Full Opinion

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court ."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-3631-24 DAVID BERKOWITZ, Plaintiff-Appellant, v. WP FIDELCO LLC, Defendant-Respondent. ________________________ Argued September 22, 2026 – Decided October 22, 2026 Before Judges Gilson and DeAngelis. On appeal from the Superior Court of New Jersey, Chancery Division, Essex County, Docket No. C- 000138-24. Louis A. Modugno argued the cause for appellant (Trif & Modugno LLC, attorneys; Louis A. Modugno and Brendan W. Carroll, on the briefs). Jay J. Rice argued the cause for respondent (Nagel Rice LLP, attorneys; Jay J. Rice, of counsel and on the brief; Michael J. Paragano, on the brief). PER CURIAM This appeal arises out of claims by plaintiff David Berkowitz (Berkowitz or plaintiff) that his ownership interests in defendant WP Fidelco LLC (Fidelco or defendant) were diminished when, effective May 1, 2020, Fidelco adopted an amendment to its operating agreement without his consent. Berkowitz sued Fidelco, asserting breach of contract claims and seeking damages. He appeals from an order granting summary judgment to Fidelco and dismissing his complaint with prejudice. Berkowitz argues that the trial court erred in interpreting the operating agreement and in determining that he was not disassociated from Fidelco. The facts and law do not support the claim of disassociation. Moreover, Berkowitz did not present evidence of damage apart from his disassociation claim and, therefore, because proof of damage is an essential element for breach of contract claims, he failed to establish those claims. Accordingly, we affirm the dismissal of Berkowitz's complaint, albeit for reasons different from the trial court. I. We discern the facts from the summary judgment record, viewing the evidence in the light most favorable to Berkowitz, against whom summary judgment was entered. See Richter v. Oakland Bd. of Educ., 246 N.J. 507, 515 (2021) (citing Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995)); A-3631-24 2 Rivera v. Cherry Hill Towers, LLC, 474 N.J. Super. 234, 238 (App. Div. 2022). We also note that before the trial court and us, Berkowitz maintained the material facts were not in dispute and the claims in this matter depended on an interpretation of the operating agreement. In the early 2000s, Berkowitz helped Marc Berson identify and negotiate the purchase of a building located at 471-495 Broad Street, Newark (the Property). Berson then formed Fidelco to acquire the Property. Fidelco is a New Jersey limited liability company that owns Washington Park Fidelco, LLC, which in turn owns and operates the Property. To purchase the Property, Fidelco raised just over $14,200,000 in capital from its members. It also borrowed $41,000,000. In 2004, the members of Fidelco, including Berson and Berkowitz, executed a First Amendment and Restated Operating Agreement and a First Amendment to the First Amended and Restated Operating Agreement (collectively, the Operating Agreement). The members of Fidelco were grouped into several "Class[es]" of ownership, including Classes A, B, C, D, and E. 1 Berson owned the majority of Fidelco, controlling over fifty-one percent of the 1 There were no members of Class D, and the Operating Agreement explained that members of Class D would be determined in the future depending on whether there were future capital contributions. A-3631-24 3 company and was a Class A, B, C, and E member. He also held interests in other companies and trusts that were members of Fidelco. In December 2004, Berkowitz had an eleven percent ownership of Fidelco. He had been deemed to have made a capital contribution of $100,000, which gave him a one percent Class B ownership interest. He also had a ten percent Class C ownership interest. Additionally, Berkowitz owned five percent of Class E, but the parties agree that the Class E interest would only yield a return if the Property is sold. The Operating Agreement defines an "Interest" as "an ownership interest in the Company, including all the rights and obligations in connection therewith under the [Operating] Agreement and the [Revised Uniform Limitation Liability Company] Act [ N.J.S.A. 42:2C-1 to -94 (the Act)]." Article V of the Operating Agreement explains that Fidelco will be managed by a Manager, who was Berson. Section 5.03 of the Operating Agreement explains how members can meet and consent to actions. That provision also states: Notwithstanding anything contained herein to the contrary, without the unanimous consent of all of the Members of the Company, no amendments or modifications will be made to this Operating Agreement which, by their terms, would materially expand the liabilities or obligations of any of the Members or diminish the interest of any such Member in the Company. A-3631-24 4 Class A members had made capital contributions totaling $9 million and under the Operating Agreement were entitled to a preferred rate of return on their capital contributions of twelve percent for the first two years, fourteen percent in the third year, and sixteen percent per year thereafter. There were two Class B members: Berson, who made a capital contribution of $5,258,240, and Berkowitz, who was deemed to