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Estate of Pittas v. Scugoza

August 6, 2007


On appeal from the Superior Court of New Jersey, Chancery Division, Hudson County, Docket No. C-58-04.

Per curiam.


Argued May 8, 2007

Before Judges Weissbard and Lihotz.

The parties represent the estates of two long-time business associates, who failed to quantify the nature of their financial relationship prior to their deaths. Plaintiff appeals from the final judgment, entered on May 1, 2006, dismissing its complaint with prejudice. We affirm.

Nicolas Pittas and Joseph Scugoza each ran companies involved in the waste disposal business. In November 1984, their respective companies entered into a joint business project to haul debris from the renovation of the Statute of Liberty on Ellis Island. Following the completion of the Statute of Liberty Project, Pittas, Scugoza, and Chris Yonclas became principals of Accent Investments, Inc. (Accent), a company seeking to invest in landfills.

Yonclas located a landfill investment site in Steubenville, Ohio, called Crossridge. To the best of Yonclas's recollection, Crossridge was purchased for $500,000 in December 1986. Yonclas recalled a conversation with Scugoza from which he understood that the initial capital contribution of $250,000 was to be made equally by Pittas and Scugoza. The balance of the purchase price was financed by Scugoza, and the Crossridge corporate stock was titled solely to Scugoza. Yonclas described Pittas's role immediately after Crossridge was acquired as an "interested investor." He also stated that money towards all capital improvements was provided by Scugoza.

Scugoza's attorney, Mr. Pribish, testified that although discussions were held to make Pittas an equal owner, a fifty- percent purchase transaction had never been consummated. Pribish was not aware of any ownership interest held by Pittas in Crossridge.

Trial testimony from Pittas's brother supported the conclusion that Pittas provided his equal contribution of $125,000 to purchase a one-half interest in Crossridge. At trial, he discussed various checks and money transfers from Pittas to Scugoza, totaling $925,000, made during the period December 29, 1986 to June 10, 1988, which plaintiff asserted were "conclusive proof that [Pittas's] payments were intended and used for the initial and ongoing operating expenses of Crossridge."

In November 1990, Crossridge was closed under a cease and desist order issued by the State of Ohio because Scugoza failed the required landfill owner background check when his past felony convictions were discovered. A decision issued by the Ohio Environmental Board of Review, which was affirmed on appeal, found that based on testimony offered on behalf of Crossridge, "[o]n November 2, 1990, the time the orders were issued, the common stock of Crossridge, Inc. was owned solely by Mr. Joseph M. Scugoza." Negotiations began to effectuate the sale of Crossridge. Various documents reflecting sale proposals were presented at trial. Attempts to sell Crossridge to Mingo Junction; Yonclas and his partner, Kurt Anderson; and TransAmerica, Inc., proved unsuccessful.

Plaintiff asserted the transactions to sell Crossridge were structured specifically to repay Pittas his ownership interest in Crossridge. Defendant argued that the evidence contained proofs militating against that conclusion. For example, in 1995, it was proposed that Crossridge be sold to Olympic Enterprises, LLC (Olympic), which was owned by Pittas and his brother. The Pittases signed documents accompanying Olympic's application for approval of the transaction, which were submitted to the Ohio regulatory authorities. These affidavits represented to the state authorities that Scugoza was the sole owner of Crossridge. The Pittases each disavowed any current or prior ownership interest in Crossridge or other landfills.

After reviewing the application, the Ohio Attorney General issued a forty-three page investigative report outlining Pittas's past dealings with Scugoza, detailing numerous financial and business ties between the two, which had been omitted in the prior disclosure. Pittas responded with a thirty-one-page rebuttal, identifying areas of disagreement with the Attorney General's findings, and exhaustively detailing his past business dealings with Scugoza. In that rebuttal, Pittas did not challenge the finding that Scugoza was the sole owner of Crossridge, made no assertion of an equitable ownership in Crossridge, or claim that Pittas loaned $925,000 to either Scugoza or Crossridge.

Scugoza died in February 2001. Although, shortly after his death, Pittas claimed for the first time that he was an equal owner of Crossridge, he filed no claim against Scugoza's estate during the six-month period after the receipt of notice to file claims. See N.J.S.A. 3B:22-4. Pittas died in August 2002. The Chancery Division action was filed by Pittas's estate in March 2004. A seven-day bench trial before Judge Olivieri resulted in judgment for defendant on May 1, 2006. Judge Olivieri thoroughly analyzed the record in his 108-page oral bench decision and concluded that plaintiff had failed to meet its burden to prove the existence of either a legal or equitable interest in Crossridge or a debt owed by Scugoza to Pittas.

After summarizing the testimony of each witness, and making both factual findings and credibility determinations, Judge Olivieri summarized ...

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