FOLLOW US

A New Jersey appeals court has affirmed the permanent dismissal of all claims tied to a business dispute over a Newark residential property, agreeing that extensive misconduct and sham court filings justified throwing out the case under the doctrine of unclean hands.

In an unpublished decision issued Friday, a three-judge Appellate Division panel backed a lower court’s ruling involving property at 140–148 Roseville Ave., finding the litigation was tainted by what the trial judge described as “fraudulent filings, unethical and otherwise questionable conduct.”

The lawsuit began in October 2021, when Isaac Hersko, who has since died, sued his brother Barry Hersko, Barry’s wife Bella Hersko, and the property owner, Roseville Tower LLC. The dispute expanded after business associate Chaim Simkowitz filed counterclaims and crossclaims challenging the property’s ownership structure, mortgages, management, and interests in a related entity, Roseville Park LLC.

Isaac Hersko alleged that he and Barry were “equal partners” in the Newark property and accused his brother of improperly withdrawing $25 million from shared funds. The case proceeded to a bench trial in February 2024.

Following that trial, the court ruled that Simkowitz’s counterclaims and crossclaims had to be dismissed under the unclean hands doctrine. Two months later, the court granted Isaac Hersko’s request to voluntarily dismiss several of his claims and permanently dismissed all remaining claims by every party, citing the same doctrine.

On appeal, the panel relied in part on longstanding precedent, including the New Jersey Supreme Court’s 1955 decision in Untermann v. Untermann, to uphold the ruling.

“We conclude the judge’s application of the doctrine of unclean hands as to all parties was supported by substantial credible evidence in the record,” the panel said. “The judge provided detailed reasons in her oral opinion and statement of reasons in applying the doctrine.”

The appellate court added that the trial judge found the parties had “knowingly introduced fraudulent evidence to a court in a sworn complaint,” a determination that further supported dismissal.

The dispute traces back to the Hersko brothers’ financial involvement with Roseville Tower, which included a mortgage loan that later went into default. After multiple defaults, a 2010 agreement transferred full ownership of the property to Bella Hersko. Subsequent dealings among the Herskos and Simkowitz involved ownership interests, refinancing efforts, and related real estate holdings, including Roseville Park, which purchased a nearby parking lot in 2016.

The appellate panel highlighted a foreclosure complaint filed in December 2010 as a key example of a “sham” filing. According to the ruling, the complaint was allegedly used to pressure another party into selling a subordinate mortgage at a steep discount.

Counsel for Simkowitz declined to comment. Attorneys for the other parties did not respond to requests for comment.

The appellate panel consisted of Judges Robert Gilson, Lisa Firko, and Robert M. Vinci.

The case is Estate of Isaac Hersko v. Hersko et al., No. A-2622-23, New Jersey Superior Court, Appellate Division.