have made a capital contribution of $100,000. Class B members, like Berkowitz, were entitled to a preferred rate of return of eleven percent per year for their unreimbursed capital contribution. The term "Preferred Return" is defined in the Operating Agreement and means an amount equal to a Member's Unreturned Capital Contribution (computed as a weighted daily average during the period for which the Preferred Return is being determined) multiplied by the applicable Preferred Return Rate for the specified Class of Capital Contributions, which to the extent not paid shall accrue annually but shall not be compounded. Accordingly, each year Berkowitz was entitled to $11,000, which was an eleven percent return on the unreimbursed portion of his capital contribution of $100,000. To the extent the $11,000 was not paid to Berkowitz in a particular year, that amount accumulated. Article III of the Operating Agreement identifies two main types of disbursements to be made to members: "Net Ordinary Proceeds" and "Net A-3631-24 5 Capital Proceeds." Net Ordinary Proceeds is defined as cash or property received by Fidelco less expenses, including debt service. Net Capital Proceeds is defined as the net monies received for "Capital Events," like a sale of the Property. Article III also explains how those distributions would be made. Net Ordinary Proceeds would first be made to Class A members in proportion to their unpaid Preferred Return until the Preferred Returns were reduced to zero, then to Class B members in proportion to their unpaid Preferred Returns until their Preferred Returns were reduced to zero, and finally to all members in proportion to their "Percentage Interest." Berkowitz's Percentage Interest in the company was eleven percent. In 2006, Fidelco sold the first eleven floors of the Property to Rutgers University. Thereafter, Fidelco continued to own floors twelve through seventeen and the surface parking lot adjacent to the building. Fidelco used the proceeds from the partial sale to Rutgers to pay down a portion of its debt and to make a distribution to Class A members. In that regard, Class A members received their Accumulated Preferred Return as of 2006 and $4.5 million of their capital contributions. Accordingly, Class A members' capital contributions were reduced from $9 million to $4.5 million in 2006. A-3631-24 6 Berkowitz testified at his deposition that he did not receive any distributions between 2004 and 2020, except for a single distribution in 2006. Thus, as of 2020, Berkowitz's unreimbursed capital contribution was still $100,000, plus he had accrued amounts for his Preferred Return of the unreimbursed capital contribution. In April 2020, Berson sent Berkowitz a proposal to restructure Fidelco (the Initial Proposal). The Initial Proposal would have increased Class A members' ownership interest from twenty-four percent to thirty-five percent by requiring Class C members, including Berkowitz, to assign a proportional share of their Class C membership interests to Class A members. Berkowitz did not agree to the Initial Proposal. Instead, Berkowitz asked Berson to sell the Property and pay members their net share. Berson did not agree to a sale. The Initial Proposal was never implemented. Instead, in May 2020, all members of Fidelco, except for Berkowitz, signed a Second Amendment to the Operating Agreement (the Second Amendment), which became effective as of May 1, 2020. Under the Second Amendment, Berkowitz continued to hold an overall ownership interest in Fidelco of eleven percent. In that regard, he continued to have a one percent Class B interest and a ten percent Class C interest. The Preferred Return Rate for Class A and B members, however, was A-3631-24 7 reduced effective May 1, 2020. For Class A members, their preferred rate of return went from sixteen percent to seven percent. For Class B members, their preferred rate of return went from eleven percent to five percent. The Second Amendment also changed the distribution priorities so that Preferred Returns would be paid in "two tranches" for Classes A and B members. Additionally, the Second Amendment stated that the Manager had agreed to refinance the mortgage on the Property. In a memorandum dated June 4, 2020, Berson informed Class A members that the refinancing had closed in May 2020, and Fidelco had "excess loan proceeds" of $2,500,000, which would be distributed to them. On June 29, 2020, Berkowitz sent Berson an email informing him that he had not and would not agree to the Second Amendment. He also stated that he was "in fundamental disagreement with the [P]roperty's valuation information [provided by Berson] and strategic holds/sell direction [Berson had] insisted on taking for the asset." After May 2020, Berkowitz began receiving regular quarterly distributions in accordance with the provisions in the Second Amendment. In that regard, Berkowitz testified that he received approximately $16,000 annually from 2021 through 2024 and at least one distribution in 2025. Fidelco maintains A-3631-24 8 that the restructuring accomplished in the Second Amendment and the reduction in Class A's percentage of distribution, allowed for distributions to Class B members, including Berkowitz. Berson died in 2023. The