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Crouse v. Agorganic

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


October 24, 2007

DARLA CROUSE, INDIVIDUALLY AND AS A SHAREHOLDER OF AGORGANIC, INC. AND DARLA CROUSE, D/B/A CROUSE FARMS, PLAINTIFF-APPELLANT,
v.
AGORGANIC, INC.; HARMONY DALE FARMS, A PARTNERSHIP ORIGINATED UNDER THE LAWS OF THE STATE OF NEW JERSEY; HARMONY DALE FARMS, INC.; HARMONY DALE FARMS OF NEW YORK; HARMONY DALE FARMS OF NEW JERSEY; RICHARD CROUSE, INDIVIDUALLY AND IN HIS REPRESENTATIVE CAPACITY FOR HARMONY DALE FARMS; AND ART BUESING, INDIVIDUALLY AND IN HIS REPRESENTATIVE CAPACITY FOR HARMONY DALE FARMS, DEFENDANTS, AND DALE CROUSE, INDIVIDUALLY AND AS AN OFFICER AND DIRECTOR OF AGORGANIC, INC., DEFENDANT-RESPONDENT.
DARLA CROUSE, INDIVIDUALLY AND D/B/A CROUSE FARMS, PLAINTIFF,
v.
"H.F.L., INCORPORATED," DALE CROUSE AND RICHARD CROUSE, DEFENDANTS.

On appeal from Superior Court of New Jersey, Law Division, Warren County, Nos. L-331-97, L-88-00.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Submitted September 11, 2007

Before Judges Wefing, Parker and R. B. Coleman.

Following a hearing conducted pursuant to Lopez v. Swyer, 62 N.J. 267 (1973), the trial court entered a judgment dismissing with prejudice six counts of the nineteen-count complaint plaintiff had filed in this matter. The balance of the counts having been concluded, the judgment was final for purposes of appeal. Plaintiff has appealed from that judgment. After reviewing the record in light of the contentions advanced on appeal, we affirm.

Plaintiff Darla Crouse and defendant Dale Crouse are siblings; their parents are Richard Crouse and Patricia Crouse. The Crouse family operated Harmony Dale Farms on land owned by various family members, primarily Richard. Both Darla and Dale worked in the family farming business. They dispute the nature of their respective involvements, but that dispute is not material to the issues before us. In the early 1980's the farming operation was experiencing economic difficulty in light of rising prices for fertilizers, and Dale began to explore the feasibility of using municipal sludge to meet the farm's fertilizer needs. The parties dispute who was responsible for the initial concept, but, again, that dispute is not material to the issues before us.

A separate corporate entity, AgOrganic, Inc., was formed to pursue this business opportunity, and Darla asserts that she understood that she was to own forty-nine percent of the stock of AgOrganic and her brother fifty-one percent. AgOrganic's certificate of incorporation, filed in 1983, lists Dale as the president and Darla as the secretary. A development plan for AgOrganic drafted in 1985 refers to both Darla and Dale as stockholders although the size of their respective holdings is left blank. In addition, various bid documents prepared over the years by AgOrganic and submitted to a number of public entities listed both Dale and Darla as stockholders, although the descriptions of their ownership interests listed over the years were not consistent.

AgOrganic obtained the necessary permits from the New Jersey Department of Environmental Protection (DEP) to conduct such a business and successfully obtained a number of contracts from waste generators. AgOrganic's business expanded substantially over the years, and by 1990 it had gross revenues of approximately two hundred thousand dollars a month. Dale Crouse commenced negotiations to sell the business to Mid-American Waste Systems, Inc., to raise the capital to expand the business further. These negotiations culminated with the sale of AgOrganic to Mid-American on March 11, 1991, for approximately eleven million dollars. On March 12, 1991, Dale conducted a mandatory meeting for all employees of AgOrganic to inform them of the sale and to explain how they all would benefit from it. A few weeks later, representatives of Mid-American met with the employees to attend to the details of switching to new benefit plans.

On July 23, 1997, more than six years after the sale of AgOrganic, Darla filed her complaint in this matter. The counts at issue in this appeal alleged conversion of her interest in AgOrganic, breach of contract, breach of fiduciary duty, fraud, breach of the covenant of good faith and fair dealing, and promissory estoppel. Darla asserted that she was unaware of the sale of AgOrganic, and of her brother's claim to have been the sole shareholder, until she asked him in 1997 for an estimate of the value of her ownership interest in the corporation.

