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New York law firm Richards Kibbe & Orbe has been found not liable in connection to a dispute over its partner's side gig of operating a bar in Asbury Park.

The firm was named in a legal malpractice suit over services that Andrew Martin provided as part of his formation of an operating agreement with two others who opened an establishment called Aqua Lounge. But vicarious liability against Richards Kibbe cannot be maintained because the suit was dismissed with prejudice against Martin, and a ruling exonerating the employee also requires exoneration of the employer, the New Jersey Appellate Division ruled Tuesday. The decision affirmed the ruling of a Bergen County Superior Court judge who said no claim could be maintained against Richards Kibbe after the case against Martin was thrown out.

Martin, who focuses on investment transactions, debt and claims trading, is head of the firm's London office and is a member of its diversity committee.

In 2010 he formed a partnership with plaintiff Ron Gastelu Jr. and another partner to open Aqua Lounge, with Martin designated as managing member. Gastelu later claimed that Martin represented that his law firm would provide legal services for the venture so there would be no legal expenses. Martin formed the limited liability company and prepared the partnership agreement, but Gastelu claimed the agreement was executed with missing pages, which were inserted later by Martin.

Martin took over operation of the business after Gastelu, who had experience developing restaurants and bars, assisted with the build-out of the premises. But Aqua encountered problems with its landlord and its liquor license, which resulted in criminal charges being filed against one of its employees, according to court records. Gastelu accused Martin of ensuring that he did not receive his share of the profits, never gave him access to the bar's bank account and changing the locks. Gastelu claimed a breach of the bar's lease by Martin caused it to cease operating.

Gastelu's 2014 suit claimed Martin engaged in the unauthorized practice of law because he held himself out as counsel for the venture but was not admitted in New Jersey. The suit also claimed Martin violated ethics rules by failing to advise Gastelu to seek independent legal advice.

Judge James Deluca of Bergen County Superior Court found that the law firm was open to a claim of vicarious liability because Martin was acting within the scope of his employment. Deluca also found an attorney-client relationship existed between Gastelu and Martin. But Deluca said the suit's allegations that Martin violated ethics rules and New Jersey liquor laws were insufficient to defeat his motion to dismiss. And without a claim against Martin, there can be no claim for vicarious liability against the firm, the judge said.

Gastelu initially appealed the dismissal of claims against both Martin and the firm, but he later dropped his appeal against Martin.

On appeal, Judges Garry Rothstadt and Scott Moynihan agreed that Gastelu's withdrawal of his appeal against Martin meant the appeal seeking to resurrect the claim against Richards Kibbe is without merit.

"Where all claims regarding actionable conduct by an employee have been dismissed with prejudice, no vicarious liability can be maintained because the dismissal specifying that it is 'with prejudice constitutes an adjudication on the merits as fully and completely as if the order had been entered after trial,'" the appeals court said, citing a 2017 New Jersey Supreme Court case.

Scott Piekarsky of Phillips Nizer in Hackensack, the lawyer for Gastelu, did not respond to a request for comment. Jennifer Mara of Baldassare & Mara in Newark, representing Richards Kibbe, said in an email, "We are very pleased that the meritless claims against our client, the well-respected law firm Richards, Kibbe & Orbe LLP, were so unequivocally rejected by the Appellate Division."