parties informed us that, at least as of 2025, no new manager of Fidelco had been appointed. In January 2024, Berkowitz sued Fidelco, asserting three counts of breach of contract. In count one, he contended that Fidelco had breached the Operating Agreement by preventing him from accessing the books and record of the company. In count two, he alleged a breach of contract of the Operating Agreement, claiming his ownership interest in Fidelco had been diminished by the Second Amendment without his consent. In count three, he asserted a claim of breach of the covenant of good faith and fair dealing and sought the same damages he alleged under count two. Fidelco filed an answer denying that Berkowitz's interest in Fidelco had been diminished. The parties then engaged in discovery. During discovery, Fidelco produced to Berkowitz some of the books and records that he was seeking. Berkowitz, through his counsel, informed us he is not challenging the dismissal of count one of his complaint. A-3631-24 9 The trial court conducted several case management conferences and established dates for the completion of discovery and for a trial. Those dates were extended and the final discovery end date was May 22, 2025, and the final trial date was June 17, 2025. During discovery, Fidelco served an interrogatory on Berkowitz asking him to "[s]et forth a complete and itemized detail of the [d]amages [he was] seeking to recover." Ultimately, Berkowitz responded to that interrogatory by certifying that he was seeking: [T]o recover damages for [Fidelco's] diminishment of [his] interest in [Fidelco] caused by, among other things, [Fidelco's] mismanagement of the asset, self- dealing, unauthorized restructuring of the Operating Agreement, and failure to market the asset to ensure a return on Berkowitz's capital contribution. In support of his damage claim, in April 2025, Berkowitz served an expert report from Patrick B. Ard. In his report, Ard explained that he had valued the Property as of May 1, 2020, and opined that the Property had a market value of between $47.3 million to $50.2 million in May 2020. In May 2025, Fidelco moved for summary judgment, arguing that Berkowitz had suffered no diminishment in his ownership interest in Fidelco and he had failed to identify any damages to support his breach of contract claims. In opposition, Berkowitz submitted a certification. As part of that A-3631-24 10 certification, Berkowitz included a calculation of his alleged damages. Specifically, Berkowitz certified: The $976,083 is broken down in the following manner: a. Fair Market Value: $50,200,00 b. Net of 2% closing costs = $49,196,000 c. Less: all outstanding principal, accrued and preferred returns of $27,167,790 to Class A and Class B members; plus the outstanding principal balance of mortgage of $15,300,000 = $42,467,789 d. Subtotal Excess Proceeds = $6,728,211 e. Less: Class B makeup amount to trigger E class interests as follows: i. $5,258,240 class B principal balance x 3% (differential between 11% and 14%) on a non- compounded basis from September 2004 to May 2020 (15.67 years) = $2,471,898 f. Subtotal after the additional distribution to class B members = $4,256,313 g. Multiplied by my post Class E trigger total percentage interest of 15.998571%. [1% less my pro- rata share of reduction in class B membership from the Class E trigger (.001429) = .998571% PLU my Class C interest of 10% PLUS my Class E interest of 5%]. = $680,949 (= my share of the Net Excess Proceeds) h. PLUS: my principal balance of $100,000 A-3631-24 11 i. PLUS: the total of my accrued and deferred returns $148,124 j. PLUS: my share of the 3% additional return on my Class B principal balance of $100,000 ($100,000 x .03 x 15.67 years) = $47,010 (Pursuant to e. above) k. Total due upon liquidation, May 1, 2020 = $976,083 The trial court heard argument on the summary judgment motion on June 6, 2025. At the conclusion of the argument, the court granted the motion and explained the reasons for its decision on the record. That same day, the court entered an order granting summary judgment to Fidelco and dismissing Berkowitz's complaint with prejudice. The trial court interpreted the Operating Agreement and ruled that "Interest" meant "an ownership interest in the company." The trial court then determined that there was no dispute that Berkowitz still held an eleven percent ownership interest in Fidelco. Thus, the court held that "plaintiff has not established a diminution." The trial court also reasoned Berkowitz had failed to show that he had been damaged by the adoption of the Second Amendment. In that regard, the trial court stated it "can't decide if [Berkowitz's] ownership interest has been diminished because [it did not] know what the number is today and it's not in the record and it won't be at trial." A-3631-24 12 Additionally, the trial court considered but rejected Berkowitz's claim that he had been disassociated from Fidelco. The court rejected that claim for several reasons. First, the court held that Berkowitz had not plead a claim of disassociation in his complaint and although he had been given several opportunities to amend the complaint, he had not. Moreover, the trial court reasoned that allowing a claim of disassociation