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Lester v. Lester

July 1, 2008


On appeal from Superior Court of New Jersey, Chancery Division, Family Part, Essex County, Docket No. FM-07-1490-05.

Per curiam.


Argued June 2, 2008

Before Judges Parrillo and S.L. Reisner.

Defendant Arthur Lester appeals from a June 4, 2007 order of the Family Part awarding his ex-wife Tamala Lester, $40,500 plus costs, representing her one-half share of the profits of the hypothetical sale of a mutual investment property. Plaintiff cross-appeals from the same order denying her counsel fees. We affirm on the appeal and remand on the cross-appeal.

The relevant facts are as follows. The parties were married on June 10, 1990, and had one child, born May 12, 1995. They separated sometime in 2004, and executed a property settlement agreement (PSA) on January 17, 2005, which was later incorporated into the final judgment of divorce entered on May 4, 2005.

At the time of the divorce, defendant, a physician, was sixty-two years old and president of the medical staff at Clara Maass Medical Center. Plaintiff was forty-six years old and a home improvement contractor with thirty-one years of experience. Sometime after separation, but prior to divorce, the parties entered into a joint venture, verbally agreeing to acquire a "handyman's special" home, renovate and resell it, and split the profits equally between the two, after defendant was credited for funds contributed. Specifically, the parties agreed that defendant would bear the expense of the property's acquisition, repair and improvement, and plaintiff would be the day-to-day project manager, overseeing the renovation. Title to the house was to be held only in defendant's name, not jointly, because, at the time, plaintiff had an IRS lien against her.

Pursuant to this oral agreement, plaintiff located a two-family "fixer-upper" at 5 Doremus Street in Summit, which the parties agreed to convert to a one-family residence. Together with the repairs indicated by a home inspection, the cost of renovation was estimated to range from $74,000 to $120,000,*fn1 and take about three months. In accordance with their plan, defendant purchased the home for $522,900 on February 23, 2005.

Immediately after the closing, plaintiff applied for a building permit to commence construction work. In the meantime, she hired, supervised and directed a cleanup crew and eventually, after gaining permission from the township, a demolition crew. Because she was required to be on-site full time, seven days a week, to supervise the work being done, plaintiff quit her job to take on this new responsibility and did not resume other employment for about two months. Defendant meanwhile paid for all of the clean up and demolition laborers who were needed, as well as any equipment required. Plaintiff herself received no compensation for her efforts.

Once the building permit issued on April 8, 2005, plaintiff's subcontractors immediately began work. From the beginning, the project ran into unexpected problems that increased the estimated cost of renovation. For instance, the house had never been winterized and it was discovered that all the pipes in every bathroom on all three floors had burst, and two boilers and two hot water heaters had cracked. As a result, almost every wall in the house had to be opened, revealing outdated knob-and-tube electrical wiring, that had to be replaced with current BX wiring with individual circuits and a new 200 amp service. "Porcupine leaks" were also discovered, which rendered the heating system ineffective. In addition, repairs to the kitchen were delayed over a month when a Canadian supplier failed to send an integral part of the new cabinets and countertops.

Concerned over mounting carrying costs, defendant listed the home for sale in mid-June 2005 at $825,000 even though renovations were not yet completed. Actually, major repair work was not finished until one month later in July 2005, and minor repairs from a "punch list" were completed in August 2005. The parties stipulated that the total cost of renovations was $172,000. However, even after the work was completed in August, a dumpster remained in the driveway because defendant failed to pay monies owed the dumpster company, and radiators, additional molding, paint cans and old kitchen cabinets remained in the garage.

No offers were made on the home despite the fact that defendant lowered the listing price to $800,000. Its appraised value, as stipulated by the parties, was $775,000. Unbeknownst to plaintiff, defendant removed the house from the market on April 30, 2006, and moved into the residence two weeks later on May 12, 2006, having sold his other residence in West Orange.*fn2

After moving into the Summit home, other problems came to defendant's attention. Construction debris left both in front of and inside the garage had to be removed at a cost of $700. Inside, ninety percent of the old windows did not open, and none had been caulked; the refrigerator was installed without a water pipe so it had no ice; the stove was installed asymmetrically; the kitchen electrical system was incomplete which left three lights inoperative; the heating system failed to heat the second floor; two out of three toilets did not work properly; and the basement had to be redone with a new drain installed. Outside, the sidewalk had to be fixed, which necessitated fixing the driveway; the gutters had to be redone and excess water channeled away from the house to prevent further flooding; and unfinished rails that were installed had already begun rotting.

Despite their agreement that plaintiff was to receive a one-half share of the net equity in the home, plaintiff received nothing upon defendant's occupation of the residence. It was defendant's position that after all the associated costs were considered, including closing costs and real estate commissions on a hypothetical sale of the home, there was no equity remaining to be divided. Plaintiff disagreed and calculated her one-half equity share ...

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