August 17, 2007
LAWRENCE A. MARRO, INDIVIDUALLY AND DERIVATIVELY AS A SHAREHOLDER OF CONDIT IMPORTS, INC. T/A CONDIT TOYOTA, PLAINTIFF-APPELLANT,
LARRY R. CONDIT AND CONDIT IMPORTS, INC. T/A CONDIT TOYOTA, CHRIS PREZIOSI AND ALBERT PREZIOSI, DEFENDANTS-RESPONDENTS.
On appeal from Superior Court of New Jersey, Law Division, Sussex County, L-0791-01.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted December 6, 2006
Before Judges A. A. Rodríguez, Collester and Sabatino.
Plaintiff Lawrence A. Marro appeals from a judgment entered in the Law Division in favor of defendants Larry R. Condit and Condit Imports Inc. based on the trial judge's grant of defendants' R. 4:37-2(b) motion for dismissal of plaintiff's second amended complaint as well as defendants' counterclaim for specific performance. We affirm.
Plaintiff initiated this action by a verified complaint filed in the Chancery Division and an order to show cause seeking restraints on defendant Condit from selling Condit Toyota and its assets to defendants Chris and Albert Preziosi. Both plaintiff's application for interim relief and defendants' motion to dismiss the complaint for failure to state a claim pursuant to R. 4:6-2(e) were denied on June 29, 2001 by the Chancery judge, who also transferred the action to the Law Division. Thereafter, plaintiff filed two amended complaints, the second of which alleged the following grounds for relief:
(1) breach of a shareholder agreement by Condit when he sold the assets of Condit Toyota to the Preziosis; (2) violation by Condit of his fiduciary duties as a majority shareholder and president of Condit Imports, Inc.; (3) common law fraud; (4) shareholder oppression in violation of N.J.S.A. 14A:12-7(1)(3); and (5) failure to pay plaintiff the fair market value for his shares in Condit Toyota pursuant to N.J.S.A. 14A:11-2. The defendants denied liability and filed a counterclaim for specific enforcement of an option agreement giving Condit the right to purchase plaintiff's shares in the Toyota franchise at their book value. On February 16, 2005, defendants moved for summary judgment pursuant to R. 4:46-1, but the motion was denied by the Law Division judge on May 17, 2005, on grounds there existed a genuine issue of material fact as to the date plaintiff signed the "option letter."
On September 19, 2005, a jury trial began before a different judge, Judge James A. Farber. After two days of trial, plaintiff completed his case on September 21, 2005. Defendants then moved for a judgment pursuant to R. 4:37-2(b), which was granted by Judge Farber. The judge then dismissed the complaint and directed specific performance of the option agreement. This appeal followed.
A motion for involuntary dismissal at the end of a plaintiff's case will not be granted unless, viewing the evidence most favorable to plaintiff and giving plaintiff the benefit of all favorable inferences, a prima facie case for recovery has not been presented. Pitts v. Newark Bd. of Educ., 337 N.J. Super. 331, 340 (App. Div. 2001). In considering a motion for involuntary dismissal under R. 4:37-2(b), our Supreme Court has directed that, "the trial court is not concerned with the worth, nature or extent (beyond a scintilla) of the evidence, but only its existence, viewed most favorably to the party opposing the motion." Dolson v. Anastasia, 55 N.J. 2, 5-6 (1969). See also Zive v. Stanley Roberts, Inc., 182 N.J. 436, 441-42 (2005). Absent unusual circumstances, involuntary dismissal will be denied if the plaintiff's case raises a credibility question to be submitted to the jury. Caliguire v. City of Union City, 104 N.J. Super. 210, 217 (App. Div. 1967), aff'd, 53 N.J. 182 (1969). See also Ferdinand v. Agricultural Ins. Co. of Watertown, 22 N.J. 482, 494-95 (1956); Zucker v. Silverstein, 134 N.J. Super. 39, 50 (App. Div. 1975).
The proofs set forth on plaintiff's case-in-chief were as follows. Defendant Condit was the principal owner of the Condit Ford/Lincoln/Mercury dealership, a Ford leasing company, a truck dealership, and an auto body shop. Plaintiff Marro began employment with Condit Ford, Inc. in 1989 as the controller of the company. He routinely handled the administration and business functions of the office including budgeting and reconciliation of accounts. He also served as treasurer of Condit Ford and Vice President of Condit Auto Lease Corporation. In the early 1990s defendant Condit became interested in acquiring a local Sussex County Toyota dealership that had been in bankruptcy. Marro and John Mathews, another Condit employee, expressed an interest in participating in the dealership purchase. Defendant agreed, and to that end the corporation known as Condit Imports, Inc. was formed and incorporated on August 9, 1994. Condit was the president and director of the company known as Condit Imports and Marro was the treasurer.
In July 1994, Marro purchased for $25,000 eighteen shares of stock in Condit Imports, which totaled 3.6 percent of the total outstanding corporate stock. Marro testified that he purchased the shares in Condit Imports with the intention of participating in a long-term investment with a share of corporate profits and securing a long-term management position within the organization. Mathews purchased thirty-six shares, comprising 7.2 percent of the outstanding stock. The remaining 446 shares or 89.2 percent of the common stock were held by Larry R. Condit after his corporate contribution of over $600,000. The purchase of the Toyota dealership was completed in February 1995.