in 2025, just before trial would not be fair to Fidelco. Second, the trial court noted Berkowitz had not submitted an expert report to support a disassociation claim. In that regard, the trial court held an expert report was necessary to support a disassociation claim. The trial court determined that Ard's expert report had "literally nothing to do with the calculation" of Berkowitz' alleged diminished interest in Fidelco. Finally, the trial court determined there were no facts showing an event of disassociation under the Act. In that regard, the trial court pointed out that Berkowitz had never expressly withdrawn from Fidelco, Fidelco had not expelled him, and there was no judicial order expelling Berkowitz from Fidelco. N.J.S.A. 42:2C-46(a), (b) and (e). A-3631-24 13 II. Berkowitz now appeals from the June 6, 2025 order granting summary judgment to Fidelco and dismissing his complaint with prejudice. In support of his appeal, Berkowitz makes three arguments. First, he contends that the trial court improperly found that the Second Amendment did not diminish his interest in Fidelco. Second, he contends that the trial court failed to find that he was a disassociated member and that he was entitled to damages as a disassociated member. Finally, Berkowitz asserts that the trial court failed to apply the proper legal standard and failed to make adequate conclusions of law. We reject Berkowitz's arguments for reasons different from the trial court. As will be explained, we interpret the term "Interest" to be broader than the interpretation used by the trial court. Nevertheless, the record establishes that Berkowitz only offered evidence of damage as a disassociated member of Fidelco, and the material undisputed facts established that he was not disassociated. Consequently, because Berkowitz failed to establish he had been damaged, his claims for breach of contract were properly dismissed because discovery had closed and he had no evidence supporting a damage claim that could be presented at trial. A-3631-24 14 A. Our Standard of Review. An appellate court reviews "a grant of summary judgment de novo, applying the same standard that governed the trial court's determination." Padilla v. Young Il An, 257 N.J. 540, 547 (2024) (citing Samolyk v. Berthe, 251 N.J. 73, 78 (2022)). Summary judgment is proper if, viewing the evidence in a light most favorable to the non-moving party, the record demonstrates "no genuine issue as to any material fact challenged and that the moving party is entitled to a judgment or order as a matter of law." Friedman v. Martinez, 242 N.J. 449, 471-72 (2020) (quoting R. 4:46-2(c)). "An issue of material fact is 'genuine only if, considering the burden of persuasion at trial, the evidence submitted by the parties on the motion, together with all legitimate inferences therefrom favoring the non-moving party, would require submission of the issue to the trier of fact.'" Grande v. St. Clare's Health Sys., 230 N.J. 1, 24 (2017) (quoting Bhagat v. Bhagat, 217 N.J. 22, 38 (2014)). "If there is no genuine issue of material fact, we must then 'decide whether the trial court correctly interpreted the law.'" Gill v. Dir., Div. of Tax'n, 481 N.J. Super. 17, 23 (App. Div. 2025) (quoting DepoLink Ct. Reporting & Litig. Support Servs. v. Rochman, 430 N.J. Super. 325, 333 (App. Div. 2013)). Moreover, appellate courts review de novo a trial court's interpretation of A-3631-24 15 contracts. Serico v. Rothberg, 234 N.J. 168, 178 (2018); JPC Merger Sub LLC v. Tricon Enters., Inc., 474 N.J. Super. 145, 159-60 (App. Div. 2022). "Accordingly, we pay no special deference to the trial court's interpretation and look at the contract with fresh eyes." JPC Merger Sub LLC, 474 N.J. Super. at 160 (quoting Kieffer v. Best Buy, 205 N.J. 213, 223 (2011)). B. The Operating Agreement. A central issue on this appeal is the interpretation of the word "Interest" as used in the Operating Agreement. Berkowitz argues "Interest" is broader than his eleven percent ownership interest in Fidelco and includes his right to receive a "Preferred Return Rate" of eleven percent on his $100,000 capital contribution. So, according to Berkowitz, when the Second Amendment reduced his Preferred Return Rate for his Class B interest from eleven percent to five percent, he was damaged. In interpreting a contract, we look at the language used by the parties and construe the language consistent with its plain meaning, considering the overall purpose and meaning of the contract. See In re County of Atlantic, 230 N.J. 237, 254 (2017). "Because '[t]he plain language of the contract is the cornerstone of the interpretative inquiry[,] when the intent of the parties is plain and the language is clear and unambiguous, a court must enforce the agreement A-3631-24 16 as written, unless doing so would lead to an absurd result.'" JPC Merger Sub LLC, 474 N.J. Super. at 161 (alterations in original) (quoting Barila v. Bd. of Educ. of Cliffside Park, 241 N.J. 595, 616 (2020)) (internal quotation marks omitted). The Operating Agreement defines "Interest" as "an ownership interest in the Company, including all the rights and obligations in connection therewith under this Agreement and the Act." The plain language of that definition includes rights beyond a member's overall ownership interest. Accordingly, we interpret "Interest" to include the "Preferred Return Rate." When Fidelco adopted the Second Amendment, it reduced Berkowitz's Preferred Return Rate on his unreimbursed capital contribution from eleven percent to five percent after May 1, 2020. Nevertheless, Berkowitz never sought damages related to the reduction in his Preferred Return Rate. In his discovery responses and in his opposition to the motion for summary judgment, Berkowitz did not claim that he was damaged by receiving a five percent Preferred Return Rate after May 2020. To prove a breach of contract, Berkowitz had to prove he suffered damages. See EnviroFinance Grp., LLC v. Envtl. Barrier Co., 440 N.J. Super. 