March 18, 2008
VINCENT SABATINI AND CLARE SABATINI, PLAINTIFFS-RESPONDENTS,
CHARLES SABATINI, DEFENDANT-APPELLANT.
On appeal from Superior Court of New Jersey, Chancery Division-General Equity, Atlantic County, C-186-05.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted January 23, 2008
Before Judges Coburn and Chambers.
Defendant Charles Sabatini appeals from the judgment of partition entered on December 18, 2006, contending that he did not receive proper credit for the cost of improvements and repairs he made to the property. We affirm.
This partition action was brought by plaintiffs Vincent Sabatini and Clare Sabatini against their son, defendant Charles Sabatini, seeking partition of a property that they jointly owned with him. Defendant filed an answer and counterclaim seeking partition and an accounting. The parties stipulated that plaintiffs and defendant each had a fifty percent ownership in the property.
The property in question is a single family home located at 15 South Cornwall Street, Ventnor City. Plaintiffs live next door to the property. They originally acquired it with another son in 1994, and that son's interest was transferred to defendant in 1998. Defendant has resided on the property for over nine years. During those years, defendant incurred expenditures for the property for repairs, improvements, and carrying charges (consisting of real estate taxes, insurance costs, and similar items), but made no payments to plaintiffs for his occupancy of the premises.
In 2004, the house became a show house for a charitable fundraiser, and in preparation for that event, defendant spent monies in improvements*fn1 and repairs to the property. Due to a subsequent deterioration in the relationship of the parties, this partition action was commenced.
The trial judge granted partition of the property, recognizing that each side held a fifty percent interest in it. The trial court then considered whether any credits were due to either side. Based on the fair rental value of the property, the trial court found that the value of defendant's use of the premises from the time he commenced ownership in 1998 through 2006 was approximately $369,000. Defendant was found to have paid the sum of $107,000 in carrying costs and the sum of $50,000 in repairs to the premises, including repairs in connection with the show house event. Defendant's out of pocket payments in carrying costs and repair costs thus totaled $157,000. Since this sum was less than the value of his use of the premises, namely $369,000, defendant was not awarded reimbursement from plaintiffs for the repairs or carrying costs. Indeed, the value of defendant's use of the premises exceeded the amount of payments he made for repairs and carrying costs by $212,000.
The trial court then considered the amounts that defendant had expended in improvements to the premises and found that defendant had spent an additional $270,000 on improvements to the premises, including improvements in connection with the show house event. However, since defendant could not demonstrate that these improvements had increased the value of the premises,*fn2 he was given no credit for these expenditures. As a result, the court granted defendant no credits for his expenditures on the property. In addition, the trial court found that, under applicable law, plaintiffs were not entitled to payments from defendant for his use of the property for nine years.
The final judgment of partition dated December 18, 2006, gave plaintiffs the right to acquire defendant's interest in the property for the sum of $532,500, representing one-half of the appraised value. In the alternative, plaintiffs could sell the property to a third party, provided defendant received the minimum sum of $532,500, subject to certain deductions, and plaintiffs would be responsible for any real estate commissions. In the event plaintiffs failed to elect to either purchase the property or sell it to a third party, then defendant could purchase plaintiffs' interest in the property for $532,500. If none of the parties made any election within the time periods specified in the order, then provision was made for the sale of the property and distribution of the proceeds equally between the parties.
On appeal, defendant contends that he should be credited for the portion of his payments toward improvements and repairs that are attributable to the show house. He seeks credit for the sum of $175,500, representing his expenses for improvements to the premises due to the show house event, and the sum of $32,500, representing repairs he made in connection with the show house event.*fn3 He maintains that these expenditures were done at his mother's request and direction. He also contends that he made these expenditures because he understood from a conversation with his father that the property would be left to him when his parents died. This contention was denied by defendant's father.
Our review is limited, since we may not overturn 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). In cases where the evidence is largely testimonial, we must give special deference to the factual findings of the trial judge, who is better able to determine the credibility of the witnesses due to his opportunity to hear and observe the witnesses. Cesare v. Cesare, 154 N.J. 394, 412 (1998).
We note that defendant is not entitled to reimbursement for the improvements and repairs allegedly done at his mother's request under an agency or contract theory. Neither cause of action was pled in defendant's counterclaim, and neither finds support in the record. Defendant merely testified that his mother was aware of the renovations and repairs, that she assisted by letting contractors into the house to do the work, that she served as a greeter, and that she was active in the charitable organization running the show house. Neither the pleadings nor the record supports a finding that defendant is entitled to the house based on an alleged promise that he would inherit it.
Defendant argues that the fact the show house expenses were incurred at his mother's request and his belief that he would inherit the house are equitable circumstances that the trial court should have taken into account and that the trial court should have allowed him a credit for these sums. Indeed, "the allocation of charges and credits as between the cotenants [is] governed by the basic justice and fairness of the situation." Baird v. Moore, 50 N.J. Super. 156, 173 (App. Div. 1958).
Our careful review of the record indicates that the trial judge's analysis of the credits is in accordance with equitable standards. As noted above, the trial court found that the value of defendant's use of the premises was $369,000, while his expenditures for repairs and carrying costs totaled $157,000. Since the value he received exceeded the repairs and carrying costs he paid, defendant was not given any credit for those expenditures. On the other hand, plaintiffs were given no credit for defendant's use and occupancy of the premises. This ruling is in accord with the principle that a tenant in common who is in possession cannot be charged for his occupancy of the premises, since all cotenants have a right to possession. Esteves v. Esteves, 341 N.J. Super. 197, 202 (App. Div. 2001). However, when the tenant in common who has been in possession seeks credit for his contribution toward the operation and maintenance expenses from the other tenant, in fairness and equity, he must provide a credit for the value of his use and occupancy of the premises to the other. Ibid. As a result, defendant was not entitled to a credit for the costs of the repairs he made to the premises, including the $32,500 in repairs he contends he made in connection with the show house event.
In addition, defendant was not entitled to any credit for the improvements he made to the premises, including those made in connection with the show house, because those expenditures did not increase the value of the property. The trial court's ruling on this point is in accord with the principle that when a cotenant makes an improvement to a property, he has an equitable lien against the property only to the extent that its value is enhanced by the improvement. Donnelly v. Capodici, 227 N.J. Super. 310, 311-13 (Ch. Div. 1987).
After a careful review of the record, we conclude that the trial judge's findings here are well supported by competent credible evidence. The trial judge fairly and equitably weighed all of the relevant facts in light of the applicable law, and fashioned a thoughtful, well crafted, fair and equitable order of partition.