October 24, 2007
DONALD HIBBERT, PLAINTIFF-APPELLANT,
T & A HOLDINGS, LLC, A NEW JERSEY LIMITED LIABILITY COMPANY, D/B/A SELINSGROVE NISSAN, GREGORY MUNOZ AND CHARLES CARY, DEFENDANTS-RESPONDENTS.
On appeal from the Superior Court of New Jersey, Law Division, Monmouth County, Docket No. L-584-04.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted September 18, 2007
Before Judges Winkelstein and Yannotti.
Plaintiff Donald Hibbert appeals from a final judgment entered by the Chancery Division on August 7, 2006, in favor of defendants T & A Holdings, LLC (T & A), and Gregory Munoz (Munoz). We affirm.
On July 31, 2003, plaintiff filed a verified complaint naming T & A, Selinsgrove Nissan, Munoz and Charles Cary (Cary) as defendants. According to the complaint, plaintiff and Munoz formed T & A for the purpose of operating an automobile dealership. Munoz made an initial capital investment of $315,000 and plaintiff contributed $135,000. However, the operating agreement provided that plaintiff and Munoz would each possess a 50% ownership interest in the corporation. In May 2002, T & A entered into an agreement with Andretti Dealerships, LLC for the purchase of a Nissan dealership that operated under the name of Selinsgrove Nissan. Plaintiff was named manager of the dealership; Munoz was the so-called "dealer principal."
Plaintiff alleges that in April 2003, the dealership "had fallen short" and to address the shortfall, T & A had to pay Nissan North America, Inc. (Nissan) $70,000. Plaintiff provided $35,000 to cover his part of this obligation. According to plaintiff, Munoz told plaintiff that he did not have the $35,000 for his part of the debt and had to sell some of his stock to Charles Cary (Cary) in order to obtain the required funds. Plaintiff says that it was his understanding that Munoz was going to sell his own shares to Cary.
Plaintiff claims that, unbeknownst to him, Munoz and Cary agreed that Cary would acquire six shares of stock, three from Munoz and three from plaintiff, with "the end result" that plaintiff and Munoz would both have 47% ownership interests in T & A, and Cary would have 6%. Plaintiff alleged that Munoz only gave him the signature page of the amended operating agreement, which reflected the changes in the ownership shares. Plaintiff signed the document, allegedly unaware that he was agreeing to the sale of three of his shares. Plaintiff also claims that he never received any money for what he calls the "purported sale" of his stock to Cary.
In July 2003, Munoz and Cary, acting with a combined 53% ownership interest in the corporation, terminated plaintiff from his position as manager of the dealership. Plaintiff alleges that his termination was without good cause. Plaintiff says that he was frozen out of the company so that Munoz and Cary could take control of the business "by themselves," and "deny [plaintiff of his] promised salary, benefits and [the] ability to protect his investment." Based on the alleged wrongful actions of Munoz and Cary, plaintiff asserted claims for breach of fiduciary duty, minority oppression, and fraudulent concealment.
The matter was tried before Judge Robert A. Coogan, sitting without a jury. After the presentation of plaintiff's case-in-chief, the judge dismissed plaintiff's claims against Cary.
Following the trial, the judge issued a letter opinion dated July 25, 2006, in which he found that: plaintiff had not established that Munoz made any fraudulent misrepresentations to plaintiff that were material or that he relied upon; Munoz breached no duty owed to plaintiff; and Munoz did not cause plaintiff to sustain economic damages. The judge entered judgment for T & A and Munoz, and this appeal followed. Plaintiff does not challenge the dismissal of his claims against Cary but argues that there is insufficient evidence in the record to support the dismissal of his claims against T & A and Munoz.
The standard of review that governs our consideration of plaintiff's arguments on appeal is well established. "Findings [of fact] by [a] trial judge are considered binding on appeal when supported by adequate, substantial and credible evidence." Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 484 (1974) (citing N.J. Turnpike Auth. v. Sisselman, 106 N.J. Super. 358, (App. Div.), certif. denied, 54 N.J. 565 (1969)). We will "'not disturb factual findings and legal conclusions of [a] trial judge unless we are convinced that they are so manifestly unsupported by or inconsistent with the competent, relevant and reasonably credible evidence as to offend the interests of justice.'" Ibid. (quoting Fagliarone v. Twp. of No. Bergen, 78 N.J. Super. 154, 155 (App. Div. 1963)).