325, 345 (App. Div. 2015) (citing Murphy v. Implicito, 392 N.J. Super. 245, 265 A-3631-24 17 (App. Div. 2007)). The material undisputed evidence shows that before 2020, Berkowitz had received only one distribution in 2006. After the Second Amendment was implemented, Berkowitz began receiving regular distributions, which were approximately $16,000 annually. Berkowitz never presented evidence that the $16,000 per year was less than the $11,000 he was accruing before the Second Amendment was adopted. Obviously, a reduction from eleven percent to five percent could result in a loss. Berkowitz, however, never claimed a loss related to receiving $5,000 as a Preferred Return compared with $11,000. Moreover, he produced no evidence during discovery as to whether he suffered an actual loss because of the change from eleven percent to five percent. So, at trial Berkowitz could not have pursued a damage claim on that theory. C. Berkowitz's Damage Claim. Instead of seeking damages related to the reduction in his Preferred Return Rate, Berkowitz sought to claim that he had been disassociated and he was, therefore, entitled to damages as a disassociated member. That damage claim is not supported by the material facts or law. The Operating Agreement states: "No Member shall have a right to withdraw from the Company prior to the dissolution and winding up of the A-3631-24 18 Company." It is undisputed that Fidelco has not dissolved or wound up its operations. Consequently, Berkowitz's right to be considered disassociated from Fidelco depends on whether an event under the Act triggered a disassociation. The Act identifies various events that can cause a disassociation of a member of a limited liability company. N.J.S.A. 42:2C-46. The events that might apply to Berkowitz include (i) he had expressed notice to "withdraw as a member," N.J.S.A. 42:2C-46(a); (ii) he had been "expelled by the unanimous consent of the other members," N.J.S.A. 42:2C-46(d); (iii) he had been "expelled as a member by judicial order" based on certain delineated reasons, N.J.S.A. 42:2C - 46(e); or (iv) he had died or been judicially declared incapable of performing his duties as a member, N.J.S.A. 42:2C-46(f). There are no facts showing that Berkowitz expressly withdrew as a member of Fidelco. Berkowitz now points to the June 29, 2020 email, in which he objected to the Second Amendment. That email, however, contains no language expressly notifying Fidelco that he was withdrawing as a member. Instead, the material facts establish that after the Second Amendment was adopted, Berkowitz continued to be a member of Fidelco, and he received A-3631-24 19 regular distributions in accordance with the provisions of the Second Amendment. Additionally, there are no facts showing Berkowitz was expelled by the other members or by judicial order. Nor has he died or been declared incapable of performing his duties as a member. Berkowitz argues that because the Second Amendment required his consent, its adoption was a breach of his rights under the Operating Agreement , and he was, therefore, entitled to be considered disassociated as of May 1, 2020. Neither the plain language of the Operating Agreement nor the material facts support that claim. A plain reading of section 5.03 of the Operating Agreement does not preclude the other members of Fidelco from amending the Operating Agreement unless the amendment diminishes the interest of any member in Fidelco. As we have analyzed, after over a year of discovery, Berkowitz did not identify any damage related to the reduction of his Preferred Return Rate. Given that we are affirming the order granting summary judgment and dismissing Berkowitz's claims with prejudice for reasons different from the trial court, we need not address Berkowitz's arguments that the trial court applied the incorrect standard and failed to make adequate conclusions of law. A-3631-24 20 D. A Potential Undetermined Issue. Although we are affirming the order dismissing Berkowitz's claims, we note that there is a potential future undetermined issue. If at some point in the future the Property is sold, Berkowitz may, at that time, be able to claim and show that the reduction of his Preferred Return Rate from eleven percent to five percent has caused him damage. That issue is not presented on this appeal , and we offer no view on whether it may be a viable claim. Instead, we simply note that it is an undetermined issue. Affirmed for the reasons expressed in this opinion. A-3631-24 21