December 13, 2007
ESTATE OF AYAS ADIGUZELLI, YURDANUR ADIGUZELLI, NUR ADIGUZELLI, HALIME ADIGUZELLI AND SAMIME DEMIRTAS, PLAINTIFFS-RESPONDENTS/ CROSS-APPELLANTS,
MEHMET ADIGUZELLI AND TURGAY ADIGUZELLI, DEFENDANTS-APPELLANTS/CROSS-RESPONDENTS.
On appeal from Superior Court of New Jersey, Chancery Division, Sussex County, Docket No. C-9-98.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued October 23, 2007
Before Judges Coburn, Grall and Chambers.
The litigation that led to this appeal and cross-appeal involves a dispute over real estate and business interests of members of the Adiguzelli family. The defendants, Mehmet and Turgay Adiguzelli, are brothers. Their father and mother, Ayas and Yurdanur Adiguzelli, and their sisters, Halime, Samime and Nur Adiguzelli, are the plaintiffs. Ayas Adiguzelli died after filing the complaint, and his estate was substituted as a plaintiff. Questions of liability and damages were bifurcated and tried to the court.
Defendants appeal from the judgments on liability and damages, which establish their liability for conversion of their parents' business interests and award damages. Plaintiffs' cross-appeal from the judgment dismissing, as time-barred, their claim based on wrongful appropriation of real estate held in trust for the entire family. We affirm substantially for the reasons stated by Judge MacKenzie in written decisions dated November 15, 2001, January 22, 2002, April 3, 2002 and April 1, 2005, and the writing appended to the amended judgment dated June 3, 2005.
Substantial credible evidence in the record supports the following factual findings. In 1976, Ayas Adiguzelli went into the business of slaughtering animals and selling the meat to select customers. In 1979, he opened a store in Brooklyn, New York, where he offered the meat to retail customers. In 1980, he purchased property in Fredon, New Jersey, where he established a home for his family and a slaughterhouse for his business. Ayas formed one partnership for operation of the meat market, in which his wife Yurdanur and his son Mehmet each had a fifty percent interest. He formed a second partnership for the slaughterhouse, ownership of which was divided forty-five percent to Ayas, forty percent to Ayas's son Turgay, and fifteen percent to Ayas's son Mehmet. During the 1980s, Ayas purchased additional real estate in both New York and New Jersey. He placed title to the seven properties in his sons' names, but he considered the property as being held by his sons for the benefit of the entire family.
The Adiguzelli family lived together in Fredon until 1989 or 1990, when Mehmet expelled his parents and sisters from the family home. Despite the dramatic expulsion, the members of the family continued to have dinner together regularly, every "two weeks or so."
After the expulsion, Ayas limited his participation in the partnerships to work at the slaughterhouse, but he and his wife continued to receive income from the partnerships. The tax returns for the meat market reflected defendants' mother's ownership interest through tax year 1990. The individual tax returns filed by Ayas and Yurdanur reflected income from the partnerships in 1990 and 1991. On February 24, 1992, the accountant who prepared business and family tax returns did not include a "K-1" partnership form with the return he prepared for defendants' parents. That was the first information they received that indicated a change in the partnerships.
Without notice to plaintiffs, defendants had incorporated the partnerships. On January 4, 1991, defendants incorporated Halal Meat Market, Inc. The assets of the meat market partnership were transferred to that corporation, and defendants are the sole shareholders. On January 9, 1992, defendants incorporated Halal Packing Inc. Defendants transferred the assets of the slaughterhouse partnership to the corporation, and they are the sole shareholders.
In September 1992, Ayas started up a new business involving animal hides. According to Ayas, he was disappointed in that business.
Plaintiffs filed their complaint alleging fraud and misappropriation, breach of fiduciary duty and unjust enrichment concerning defendants on February 19, 1998. Defendants answered on March 11, 1998. They asserted defenses based on laches and the statute of limitations.
At the conclusion of plaintiffs' case on liability, defendants moved to dismiss their claims as time-barred. The judge permitted defendants to present their case before arguing the fact-sensitive motion.
At the conclusion of the trial on liability, the judge, accepting defendants' argument, concluded that after Mehmet's 1989 expulsion of plaintiffs from the family residence, plaintiffs could no longer have entertained a reasonable belief that defendants held either the real property or the partnerships in trust for the family. On that basis, the judge dismissed all of plaintiffs' claims.
Plaintiffs moved for reconsideration. They argued that defendants waived the time-bar because they did not raise the issue until the close of plaintiffs' case on liability. In the alternative, plaintiffs argued that they did not have notice of defendants' misappropriation of the partnership interests until February 24, 1992, when they reviewed their tax return. The judge recognized that he failed to distinguish plaintiffs' equitable interests in the real property and their legal interests in the partnerships. On that basis, the judge concluded that the 1989 expulsion of the family from their home triggered the limitations period with respect to the real estate but not the limitations period for claims based on the partnerships. Applying the discovery rule, the judge determined that the six-year statute of limitations for misappropriation of the partnership interests did not begin to run until defendants' parents were given information putting them on notice of the incorporations. The judge's reference to plaintiffs' discovery is fairly read as a reference to February 24, 1992.