Here, there is sufficient credible evidence in the record to support the judge's finding that plaintiff voluntarily executed the amended operating agreement. Plaintiff testified that when Cary agreed to acquire stock of the corporation, it was his understanding that Cary would purchase 6% of Munoz's shares. According to plaintiff, Munoz only provided him with the signature page of the amended operating agreement and told him that he said that nothing had changed. Plaintiff said that he was not aware Cary had purchased 3% of his shares until he was told that he was being terminated as manager for the dealership. However, Munoz testified that plaintiff was in fact provided with a copy of the amended operating agreement two weeks prior to the date when plaintiff signed the document. Exhibit A to the agreement states that Munoz and plaintiff have 47% interests in the company, and Cary had 6%.
In his written opinion, the judge found plaintiff to be "likeable" but "not credible." The judge noted that at trial some of plaintiff's responses to questions were vague. On the other hand, the judge considered Munoz to be a credible witness, noting that he answered the questions "directly and forthrightly." We must defer to such fact-finding where, as here, the judge heard the testimony, had an opportunity to observe the witnesses, and obviously "has a better perspective than a reviewing court in evaluating the veracity of witnesses." P.H. v. T.H., 370 N.J. Super. 586, 601 (App. Div. 2004). The judge's credibility findings, as well as the signed document, amply support the judge's determination that plaintiff voluntarily and knowingly signed the amended operating agreement, thereby refuting plaintiff's claim that he was fraudulently misled into agreeing to sell 3% of his shares to Cary.
The record additionally supports the judge's finding that Munoz committed no act or omission that caused plaintiff's losses. Here, plaintiff alleged that he suffered a monetary loss resulting from alleged misuse by Munoz of company funds for personal expenses. Plaintiff also claimed that Munoz caused the loss of his investment in the corporation that resulted when the dealership failed. The judge found insufficient evidential support for the claim that Munoz wrongfully diverted company funds for personal use, and determined that the dealership failed because it had a heavy debt structure, an inability to sustain market share in the region, and was undercapitalized.
Plaintiff argues that the judge erred because he "totally disregarded the uncontroverted testimony" of William J. Keephart (Keephart), the forensic accountant who testified for plaintiff. Keephart asserted that Munoz's actions caused "irreparable harm" to T & A's financial condition and eventually led to the company's demise when it defaulted on its dealership agreement with Nissan. Keephart said that Munoz established an "undisclosed bank account," moved $23,820.93 to that account, withdrew the monies, and deposited the same into his personal account. Keephart further asserted that Munoz used company funds to pay for legal expenses and for the purchase of real estate. Keephart also alleged that Munoz sold the dealership's parts inventory and disposed of other company assets for personal gain.
However, Munoz disputed Keephart's assertions. He denied that he moved T & A monies to an "undisclosed bank account." Munoz said that plaintiff had consented to the transfer of funds. Munoz testified that he used his personal credit card for business expenses because plaintiff did not have any credit cards and plaintiff's credit "was not that good."
Munoz additionally testified that plaintiff also used his card when they traveled to San Diego on a business trip. Munoz denied that he took possession of the dealership's parts inventory, said that company funds were used to purchase real estate for business purposes, and the legal expenses were for corporate purposes. Moreover, Munoz said that he provided personal funds to keep the corporation afloat. He stated that the dealership's failure was due in part to plaintiff's failure to fulfill his responsibilities as manager.
In addition, Bradley Palmer (Palmer), the company's accountant during the entire time it was in operation, testified that the company lost money consistently and was never profitable. Palmer opined that the dealership did not "have sufficient sales to generate enough margin dollars to cover its expenses."
In his written opinion, Judge Coogan found that Keephart was a credible witness but his testimony was not convincing. The trial court has the discretion to determine the credibility of an expert witness and is "free to accept or reject in whole or in part the testimony of" any expert. Southbridge Park, Inc. v. Borough of Fort Lee, 201 N.J. Super. 91, 94 (App. Div. 1985); Fox v. Twp. of W. Milford, 357 N.J. Super. 123, 131 (App. Div.), certif. denied, 176 N.J. 279 (2003). Here, there were sound reasons to reject Keephart's testimony and the judge did not abuse his discretion as fact-finder in doing so.
Furthermore, as noted previously, the judge considered Munoz to be a credible witness. The judge stated that Munoz tried to salvage the dealership "but to no avail." Plaintiff and Munoz had both sustained monetary losses. The judge observed, "A heavy debt structure, an inability to sustain market share in the geographic area, and under-capitalization are but some examples of these circumstances." In our view, there is sufficient credible evidence in the record to support this finding.
Therefore, we affirm the judgment appealed from substantially for the reasons stated by Judge Coogan in his letter opinion dated July 25, 2006.
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