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Ascension Consortium, Inc. v. Hines


March 12, 2009


On appeal from the Superior Court of New Jersey, Law Division, Hudson County, L-915-06.

Per curiam.


Submitted February 3, 2009

Before Judges Winkelstein, Gilroy and Chambers.

Following a jury trial, defendants Reverend Garrison Hines and Grace Temple of the Church of God and Christ (the Church) appeal from a January 8, 2008 final judgment in favor of plaintiff, Ascension Consortium, Inc., in the amount of $484,845.*fn1 We affirm.

In 2003, plaintiff's representative, Don Wilson, approached Reverend Hines, the Church's pastor and president, to discuss the potential development of low income housing on vacant property the Church owned in Jersey City. In furtherance of that development, because the land was subject to tax liens, plaintiff facilitated a loan between Meridian Mortgage and the Church to pay off the liens. Thus, on September 17, 2003, the Church mortgaged the property for $270,000, which it agreed to pay in full by March 17, 2004. Reverend Hines signed the mortgage documents on behalf of the Church. He testified that he had full power and authority to do so, even though the Church did not pass a formal resolution authorizing him to do so.

On March 2, 2004, plaintiff and the Church entered into a partnership agreement to form the Randolph Avenue LLC Venture (the LLC) to develop the property. The project was to include seven buildings consisting of forty-eight housing units. Reverend Hines signed the agreement on behalf of the Church.

The agreement provided that, "The [Church] will provide to the LLC upon creation[,] the above-mentioned [Church property]." The agreement also provided that, "The [Church] will have 51% of the voting power with the remaining 49% belonging to [plaintiff]." Plaintiff would secure financing for the project, obtain all governmental approvals, ensure that title to the property was clear, and manage the overall development process. The LLC would pay all outstanding taxes and notes on the property.

Plaintiff's understanding of the agreement was that the Church would convey the property to the partnership for development. In exchange, the Church would be entitled to fifty-one percent of the proceeds from the sale of the lots. Reverend Hines admitted that the property was "supposed to have been" conveyed to the LLC, and that "if the project was completed," the assets would be divided in accordance with the percentages identified in the agreement. The Church did not convey the property to the LLC.

On February 7, 2005, a final judgment in foreclosure was entered against the Church and Reverend Hines for failure to satisfy the Meridian mortgage. To save the property from foreclosure, plaintiff, at the request of Reverend Hines, sought a buyer for the property. Plaintiff secured three offers to purchase the property; Reverend Hines accepted one of the offers, which was for $1.2 million. Because the Church had not conveyed title to the property to plaintiff as called for in the agreement, the Church directly conveyed the property to the buyer. Reverend Hines and the Church refused to divide the proceeds of the sale with plaintiff.

Plaintiff sued, and the jury determined that Reverend Hines and the Church breached their agreement with plaintiff by not paying plaintiff the percentage of the sale proceeds as set forth in the partnership agreement, and found that plaintiff sustained damages of $484,845 as a result. On appeal, the Church and Reverend Hines argue that no contract existed between the parties; and in the absence of a resolution of the Church's board of trustees authorizing the partnership agreement, the Church could not be bound by the agreement signed by Reverend Hines.

Initially, we view these arguments as a claim that the jury's verdict was against the weight of the evidence. In that context, the appeal is procedurally barred as defendants failed to move before the trial court for a new trial. See R. 2:10-1 (appellate court will not address appeal claiming verdict was against the weight of the evidence unless motion for a new trial on that ground is made in the trial court); see also Pressler, Current N.J. Court Rules, comment 2 on R. 2:10-1 (2009); Fiore v. Riverview Med. Ctr., 311 N.J. Super. 361, 362-63 (App. Div. 1998). Nevertheless, we will address defendants' appeal on its merits.

The trustees of a religious society are empowered to convey church property after authorization by the society's membership. Hopewell Baptist Church v. Gary, 111 N.J. Super. 1, 6, aff'd, 57 N.J. 166 (1970); see also N.J.S.A. 16:1-6 (trustees of church or religious society are authorized and empowered to sell and convey church property if sale is authorized by majority of members present at any meeting called by trustees and held at its usual place of worship). The president of the religious corporation may execute all contracts. N.J.S.A. 16:1-14.

The manner in which a religious society may appropriately exercise its power of directing its trustees in the acquisition or sale of church property depends on the established rules and regulations of the particular society. Page v. Asbury Methodist Episcopal Church, 78 N.J. Eq. 114, 116 (Ch. 1910). "[W]hether the power to give such direction resides in the whole congregation, or in particular members, or in special officials, depends, in each instance, on the established usages or express regulations of the individual congregation or of that wider ecclesiastical organization of which such congregation is a branch." Ibid.

On appeal, defendants do not dispute that Reverend Hines executed the partnership agreement, nor do they dispute the certainty of the terms of that agreement. See Weichert Co. Realtors v. Ryan, 128 N.J. 427, 435 (1992) (to be enforceable, contract must be sufficiently definite so that the performance to be rendered by each party can be ascertained with reasonable certainty). Indeed, Reverend Hines admitted that the property was "supposed to have been" conveyed to the LLC, and that "if the project was completed," there would be a split of the assets in accordance with the percentages identified in the agreement. Rather, defendants contend that an enforceable agreement does not exist because Reverend Hines, although he is the president of the Church, did not have the authority to bind the Church in the absence of a formal resolution by the board of trustees authorizing the agreement.

