly, although


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                                        10
plaintiff did not obtain a written informed consent, his failure to achieve exact

compliance with the RPC does not preclude him from enforcing the loan because

the record otherwise contains clear and convincing evidence that the intent and

purpose of the rule was satisfied.

      Affirmed.




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