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Izzo v. Izzo Realty Associates

December 11, 2007


On appeal from the Superior Court of New Jersey, Law Division, Middlesex County, L-2086-04.

Per curiam.


Submitted: October 3, 2007

Before Judges Axelrad and Payne.

Plaintiff Paul Izzo appeals from the August 4, 2006 order vacating a writ of execution entered on a default judgment which he obtained against Izzo Realty Associates, L.P. ("Associates"), and the September 8, 2006 order denying his motion for reconsideration. We affirm.

The record discloses that Associates owned a parcel of commercial real estate ("property" or "partnership property") located in Old Bridge. The limited partnership was formed in 1991 by Louis A. Izzo and Concetta Izzo. Upon their deaths, their four children, Carol Gutterman, Louis Izzo, Eleanor Edelman, and appellant, each became 25% owners and the general partners of Associates. On March 23, 2004, appellant filed suit against the partnership and his three siblings, seeking payment of management fees in the amount of $44,610, allegedly due him with respect to the property under the partnership agreement for the years 1998 to 2001, based on theories of breach of contract and unjust enrichment. Service was made upon the general partners, who all appeared and filed counterclaims and cross-claims. Service on the partnership itself was made upon Edelman's husband, who was neither a general partner nor a registered agent. Although the complaint is framed in a manner that would suggest liability on the part of the partnership entity, and service on the partnership appeared to be deficient under Rule 4:4-4(a)(5), no motion to dismiss or answer was ever filed on Associates' behalf.

The suit proceeded against the three individuals. At trial before Judge Happas on February 15, 2005, with all parties represented by counsel, a settlement was reached between appellant and his three general partners. The terms, placed upon the record, required the appointment of a management company to serve as real estate manager for the partnership property, payment of profits on an equal basis to the partners, and payment to each of the general partners of specified amounts at the earlier of the sale of the property or by January 15, 2006, including "a fee classified as a manager's fee, in the amount of $7,500" to appellant. All claims, counterclaims and cross-claims were to be dismissed with prejudice. There was a specific reservation of rights, however, by the parties "with respect to other partnership matters, including the sale of the partnership property to the current proposed buyer."

Gutterman and Louis Izzo, through counsel, subsequently moved to enforce the settlement agreement. Following oral argument on May 13, 2005, in which appellant and Edelman appeared pro se, Judge Pullen granted the motion to enforce the settlement. In January 2006, appellant received the $7500 management fee payment.

Unbeknownst to any of his three siblings or their attorneys, appellant, through counsel, had been moving forward with default proceedings against the partnership contemporaneous with his litigation against the general partners. He filed a request for the entry of default against Associates on September 24, 2004, obtained default judgment on February 1, 2005 in the amount of $44,610, and docketed the judgment on February 7, 2005. On May 25, 2006, after appellant received payment of the management fee pursuant to the settlement agreement, he obtained a writ of execution on his default judgment and sought to levy upon funds of the partnership.

Gutterman and Louis Izzo then moved to enforce the settlement agreement and vacate the writ of execution, arguing the partnership claim and undisclosed judgment had merged into the settlement and the reservation of rights did not apply to the management fee claim but to other issues, such as partition. The matter apparently proceeded as uncontested because appellant's papers were not received by the court, and defendants' motion was granted by order of August 4, 2006.

Appellant moved for reconsideration, asserting that he had a valid judgment against the partnership because default and default judgment had been properly entered upon which he could execute and there was no basis for vacating the judgment. He further argued that defendants' motion sought to have the court rewrite the settlement agreement by inserting a new term that would vacate his judgment, when the settlement agreement did not encompass appellant's claims against Associates but only claims and counterclaims against the individual partners, did not reference the judgment, and explicitly contained a reservation of rights that he contended entitled him to proceed against the partnership. In opposition to defendants' motion, appellant certified, in pertinent part, as follows:

6. When the Settlement Agreement involving the individual partner claims was agreed to, no one requested that I agree to vacate the judgment against the partnership as part of the settlement.

7. . . . The Settlement Agreement did not require that I give up any rights to the Judgment against the Partnership.

Furthermore, according to appellant, the reservation of rights provision "was inserted because of the Judgment as well as other partnership issues." Appellant further stated, "[i]f the other parties had insisted that [he] give up a judgment for over $40,000 ...

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