She filed suit several months after he told her he had been the sole shareholder of AgOrganic and had sold the corporation in March 1991. She filed a motion to preclude her brother from asserting the statute of limitations as a defense but that motion was denied. The trial court held a series of hearings pursuant to Lopez, supra, and in 1999 dismissed the subject counts. Darla appealed, and we reversed, concluding that the trial court had improperly decided the question of the ultimate merits of Darla's complaint in the context of a Lopez hearing; we remanded the matter for further proceedings to determine whether Darla was or should have been aware of the sale of AgOrganic in March 1991. If she was, her causes of action would be time-barred. Crouse v. AgOrganic, Inc., No. A-5877-01T5 (App. Div. Sept. 30, 2003). On remand, a new Lopez hearing was conducted on various dates in the summer of 2005. After that hearing concluded, the trial court issued a comprehensive written opinion setting forth its findings of fact and conclusions of law that Darla had not carried her burden of proving that the statute of limitations should be tolled and her litigation be permitted to proceed. Darla has appealed from the resulting judgment.

Darla makes two arguments on appeal--that the trial court's findings of fact are contrary to the overwhelming weight of the evidence and that the trial court erred in finding that her brother Dale did not breach his fiduciary duties to her.

In support of her first argument, Darla presents a number of reasons why the trial court should have concluded that she was unaware that AgOrganic had been sold to Mid-American and thus was entitled to the benefit of the discovery rule. While the trial court could have reached these conclusions, it did not. The trial court, moreover, noted at various points in its letter opinion that it rejected plaintiff's testimony with regard to several key points as simply not credible. That the trial court may have not have accepted the testimony of Dale and his father with respect to several other issues does not provide a basis for us to supersede the trial court's rejection of key aspects of plaintiff's testimony as not credible.

Cases are legion that appellate courts should defer to the factual findings of the trial courts and the credibility assessments which are integral to those findings. More than thirty years ago then-Chief Justice Hughes articulated the principles guiding our review in this matter.

Considering first the scope of our appellate review of judgment entered in a non-jury case . . . we note that our courts have held that the findings on which it is based should not be disturbed unless they are so wholly insupportable as to result in a denial of justice . . . . Findings by the trial judge are considered binding on appeal when supported by adequate, substantial and credible evidence. It has otherwise been stated that our appellate function is a limited one: we do not disturb the factual findings and legal conclusions of the 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 and the appellate court therefore ponders whether, on the contrary, there is substantial evidence in support of the trial judge's findings and conclusions. [Rova Farms Resort, Inc. v. Investors Ins. Co., 65 N.J. 474, 483-84 (1974) (internal quotations omitted).]

These fundamental principles of appellate review remain valid. Daidone v. Buterick Bulkheading, 191 N.J. 557, 560 n.1 (2007); Sager v. O.A. Peterson Constr. Co., 182 N.J. 156, 164 (2004); Pheasant Bridge Corp. v. Twp. of Warren, 169 N.J. 282, 293 (2001); Schinn v. Schaal, 394 N.J. Super. 55, 65-66 (App. Div. 2007); Mizrahi v. Cannon, 375 N.J. Super. 221, 227 (App. Div. 2005).

Plaintiff's second argument revolves around the following passage in the trial court's written opinion.

The Court finds that Dale Crouse fulfilled his duty as a majority shareholder by first informing the plaintiff in a private meeting in advance of the sale and then publicly announcing the sale to all of the employees again in the presence of the plaintiff.

Dale Crouse did nothing to try and conceal that there was a sale of Agorganic [sic] to [Mid-American].

Plaintiff complains that the trial court in doing so dealt with the ultimate merits of her assertion of breach of fiduciary duty and exceeded the scope of the Lopez hearing. Although we agree that the question whether defendant Dale Crouse breached a fiduciary duty to his sister was not before the trial court, we do not agree that the trial court's determinations went beyond the permissible bounds.

Plaintiff argues that she may proceed with her claim of breach of fiduciary duty because defendant Dale Crouse did not inform her correctly about the sale of AgOrganic, lulling her into inaction over the years. That argument, however, relies upon plaintiff being entitled to invoke the discovery rule. As we have indicated, we are satisfied that the trial court's determination that plaintiff is not entitled to the benefit of the discovery rule should be affirmed. Recasting her argument in different wording does not cure its weaknesses.

Affirmed.

20071024

© 1992-2007 VersusLaw Inc.



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