Plaintiff claimed that Reverend Hines had the apparent authority to bind the Church. The trial court found that the question of Reverend Hines's apparent authority was a jury question, and, accordingly, the court instructed the jury on that doctrine, which imposes liability on a principal for the acts of its agent where "the principal's actions have misled a third-party into believing that a relationship of authority in fact exists." Mercer v. Weyerhaeuser, 324 N.J. Super. 290, 317 (1999). "[T]he factual question which arises is whether 'the principal has by his voluntary act placed the agent in such a situation that a person of ordinary prudence, conversant with business uses, and the nature of the particular business, is justified in presuming that such agent has the authority to perform the particular act in question.'" Id. at 318 (quoting Mesce v. Automobile Ass'n, 8 N.J. Super. 130, 135 (App. Div. 1950)).

It is the plaintiff's burden to establish the apparent authority and the agency relationship. Mercer, supra, 324 N.J. Super. at 318. The plaintiff must demonstrate that the appearance of authority has been created by the principal's conduct, that a third party has relied on the agent's apparent authority to act for the principal, and that the reliance was reasonable under the circumstances. Ibid.

Here, the jury unanimously found that plaintiff proved that a binding contract was formed between plaintiff and both Reverend Hines and the Church. The record contains sufficient evidence of Reverend Hines's actual and apparent authority to support that verdict. Reverend Hines testified that other business transactions that he conducted on behalf of the Church concerning the Church's property did not require a formal resolution by the board. For example, he stated that he had full power and authority to execute the Meridian mortgage, and that it was binding on the Church and on him as president of the Church, even without a formal resolution because the Church "knew about it." Reverend Hines testified that he signed the partnership agreement "for the church." The Church presented no evidence to refute that testimony or to support its position that the Reverend did not have authority to act on the Church's behalf and that a formal resolution of the board of trustees was required before he could execute the partnership agreement.

Other evidence lent support to plaintiff's position. The Church issued two checks, totaling almost $35,000, to James Johnson, president of Architectural Designed Environments Inc., the architect the LLC retained to develop a design plan for the property. Reverend Hines signed the service contract with the architect; he, along with another member of the three-member board of trustees, co-signed the two checks and other various payments made by the Church in connection with the development project.

Reverend Hines was not only the Church pastor, but he was the president of the Church and served on the board of trustees with only two other members. He testified that the other board members knew of his actions in mortgaging the property and making substantial payments in furtherance of the development project. Defendants offered no evidence to show that the board objected to these payments. The proofs were sufficient for plaintiff to justifiably believe that Reverend Hines had authority to act on the Church's behalf in entering the partnership agreement, and it was reasonable for plaintiff to rely on that authority.

Next, we address defendants' contention that plaintiff's counsel violated the rules of professional conduct (RPCs) by questioning a witness regarding defense counsel's claimed representation of defendants during contract negotiations. Defendants contend that plaintiff's counsel violated RPCs 3.3 and 3.7 by eliciting testimony from plaintiff's witness, Don Wilson, that defendants were represented by defendants' trial counsel, George Wiggs, Esq., during negotiations relating to the partnership agreement. Defendants argue that plaintiff's counsel's actions in eliciting such testimony required Wiggs to testify as a witness, conduct prohibited by RPC 3.7 (lawyer shall not act as advocate at a trial in which the lawyer is likely to be a necessary witness). Defendants also argue that plaintiff's failure to disclose the subject matter of Wilson's testimony to the court and defense counsel prior to trial violated RPC 3.3, which provides in part that a lawyer shall not knowingly:

[F]ail to disclose a material fact to a tribunal when disclosure is necessary to avoid assisting an illegal, criminal or fraudulent act by the client;

[F]ail to disclose to the tribunal a material fact knowing that the omission is reasonably certain to mislead the tribunal . . . . [RPC 3.3(a)(2),(5).]

These arguments are without merit for a number of reasons. First, there is no evidence that defendants ever served discovery or took depositions of plaintiff's witnesses, and, as such, they cannot claim surprise as to Wilson's testimony. Without availing themselves of the opportunity to discover Wilson's anticipated testimony as to Wiggs's representation of defendants in connection with the making of the partnership agreement, defendants cannot claim unfair surprise at trial. Auster v. Kinoian, 153 N.J. Super. 52, 56 (App. Div. 1977) (plaintiff's failure to engage in discovery no basis for continuance of return date of summary judgment motion).

More significantly, however, is that Wilson's testimony was relevant to defendants' claim that they were not represented by an attorney when the partnership agreement was negotiated and executed, and that plaintiff manipulated Reverend Hines into executing the agreement. Reverend Hines testified that neither he nor the Church was represented by Wiggs in connection with the partnership agreement negotiations. Wilson's testimony was in response to that claim. Thus, the testimony was relevant, see N.J.R.E. 402; and it was not unduly prejudicial as to warrant preclusion under N.J.R.E. 403.

Contrary to defendants' arguments, Wilson's testimony did not constitute a violation of any of the RPCs. Defendants' arguments as to that issue are without merit to warrant further discussion in a written opinion. R. 2:11-3(e)(1)(E). Nevertheless, even if plaintiff's counsel's actions in eliciting the disputed testimony had in any way violated the RPCs, which we find did not occur, imposition of sanctions on the client, as defendants urge us to do here, is outside the role of this court. Only the Supreme Court and the "separate bodies" authorized to assist the Court have the authority to discipline attorneys for ethical violations and it is not for the trial or appellate courts to punish an innocent client for his or her attorney's offensive behavior. Brundage v. Estate of Carambio, 195 N.J. 575, 609-610 (2008).


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