On appeal from the Superior Court of New Jersey, Law Division, Bergen County, Docket No. BER-L-11059-04.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Parker, C.S. Fisher and Yannotti.
In these cross-appeals, both parties challenge the judgment entered on March 16, 2006 after a non-jury trial in which the court dismissed the complaint and the counterclaim with prejudice. This dispute arises out of a partnership between two physicians who purchased a building and entered into an unwritten agreement to practice jointly. We affirm.
Plaintiff Assia Bromberg, M.D. (Bromberg) filed a complaint on August 5, 2004 alleging that defendant Henry Velez, M.D. (Velez) breached their contract, underpaid firm profits to plaintiff and overpaid them to defendant. On September 27, 2004, defendant answered and counterclaimed alleging that he was underpaid his share of the profits, was not paid for administrative services and for renovations made to the building where the parties jointly practiced. In her answer to the counterclaim, plaintiff pleaded waiver and estoppel as affirmative defenses.
The facts pertinent to this appeal are as follows. In 2000, plaintiff and defendant formed a partnership known as Valley Health Care Group (Valley). They also formed a second corporation known as Greenway Oaks to purchase a building for their practice. They practiced together for three years without conflict and it is undisputed that during this time, defendant maintained the billing and administration of the practice, including partnership distributions.
Plaintiff is an obstetrician/gynecologist and defendant specializes in occupational medicine, including workers' compensation reviews and assessments. Before joining plaintiff in practice, defendant had a separate practice handling workers' compensation reviews for Nabisco. When the parties bought the building, defendant borrowed his share of the down payment from plaintiff's husband because defendant was then going through a divorce and had financial difficulties. In establishing the joint practice, plaintiff contends that the parties agreed to pay the expenses from the top of their revenues and share the net profits in accordance with their respective productivity. Defendant had a nurse and office person who worked on the Nabisco files and he paid them separately for the non-partnership work.
The matter was tried to the court from November 14 to 17, 2005. Emanuel Yedwab, a licensed Certified Public Accountant (CPA), had been defendant's accountant since 1989 and served as Valley's accountant after the partnership was formed. Yedwab testified that Valley submitted monthly "cash receipts, disbursements, [and] expenses" from which he and defendant "put together a financial statement showing the income and expenses and [any] profit . . . in accordance with what [they] would do for tax purposes." They also did the reporting for payroll and tax purposes, including W-2 and 1099 forms. Yedwab rarely heard from plaintiff, but he was available to answer any questions that arose. He testified that he did not know of any dispute between the parties regarding distributions until a meeting in 2004, which was attended by plaintiff, defendant, plaintiff's accountant George Farley and himself.
In October 2003, plaintiff began to question the accounting and distribution methods employed by Velez and Yedwab. She contacted Farley, also a licensed CPA, to do an independent audit of the books. When Farley first met with plaintiff, she explained "the way the business operated, the way that the compensation was to be divided" and that defendant claimed "that she owed him money, or the business owed him money." At trial, the parties stipulated to the numbers reflecting income and expenses that were used by Farley in his audit.
Based upon the information provided to Farley by plaintiff, Farley testified that:
I calculated the percentage of fees that each doctor had earned from the inception of the business up until some times [sic] in the middle of 2004.
I then took the expenses that the corporation had paid for 2000 through 2004 from information given to me by [Yedwab], the accountant for the firm, as well as from information I think that was provided to me by [defendant] for 2004, as well. And I applied that information onto a worksheet which spread the . . . income pro rata, according to which doctor had generated the fees, and I then split the expenses 50-50 between the two doctors . . . I came up with a number that would have been a potential distribution for each doctor.
I then subtracted the amount of money that was, in fact, paid to each doctor during the period from 2000 through 2004 and I calculated a balance due from the doctor or a ...