Following a subsequent bench trial on damages, Judge MacKenzie awarded damages in the amount of $1,792,323, plus prejudgment interest of $507,320, for profits lost in years 1991 through 2002. The judge also awarded $443,888, representing the combined value of defendants' parents' equity interest in the partnerships.
Defendants raise the following issues on this appeal:
I. THE LOWER COURT'S DECISION TO RECONSIDER ITS PRIOR RULING [ON STATUTE OF LIMITATIONS AND LACHES] AND ITS SUBSEQUENT REVERSAL OF THAT RULING VIOLATED THE NEW JERSEY COURT RULES RELATING TO MOTIONS FOR RECONSIDERATION, AND IS INCONSISTENT WITH PRINCIPLES OF FINALITY.
a. Trial Court Erred in Its
Finding that It Expressed Its Decision Based Upon an Incorrect or Irrational Basis.
b. The Trial Court's Original Ruling Was Consistent with Respondents' Trial Testimony.
II. THE LOWER COURT FAILED TO DISMISS RESPONDENTS' CLAIMS AS TO THEIR LEGAL INTERESTS IN THE BUSINESSES ON GROUNDS THAT THOSE CLAIMS WERE BARRED BY THE OPERATIVE STATUTE OF LIMITATIONS, THE DOCTRINE OF LACHES AND/OR WAIVER.
a. Respondents' Cause of Action for Conversion Should Have Been Dismissed as Untimely Because It Accrued No Later Than
December 1, 1991 and the applicable Six-year Statute of Limitations Was Not Tolled.
b. Any and All of Respondents['] Claims under N.J.S.A. 42:1-1 to 43 Are Also Time Barred.
1. Wrongful Exclusion.
2. Breach of Fiduciary Duty.
c. Any and All Viable Claims
Respondents may have had are barred by the operative statute of limitation and/or laches. . . . .
III. PURSUANT TO NEW JERSEY COURT RULE 1:7-1(A), THE LOWER COURT FAILED TO MAKE REQUIRED FINDINGS ON THE RECORD.
a. Expiration of Statute of Limitations.
b. Finding of unjust enrichment and constructive trust.
IV. THE LOWER COURT'S DECISION VIOLATED NEW JERSEY RULES OF EVIDENCE BY IMPROPERLY RELYING ON THE NET OPINION OF RESPONDENTS' FORENSIC ACCOUNTANT.
V. THE LOWER COURT'S DECISION MUST BE REVERSED BECAUSE IT FAILS TO RELY ON ADEQUATE, SUBSTANTIAL AND CREDIBLE EVIDENCE, RESULTING IN A CLEAR DENIAL OF JUSTICE.
Plaintiffs raise one issue on their cross-appeal:
I. DEFENDANTS WAIVED THE AFFIRMATIVE DEFENSES OF RUNNING OF THE STATUTE OF LIMITATIONS AND LACHES.
As we noted at the outset of this opinion, we affirm substantially for the reasons stated by Judge MacKenzie in his written decisions. This court does "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." Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 484 (1974) (internal quotations omitted). We defer to the trial judge's findings on credibility. Ibid.
The common foundation for defendants' claims is their disagreement with the judge's resolution of conflicting testimony and evidence. The judge found the testimony presented by plaintiffs, in both segments of this bifurcated trial, to be credible and "well-supported in the exhibit evidence introduced." In contrast, he found that defendants' testimony lacked the same "ring of trustworthiness." In light of that determination, binding on this court, we cannot conclude that "the judge went so wide of the mark, [that] a mistake must have been made." Maggio v. Pruzansky, 222 N.J. Super. 567, 577 (App. Div. 1988) (internal quotations and citation omitted). The factual findings and legal conclusions that support the judge's rulings, including his reasons for exercising his discretion to reconsider and change his determination on defenses based on untimely filing, are stated with more than adequate clarity to permit the parties and this court to understand the basis for the determinations. See Rova Farms, supra, 65 N.J. at 483-84; Cummings v. Bahr, 295 N.J. Super. 374 (App. Div. 1996). Defendants' arguments to the contrary lack sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).
Plaintiffs' claim that defendants waived their objections to the timeliness of their complaint is equally lacking in merit. As the judge noted, the pretrial order referenced defendants' pretrial memorandum, in which they preserved all legal issues. This is not a case in which defenses based on laches and statute of limitations could be decided on affidavits and certifications prior to trial or a case in which the defenses mentioned in the answer were not raised until the verdict was rendered. See Mancini v. Twp. of Teaneck, 179 N.J. 425, 433-34 (2004); Williams v. Bell Telephone Laboratories, Inc., 132 N.J. 109, 113-15, 119-20 (1993); Fees v. Trow, 105 N.J. 330, 335 (1987). Defendants raised their claims at the conclusion of plaintiffs' case, when they had an opportunity to seek leave to present additional evidence and rebut defendants' relevant evidence.
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