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Insulation Corp. of America v. Berkowitz

Decided: June 24, 1994.

INSULATION CORPORATION OF AMERICA, PLAINTIFF-APPELLANT,
v.
STEVEN BERKOWITZ, M.D., ROBERT DENNIS, M.D., AND ROY MITTMAN, M.D., DEFENDANTS-RESPONDENTS, AND JEFFREY DONNER, ALVIN GOLDEN, AND JOHN MACCHIAVERNA, DEFENDANTS.



On appeal from the Superior Court of New Jersey, Law Division, Monmouth County.

Before Judges Pressler, Brochin and Kleiner

Brochin

The opinion of the court was delivered by

BROCHIN, J.A.D.

Defendants Steven Berkowitz, M.D., Robert Dennis, M.D., and Roy Mittman, M.D. are orthopedic surgeons. On or about September 10, 1987, they entered into a partnership agreement with Jeffrey A. Donner, Esq., a lawyer, Alvin H. Golden, an accountant, and John Macchiaverna, Jr., a builder, to form a partnership known as Sportsplex Associates. At about the same time, they also organized a corporation, Sportsplex Health and Fitness, Inc. The partnership was formed to acquire an existing health and racquet club and, directly or through the affiliated corporation, to develop a sports center which would include facilities where the doctors would practice sports medicine.

Plaintiff Insulation Corporation of America is in the business of installing insulation in sports facilities. In response to an inquiry

from Macchiaverna, it submitted a proposal to him dated August 30, 1988, to install insulation in a building owned either by Sportsplex Associates or by the affiliated corporation. The proposal specified a price of $53,486 for the materials and installation. The work was ordered and performed, but was not paid for. The trial court treated the insulation contract as having been entered into with Sportsplex Associates, the partnership, rather than with Sportsplex Health and Fitness, Inc., the corporation, and that ruling has not been contested on appeal.

Sportsplex Associates is bankrupt. Plaintiff sought to collect its debt from the partners. Initially, it sued only Donner, Golden, and Macchiaverna, who were the only partners with whom it had dealt. When plaintiff learned during the course of the litigation that Doctors Berkowitz, Dennis, and Mittman had been partners too, it amended its complaint to sue them also. Donner, Golden, and Macchiaverna have filed petitions in bankruptcy or for reorganization. They have not participated in this appeal.

Berkowitz, Dennis, and Mittman contend that the original Sportsplex Associates partnership, of which they were partners, was dissolved by an agreement executed by all six of the partners on or about April 15, 1988, entitled "Agreement Regarding Sportsplex Associates and Sportsplex Health and Fitness, Inc." They argue that they are therefore not liable because the debt was incurred without their authorization after dissolution, and the contract for insulation from which the debt arose was not an "act appropriate for winding up partnership affairs or completing transactions unfinished at dissolution" within the meaning of N.J.S.A. 42:1-35(1)(a).

After a bench trial in the Law Division, Judge June Strelecki, J.S.C., agreed with the doctors. Plaintiff has appealed. It contends that when Macchiaverna ordered the insulation, he possessed and exercised the authority to bind the Sportsplex Associates partnership, whether or not this partnership had previously been dissolved, and that, since Berkowitz, Dennis, and Mittman

were partners, they are jointly and severally liable for the debt ...


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