Marro testified Condit told him that his investment would be protected by a shareholder's agreement. When one was not presented to him, he asked Condit about it. Then Condit presented him with a letter dated October 6, 1994, purportedly from Marro to Condit stating the following:
In consideration of valuable benefits and other considerations you have provided me, the purpose of this letter is to present and confirm my offer to allow you (or Condit Imports, Inc. (the "Corporation"), if you prefer), to purchase any and all shares of stock I may own in the Corporation at any time, at a price equal to the greater of (a) the total of my original investment to acquire the stock, or (b) the prevailing net book value of my shares, (as defined by the Shareholders Agreement dated October 11, 1994) at the time you choose to purchase same.
It is my intention that this offer be absolute and irrevocable and toward that end, I have enclosed with this letter for you to hold, my original Stock Certificate representing the shares I own in the corporation, which I have endorsed in blank, for you to have in order to effectuate the transfer of shares, if and when you elect to purchase my shares. I am having my signature on this letter notarized in order to avoid any possible question as to my intentions.
Larry, it, of course, my intention that this offer is not assignable and my be exercised only by you, personally, or your legal representatives or estate.
Needless to say, I ask that you retain this letter and the enclosed Stock Certificate in your safe deposit box or other secure location, and that you hold same in escrow until you desire to purchase any shares and tender the required payment.
Sincerely, Lawrence Marro Sworn and Subscribed to Before me this day of 1994.
There is no dispute that Marro signed the letter. The jurat was filled in with the date February 2, 1995 and was signed by Christine Foster, Condit's executive secretary. Foster testified in her deposition that she recognized her signature and Marro's signature on the document. She also said the inserted date of February 2, 1995, was the date Marro signed the letter. However, she had no independent recollection if he signed the document in her presence. Condit was also not certain as to when Marro signed the letter or if he asked Foster to witness the signing as notary. Marro, on the other hand, said that to the best of his recollection the letter was signed by him on or about October 6, 1994, and not February 2, 1995. He also alleged that he signed the letter only as an "interim measure" while waiting for a shareholders agreement to be prepared and presented to him by Condit.
Although the October 6, 1994, letter referred to a "Shareholders Agreement dated October 11, 1994," no shareholders agreement was prepared and dated in October 1994. Rather, the shareholders agreement for Condit Toyota, Inc. was prepared and signed by Condit, Marro, and Mathews on February 1, 1995. This agreement provided certain restrictions on the sale or transfer of corporate shares. Any shareholder desiring to sell any of his shares was directed to provide thirty days notice to the corporation and the other shareholders for purchase of those shares at the same price, terms, and conditions as those offered by the shareholder desiring to sell. In the event the corporation did not purchase or retire their shares, they could be offered for sale only subject to an option on the part of each shareholder to purchase on the same terms. The shareholders agreement made no mention of the letter dated October 6, 1994, giving Condit the "absolute and irrevocable" right to purchase any shares of stock owned by Marro at a price equal to the greater of his original investment or the prevailing net book value "at any time."
In the late 1990s Condit signed a listing agreement for the sale of all Condit franchises, including Condit Ford and Condit Toyota, with Daniel T. Murphy, an automobile dealership broker, who prepared a prospectus listing the sale for the Toyota franchise at $2,035,530. Marro said he was unaware of the listing or Condit's decision to sell the franchises until December 8, 2000, when Condit called him to his office and told him Condit Toyota had been put up for sale. Marro testified that he then asked Condit why he had not offered the Toyota franchise to him as required by the shareholders agreement. He said Condit replied that he was "too far along with . . . trying to conclude the transaction" and that he would not consider selling the franchise to Marro or Mathews.
Both Marro and Mathews consulted an attorney, and a letter was sent to Condit on January 15, 2001, stating the intention of Marro and Mathews to submit an offer to purchase Condit Toyota. The letter included the following paragraph:
Please accept this as notice that prior authorization of both Lawrence Marro and John Mathews to execute any documents on their behalf that was extended by way of correspondence dated October 6, 1994 is hereby withdrawn. Please take no action in executing any documents with respect to the shares and interest of Lawrence Marro and John Mathews.
On February 12, 2001, Marro and Mathews sent another letter repeating their offer to purchase 100 percent of the shares of Condit then being offered for sale with payment in accordance with paragraph ten of the shareholders agreement. At a meeting of the parties in February 2001, Marro offered to match any offer tendered by a third party. Condit responded by letter of April 6, 2001, that he exercised his rights under the October 6, 1994 "option agreement" to purchase the corporate shares of Marrow and Mathews.
Pursuant to and in accordance with the letter which you executed on February 2, 1995, please be advised that I am hereby exercising my rights under that letter to purchase all the shares of stock you own in Condit Imports, Inc. The option given to me authorizes me to purchase your shares -- shares at the greater of (a) the total of your investment to acquire the shares or (b) the prevailing book value of your shares as defined in our Shareholders Agreement as the date thereof.
