The opinion of the court was delivered by: Joel Schneider, United States Magistrate Judge
This Memorandum of Decision serves as the Court's findings of fact and conclusions of law pursuant to Fed. R. Civ. P. 52, in connection with the parties' non-jury trial. Pursuant to 28 U.S.C. §636(c), the parties consented to the jurisdiction of this Court to preside over the trial. The only testifying witnesses were plaintiff and defendant.
Plaintiff's complaint was originally filed in Gloucester County, Superior Court of New Jersey on December 27, 2006. Defendant removed the case to this court on February 20, 2007. The court has jurisdiction over this matter pursuant to 28 U.S.C. §1332(a)(1).
This case involves a dispute between a father (defendant) and his former son-in-law (plaintiff). Plaintiff alleges the parties' entered into a partnership to flip houses. Plaintiff also alleges the partnership continued after he and his former wife, defendant's daughter, separated and divorced. Defendant contends that no partnership ever existed and that his business arrangement with plaintiff lasted only so long as plaintiff remained faithful and married to his daughter. In addition to plaintiff's claim, defendant filed a counterclaim for the repayment of a $75,000 loan to plaintiff. For the reasons to be discussed, the Court finds in favor of defendant on plaintiff's claim and in favor of defendant and against plaintiff on defendant's counterclaim.
Plaintiff, Michael Eagan, is the former son-in-law of defendant, James J. Gory. Plaintiff was married to defendant's daughter, Jennifer, on May 18, 2002. Plaintiff and Jennifer separated in August 2004 and were divorced on January 31, 2005. (Trial Transcript ("T")39:1-5; Joint Final Pretrial Order, Stipulated Facts ("Stip. Facts") at ¶4). Plaintiff's only claim is that defendant breached a partnership agreement entered into in April or May of 2001, regarding the profits from the sale of three properties. Plaintiff is not seeking the payment of wages, reimbursement of costs, a quantum meruit award or breach of contract damages. Plaintiff is merely claiming that he is entitled to his 50% partnership share of the profits from the sale of three properties.
During the relevant time period plaintiff worked as a real estate agent and as a sideline located properties, purchased them, fixed them up and sold them. (T 17:1-15). Plaintiff testified that approximately one year before his marriage on May 18, 2002, he spoke with defendant about his "sideline." Although plaintiff was not married to Jennifer at the time, defendant knew his daughter was living with plaintiff and understood they were going to marry. Plaintiff and Jennifer were engaged in the Spring of 2001 around the same time as plaintiff's "preliminary discussions" with defendant. (T59:2-13). Plaintiff testified that sometime thereafter he and defendant entered into an oral partnership agreement whereby he would locate properties in New Jersey and "orchestrate the property getting fixed up and sold." (T18:3-10). Plaintiff testified he and defendant agreed that defendant would pay all money to buy and fix the properties and they would split the profits equally when the properties were sold. (T18:3-10, 19-23). Plaintiff did not submit any evidence of specifically when and where the agreement was finalized. Plaintiff acknowledges that his alleged agreement with defendant was not reduced to writing. In August 2004, Jennifer learned plaintiff had an extramarital affair with another woman and plaintiff and Jennifer separated. (T67:16-24). Plaintiff and Jennifer divorced on January 31, 2005.
Defendant does not dispute that he entered into an "agreement" with plaintiff to flip houses but claims the agreement ended in August 2004. (T82:3-17). In addition, defendant denies he ever entered into a partnership agreement or partnership with plaintiff. (T90:18-21). Defendant claims that each property he purchased was a separate agreement. (T86:2-10). Defendant testified that he decided to give plaintiff half the profit from four sales because he thought that Jennifer was the beneficiary of the money. (Id.) However, it turned out Jennifer was not the beneficiary of the money. (Id.) Defendant also testified he had the discretion to decide how much profit from each sale to give plaintiff. Defendant argues there was no partnership as evidenced by the fact that the parties never had a joint capital account, the partnership did not have a name, none of the relevant paperwork referred to a partnership, the parties never held themselves out to third parties as partners and defendant had full discretion to decide what properties to buy and sell.
Between May 25, 2001 and September 2003, during the time plaintiff and Jennifer were engaged or happily married, defendant purchased and sold four properties, reimbursed plaintiff for his out-of-pocket expenses associated with the properties, and gave plaintiff 50% of the profit from the sales. A summary of the stipulated relevant information regarding these four properties is as follows (Exhibit 28):
Purchase DateSale DateExpenses/FeesNet Profit
Crescent Blvd.May 25, 2001December 2001$14,337$66,691
N. Weymouth Ave.July 2002August 2003$54,909$92,546
Anderson Ave.August 2002September 2003$41,097$61,687
Oakton Dr.January 2002March 2002$1,230$59,168
The dispute in this case involves profits from the sales of three properties. A summary of the stipulated relevant information regarding these properties follows (Exhibit 28b):
Purchase DateSale DateExpenses/FeesNet Profit
Rowan Univ. (722 Mullica Hill Rd.)April 2002June 2006$52,977$304,247
Tremont Ave.*fn1June 2002January 2004$15,026.77$16,973.23
New York Ave.August 2003October 2005$92,280.20$145,793.05
Plaintiff's only claim is that he is entitled to a 50% partnership share of the $462,457.03 profit earned from the sales of the foregoing three properties.*fn2 It is evident that the two properties that generated the majority of the claimed profit were purchased while plaintiff and Jennifer were together but were sold after they divorced in January 2005.*fn3
Aside from the parties' real estate dealings defendant loaned plaintiff $75,000 to be used for improvements and repairs to the house in which plaintiff and Jennifer were living in Wildwood, New Jersey. (T91:23-25 to 92:1-24; Stip. Facts at ¶5). Plaintiff did not use the money for its intended purpose and he did not repay the loan. ...