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Zochowski v. Zochowski

March 27, 2008

RICHARD D. ZOCHOWSKI, AS FIFTY PERCENT SHAREHOLDER IN ZACHMAR, INC., PLAINTIFF-RESPONDENT,
v.
T. ROBERT ZOCHOWSKI, AS FIFTY PERCENT SHAREHOLDER IN ZACHMAR, INC. AND ZACHMAR, INC., A NEW JERSEY CORPORATION, DEFENDANT-APPELLANT.



On appeal from the Superior Court of New Jersey, Chancery Division, Monmouth County, Docket No. C-349-03.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued February 14, 2008

Before Judges Payne and Messano.

Defendant T. Robert Zochowski and his brother, plaintiff Richard D. Zochowski, own equal shares of all the stock in Zachmar, Inc. (Zachmar), the owner of certain real property located in Hammonton. Defendant appeals from the March 16, 2007 order that, among other things, granted plaintiff "full and sole authority to negotiate and execute all papers on behalf of Zachmar [] in connection with the sale of the Hammonton [] property to any potential buyer," and specifically "confirm[ed] plaintiff's authority to have executed a contract for sale" of the property with Pyramid Equities (Pyramid). We have considered the arguments raised in light of the record and applicable legal standards. We affirm most of the order under review; however, as to the confirmation of plaintiff's authority to enter into the specific contract with Pyramid, we reverse and remand to the trial court for further proceedings consistent with this opinion.

We need not go into the tortuous history of the litigation in great detail. It suffices to say that Zachmar was a family real estate corporation started by the parties' grandparents and parents that owned two assets--real estate in Florida where the parties' parents resided and the Hammonton property. Plaintiff commenced this litigation seeking dissolution of the corporation after disputes arose with defendant regarding the disposition of the properties.

On March 4, 2004, an order of settlement was entered. In pertinent part, it provided that plaintiff "shall be permitted to place all of the property owned by Zachmar [] located in Hammonton [] for sale . . . for a period of six [] months from the date of this Order for the sum of $1.5 million dollars[.]" It further provided that "[i]n the event there is no agreement between the parties on a sale price under the agreed price of $1.5 million for the Hammonton [p]roperty, the parties may file a renewed [c]omplaint in this matter[.]"

Thereafter, various applications resulted in interim orders, and appeals were taken therefrom, but they are not particularly relevant to our consideration of the issues now presented. On July 22, 2005, the chancery judge entered an order that granted plaintiff "full and complete authority to solely execute all papers on behalf of Zachmar [] in connection with the sale of the Hammonton [] property to Matzel Inc. at Hammonton, LLC" (Matzel), and further restrained defendant from any interference with that sale.*fn1 On August 1, 2005, a contract for sale was signed with Matzel in the amount of $1.5 million dollars.

During the due diligence period of the contract, however, it was discovered that the Hammonton property contained more designated wetlands than originally believed, and, on October 13, 2005, Matzel cancelled the contract. In January 2006, plaintiff began negotiations for the sale of the property with Pyramid and obtained a letter of intent to purchase.

When he was advised of this development, defendant contacted the broker involved and claimed that many terms and conditions of the sale needed to be discussed before the proposed purchase agreement was accepted. In a faxed memorandum dated February 2, 2006, defendant advised his brother that "I will represent Zachmar with regard to this matter," and reiterated his belief that "the contract will need the approval of both of us in order . . . to be valid."

Concerned that defendant's correspondence was a harbinger of his intent to impede any sale to Pyramid, plaintiff moved to modify the July 22, 2005 order to permit him to negotiate the sale of the property to any potential purchaser. Before the motion was heard, on May 23, 2006, plaintiff executed a contract for sale of the Hammonton property with Pyramid. By order dated June 9, 2006, the chancery judge granted plaintiff the "full and complete authority to solely negotiate and execute all papers on behalf of Zachmar [] in connection with the sale of the Hammonton [] property to any potential buyer." (Emphasis added.)

However, defendant appealed from that order and successfully argued before us that he never received proper notice of the hearing on plaintiff's motion. We reversed and vacated the June 9, 2006 order. Zochowski v. Zochowski, No.A-5930-05 (August 1, 2007).

In the interim, on February 12, 2007, plaintiff again moved to modify the July 22, 2005 order and requested the following relief: full and complete power to "negotiate and execute all papers on behalf of Zachmar [] in connection with the sale of the Hammonton [] property to any potential buyer"; confirmation of his "authority to have executed a contract for sale of the Hammonton property with Pyramid"; a finding that defendant was in violation of litigant's rights; the "sole authority to operate [Zachmar]"; entry of restraints upon defendant from conducting any business on behalf of Zachmar or interfering with its daily operations; entry of an order requiring that all funds defendant held on behalf of Zachmar be forwarded to plaintiff; the closure of all accounts defendant maintained on behalf of Zachmar; reimbursement from defendant of closing costs incurred in the sale of the Florida property; and counsel fees. The parties appeared for oral argument before the chancery judge on March 16, 2007.

Defendant noted that the purchase price in the contract for sale with Pyramid, ostensibly $1,628,000 was actually calculated as a per acre price based upon a stated amount of "developable acres." The agreement provided that the sales price would be adjusted if Pyramid's due diligence revealed "more or less than the aforesaid developable acres." Pyramid agreed to 1) pay a minimum purchase price of $1,284,800 dollars regardless of the developable area; or 2) cancel the contract. Defendant argued that the contract was ...


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