Based upon the March 2001 financial statement of the company, the prevailing net book value of your shares is $60,791.00, a sum which is greater than your original investment. Enclosed herein you will find my check in the amount of $60,791.00 representing payment for your shares.
Condit's offer to Marro and to Mathews included a $20,000 "bonus based on their years of service," in addition to the then book value of their shares. Mathews accepted the offer and Condit purchased his shares at book value with the bonus. However, Marro refused the offer. Therefore, on April 6, 2001, Condit withdrew the offer of a bonus to Marro, and stated that he exercised his option to purchase Marro's stock at book value, which was $60,791 at that time. Mathews refused to transfer his stock. Then by letter dated September 18, 2001, Condit called a special meeting of the shareholders of Condit Imports, Inc. for October 10, 2001, to "vote on the sale of substantially all of the assets of the company pursuant to a contract dated December 22, 2000, by and between company and Chris Preziosi and Albert Preziosi, Jr." Marro objected in writing to the proposed sale, and cast his shares in opposition at the shareholders meeting. Of course, Condit voted the majority shares in favor of the sale. It was at this point that Marro filed his complaint and order to show cause in the Chancery Division.
As previously noted, the motion judge denied Condit's motion for summary judgment because he determined that there existed a material dispute of fact as to when the option letter dated October 6, 1994, was actually signed by Marro. In his statement of reasons accompanying his order, the judge stated that if the option letter was signed on February 2, 1995 as indicated by the jurat, its effective date was after the February 1, 1995 shareholders agreement. It then would supersede any restrictions in the shareholders agreement on Condit's purchase of Marro' stock. If, on the other hand, the agreement was executed before February 1, 1995, then the court reasoned the shareholders agreement restrictions might govern.
However, having heard all the testimony and evidence produced at the plaintiff's case-in-chief, Judge Farber held that there was absolutely no reason why both the option letter and the shareholders agreement could not co-exist and operate concurrently. Accordingly, Condit had the "absolute and irrevocable" option to purchase any and all shares of Marro "at any time" at a price that could not be less than Marro's original investment, thereby protecting his investment from loss. During the course of plaintiff's case-in-chief, Judge Farber ruled that the parol evidence rule barred Marro from testifying that the option document was "interim" since such proffered testimony would contradict the express language that Condit's right was "absolute and irrevocable" and could be exercised "at any time." He therefore determined there was no credible evidence that the document dated October 6, 1994, had in fact been superseded by the shareholders agreement of February 1, 1995. Therefore, even assuming a breach in the procedure for stock purchase in the shareholders agreement, he declared the jury could find no damages because Condit could purchase Marro's shares at any time and then sell the business.*fn1
We agree with Judge Farber's analysis. While Marro contends that the option agreement was signed before February 1, 1995, and Condit argues the opposite, this conflict does not constitute a dispute as to a material fact. The shareholders agreement does not even mention the option letter, much less attempt to modify or revoke its "absolute and irrevocable" right for Condit to purchase Marro's shares. Obviously designed to protect Marro's initial investment, the letter restricts the value of the shares to book value. As Judge Farber correctly noted, Marro can claim no damages by the exercise of this option by Condit since there was no credible proof that the option was abrogated or merged into the shareholders agreement.
The option agreement constituted a binding unilateral contract whereby Marro had to sell his shares at a specified price to Condit upon exercise of the option regardless of whether or not Marro chose to do so. State v. New Jersey Zinc Co., 40 N.J. 560, 576 (1963); Madison Industries v. Eastman Kodak, 243 N.J. Super. 578, 587 (App. Div. 1990). See also Humble Oil & Refining Co. v. Doerr, 123 N.J. Super. 530, 534 (Ch. Div. 1973); and Gulf Oil v. Montanero, 94 N.J. Super. 348, 358 (Ch. Div. 1967). Terms of a contract must be given their "plain and ordinary meaning." Nester v. O'Donnell, 301 N.J. Super. 198, 210 (App. Div. 1997). Here the language could not be clearer in granting Condit the "absolute and irrevocable right to purchase any and all shares of stock" that Marro owned in the corporation "at any time" at the specified price. While a determination of the intent to rescind the agreement may be inferred from all the circumstances, that intention must be clearly expressed. County of Morris v. Fauver, 153 N.J. 80, 96-7 (1998).
Here, there was no clearly expressed intention by Condit, the holder of the option, to abandon his rights under the option letter giving him the absolute and irrevocable right to purchase Marro's shares. Furthermore, while the purchase of Marro's stock by Condit, as holder of the option, was expressly permitted, there was no obligation after exercise of the option to sell his shares to Marro. The door does not swing both ways with a unilateral option. See Madison, supra, 243 N.J. Super. at 587.
In light of our determination as to the viability of the option agreement and its exercise by Condit, the remaining issues argued by Marro in this appeal are without sufficient merit to warrant further discussion. R. 2:11-3(e)(1)(E).