On appeal from Superior Court of New Jersey, Chancery Division, Bergen County.
Approved for Publication June 24, 1997.
Before Judges Shebell, Baime, and Braithwaite. The opinion of the court was delivered by Baime, J.A.D.
The opinion of the court was delivered by: Baime
The opinion of the court was delivered by
At issue in this appeal is the power of the Chancery Division to appoint a receiver in order to protect the interests of a minority partner in the dissolution of a partnership and the winding up of its affairs. The question is presented in the context of an attempt by plaintiff Joseph Muscarelle, Jr., who holds with his mother a majority interest in the partnership, to purchase partnership property over the vigorous objection of a minority partner, defendant Carolyn Infante, who wishes to have the property sold to a third party, the Ferolie Group (Ferolie). The Chancery Division appointed Gregory Castano to serve as receiver for the partnership and ordered plaintiff and Ferolie to submit final bids. Although plaintiff's bid was lower than that submitted by Ferolie, it contained a footnote in which he agreed to increase his offer to an amount $10,000 above that of Ferolie. The Chancery Division disregarded the footnote and ordered that the property be sold to Ferolie. Plaintiff appeals. We affirm the Chancery Division's order.
Joseph Muscarelle, Sr., deceased, was the general partner of Brookview Associates L.L.P. (Brookview), a partnership formed under the New Jersey Uniform Limited Partnership Act (ULPA) in 1978. Brookview's limited partners included Margaret Muscarelle, wife of decedent, and the couple's three children, plaintiff, Marlene Flanagan and Carolyn Infante. Joseph Muscarelle, Sr. and each limited partner held a twenty percent interest in the partnership. Brookview's assets included a 45,000 square foot building in Montvale, New Jersey which was leased to Sony Corporation.
Joseph Muscarelle, Sr. died on April 9, 1989. Following his death, Muscarelle's children and widow all resigned as executors of the estate, leaving the Chancery Division to appoint Gregory Castano as Substituted Administrator C.T.A. Castano distributed decedent's twenty percent interest in Brookview to decedent's wife, Margaret. As a result, Margaret held a forty percent interest in Brookview with her children each maintaining a twenty percent interest.
The Brookview partnership agreement provided that "should the general partner die, . . . the partnership shall be expeditiously terminated, but there shall not be an immediate dissolution of the partnership, the partnership being temporarily continued by the remaining partners solely for the purpose of winding up the partnership affairs and liquidating the partnership . . . ." Muscarelle's widow and children disagreed concerning the conduct of Brookview's affairs. Consequently, on March 6, 1992, the partners each signed a Partnership Liquidation Plan and Power of Attorney, appointing Castano as attorney-in-fact for Brookview. As per the agreement Castano could be terminated by the votes representing a sixty percent majority interest.
In 1994, plaintiff offered to buy his sisters' and mother's interests in the Montvale property. Unable to come to any agreement, plaintiff filed a complaint in the Chancery Division in February 1995, naming as defendants his mother and sisters as well as Castano as Administrator C.T.A. and attorney-in-fact, and seeking to compel the conveyance of the defendants' interests to him. Carolyn filed a cross-claim objecting to the proposed sale to the plaintiff and offering to purchase the property. Castano filed a counterclaim against plaintiff and a cross-claim against Margaret, Marlene and Carolyn. Specifically, Castano requested distribution of the Montvale property to the partners creating a tenancy in common. He also sought an immediate partition of the property, and a private auction of the asset among the partners. Carolyn abandoned her efforts to purchase the property when Ferolie made an offer in October 1995. She authorized Castano to negotiate with Ferolie whose offer was nearly $500,000 greater than that of plaintiff.
In November 1995, plaintiff wrote to Castano noting his disapproval of the Ferolie offer. He offered to purchase his sisters' and mother's interests at the same price as that offered by Ferolie. Plaintiff then raised his offer and filed a motion seeking an order directing Castano or the partners to sell him the Montvale property at the increased amount. Castano filed an objection, recommending that the motion be adjourned because Ferolie's offer was firm and plaintiff's was somewhat indefinite. In the alternative, Castano recommended the denial of plaintiff's motion. Castano reasoned that 1) inherent difficulties existed in ordering a sale of portions of partnership interests absent a partition, 2) the Ferolie offer was an excellent opportunity to avoid the partition issues and sell the property at arm's length to a third party, and 3) the family had difficulty working together and the resulting acrimony could impede the sale of the property at its highest price. At this point, Ferolie increased his offer by $100,000 to $4,000,000. In the context of these fast-moving events, the Chancery Division Judge adjourned the motion and ordered the three siblings to meet and attempt to negotiate. He also directed plaintiff and Ferolie to submit final, sealed bids to the court in order to insure expeditious Disposition of the property. The written order provided in pertinent part:
Joseph L. Muscarelle, Jr. and Gregory J. Castano (on behalf of the "Ferolie Group") shall finalize their respective best offers to purchase the subject property of Brookview Associates in the form of written contracts not later than 5:00 p.m. on Friday, December 29, 1995 for the purpose of presenting to the Court and all parties such offers.
The three siblings could not agree on a sale to plaintiff. Plaintiff's and Ferolie's bids were submitted to the court on December 29, 1995. Plaintiff's offer was for $4,010,000. ...