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Lustig v. Lustig

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


July 6, 2007

GERALD A. LUSTIG, INDIVIDUALLY AND AS A SHAREHOLDER OF CAMP WEEQUAHIC, INC., A PENNSYLVANIA CORPORATION, PLAINTIFF-APPELLANT/ CROSS-RESPONDENT,
v.
GAYLE LUSTIG, A/K/A GAIL LUSTIG, JOAN (LUSTIG) SEFFER, BOTH INDIVIDUALLY AND AS DIRECTORS OF CAMP WEEQUAHIC, INC., A PENNSYLVANIA CORPORATION, DEFENDANTS-RESPONDENTS/ CROSS-APPELLANTS, AND CAMP WEEQUAHIC, INC., A PENNSYLVANIA CORPORATION, NOMINAL DEFENDANT.

On appeal from Superior Court of New Jersey, Chancery Division, Essex County, No. C-416-05.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued May 2, 2007

Before Judges Wefing, Yannotti and Messano.

The parties appeal and cross-appeal from a trial court order dismissing plaintiff's complaint and denying defendants' request for counsel fees. After reviewing the record in light of the contentions advanced on appeal, we affirm the dismissal of plaintiff's complaint, reverse the denial of counsel fees, and remand the matter to the trial court for reconsideration of that issue.

The parties are siblings, the three children of Art and Mollie Lustig who in 1953 founded Camp Weequahic as a summer sleep-away camp in Lakewood, Pennsylvania. Plaintiff and defendant Joan Seffer reside in New Jersey while defendant Gayle Lustig resides in New York City. In 1963, Mr. and Mrs. Lustig incorporated the business as a Pennsylvania corporation. Mr. Lustig died in 1977, Mrs. Lustig in 1998. Following the deaths of their parents, plaintiff Gerald owned twenty-four percent of the stock of the corporation and his sisters each owned thirty-eight percent.

Unfortunately, relations among the family members have not been amicable. In 1993, even prior to the death of Mollie Lustig, plaintiff filed suit in New Jersey Superior Court, Chancery Division, alleging breach of fiduciary duty and seeking relief under N.J.S.A. 14A:12-7. The Chancery judge, however, did not execute the order to show cause submitted with plaintiff's complaint, and that law suit did not proceed further.

In November 1993 the corporation's directors met and officially removed plaintiff as a vice-president of the corporation and elected new officers. In 1994, plaintiff filed suit in Pennsylvania, alleging, among other counts, breach of fiduciary duty and breach of a shareholder's agreement. That suit was litigated to conclusion, and the judge presiding over that matter filed a detailed opinion, setting forth his rejection of plaintiff's testimony as not credible in large measure and his conclusions that defendants had not breached any fiduciary duty to plaintiff, and that plaintiff had failed to establish any basis for a shareholder's derivative action. Further, the court placed restrictions upon plaintiff's right to inspect the corporation's books and records, finding that he had requested such inspections in bad faith. It limited plaintiff to one such inspection per year, to be conducted at the corporation's place of business, upon six weeks advance notice.

Plaintiff's appeals were unsuccessful. The judgment of the Pennsylvania Court of Common Pleas was affirmed by the Superior Court of Pennsylvania in an unpublished opinion issued April 3, 2001. The Superior Court began its opinion in the following manner:

The bitter family strife initiated by appellants and recounted in such detail in this record, depicts the compelling tragedy of the disintegration of the bonds of family. Almost ten years ago, appellant Gerald Lustig embarked on a course of corporate and legal mayhem that had as its purpose either the total control or the destruction of the summer camp ("Camp Weequahic") his parents had built into a successful business. [Lustig v. Lustig, No. 1433EDA 2000, slip op. at 2 (Pa. Super. Ct. April 3, 2001).]

That court denied plaintiff's request for a reargument on May 31, 2001. Lustig v. Lustig, 778 A.2d 743 n.18 (Pa. Super. Ct. 2001). Plaintiff appealed to the Supreme Court of Pennsylvania, which denied his appeal in January 2002 without issuing an opinion. Lustig v. Lustig, 793 A.2d 908 (Pa. 2002).

In December 2005, plaintiff filed a new five-count complaint in the Essex vicinage of New Jersey Superior Court, Chancery Division. In count one, plaintiff pled a derivative shareholder's action under Pennsylvania law; in count two, breach of fiduciary duty by defendant-majority shareholders; in count three, involuntary liquidation of the corporation under Pennsylvania law; in count four, an accounting; and in count five, production of corporate books and records. Defendants moved to dismiss this complaint in lieu of filing an answer. Defendants argued that plaintiff's complaint was barred under principles of comity, res judicata, collateral estoppel and lack of jurisdiction. Plaintiff appeals from the trial court's order granting that motion and dismissing his complaint with prejudice.

Having reviewed this record, we are satisfied that the trial court's determination with regard to dismissal of this complaint was entirely correct. We have no need to address in detail the legal sufficiency of each of the theories defendants put forth to the trial court in support of their motion to dismiss. It is thus fundamentally immaterial to the ultimate disposition of this appeal that the doctrine of comity may not be applicable because the Pennsylvania action was no longer pending, having been disposed of several years prior to plaintiff filing the instant complaint. Bass v. DeVink, 336 N.J. Super. 450 (App. Div.), certif. denied, 168 N.J. 292 (2001).

The trial court, in its oral opinion, clearly noted that plaintiff, in this complaint, seeks to relitigate what has already been established in Pennsylvania. Its determination not to permit our courts to be used to that end was correct. Further, to the extent that plaintiff's complaint sets forth allegations relating to incidents that occurred after conclusion of the Pennsylvania litigation, he is seeking to enforce terms of the Pennsylvania judgment. That relief must be sought from the Pennsylvania courts, not those of this State.

We turn now to defendants' cross-appeal, in which they contend the trial court erred in denying their request for counsel fees. Defendants contend they are entitled to counsel fees under N.J.S.A. 2A:15-59.1, the frivolous claims statute. The trial court, in its oral opinion, never addressed the question of counsel fees and yet the trial court, in executing the order of dismissal, deleted the provisions finding that the complaint was frivolous and filed in bad faith and awarding fees.

We are thus unable to determine the basis for the trial court's conclusion and reverse the denial of counsel fees. We remand the matter to the trial court for consideration of the question. The record before us does not contain an indication that defendants made a separate application for counsel fees within twenty days of the entry of the trial court's order. R. 1:4-8(b). On remand, the trial court may consider whether this is an appropriate instance to relax that twenty-day provision. Gooch v. Choice Entertaining Corp., 355 N.J. Super. 14, 19 (App. Div. 2002).

The order under review is affirmed in part, reversed in part, and the matter is remanded to the trial court for further proceedings. We do not retain jurisidiction.

20070706

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