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Central Jersey Airport v. Jones

September 29, 2010

CENTRAL JERSEY AIRPORT AND JOSEPH HORNER, PLAINTIFFS-RESPONDENTS,
v.
JOHN JONES AND BENJAMIN JONES, DEFENDANTS, AND STEPHEN C. RICHARD, DEFENDANT-APPELLANT.
AIRCRAFT SUPPORT SERVICES, PLAINTIFF,
v.
JOSEPH HORNER, DEFENDANT.



On appeal from Superior Court of New Jersey, Law Division, Somerset County, Docket Nos. L-1827-04 and DC-3935-06.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued telephonically: June 2, 2010

Before Judges C.L. Miniman and Waugh.

Defendant Stephen C. Richard (Richard) appeals from two orders entered on July 10, 2009, for post-judgment relief. The first order in relevant part granted the application of plaintiffs Central Jersey Airport, Inc. (Central Jersey), and Joseph Horner (Horner) (collectively, plaintiffs) to evict Aircraft Support Services, Inc. (Aircraft Support), from Central Jersey's premises. The other order denied Richard's application to compel Horner to purchase Richard's interest in Central Jersey without prejudice. Finding no error in either post-judgment order, we affirm.

On December 8, 2004, plaintiffs filed a complaint in the Superior Court of New Jersey, Law Division, Somerset County, under docket number L-1827-04, against Richard and John Jones, but not Benjamin Jones, who was joined later.*fn1 Plaintiffs sought to recover rent that Jones failed to pay for his lease of Hangar C at Central Jersey. Plaintiffs asserted that they had been unaware of an alleged side deal between Jones and Richard pursuant to which Richard was permitted to use Jones's fuel storage tanker as a setoff against rent due and owing Central Jersey. Plaintiffs further alleged that Richard violated his fiduciary duties to Central Jersey and sought judgment against Richard and Jones for rent due and owing. Plaintiffs also sought punitive damages from Richard based on this conduct, which plaintiffs characterized as fraudulent, and sought removal of Richard as a member of Central Jersey, which at the time was an LLC.

On or about March 9, 2005, Richard filed an answer, admitting some of the allegations and denying others. He also asserted counterclaims against Horner, seeking an order compelling Horner to produce certain Central Jersey financial information and compelling Horner to purchase Richard's interest in Central Jersey at its fair market value. The complaint was amended on two occasions thereafter, with Richard filing answers to each amended complaint. Plaintiffs answered the counterclaim on or shortly after June 7, 2005.

Aircraft Support, a corporation owned by Richard, filed a separate complaint*fn2 against Horner in the Superior Court of New Jersey, Law Division, Special Civil Part, Somerset County, under docket number DC-3935-06, for breach of contract. The two actions were consolidated for trial by order dated September 22, 2006.

The facts giving rise to these two complaints began in 1996 when Horner and Richard purchased Kupper Airport in Hillsborough at an auction sale. Horner and Richard then formed a limited liability company known as Central Jersey Airport, LLC, to own, operate, and manage the airport. Horner owned eighty percent of the company; Richard owned the remaining twenty percent. Pursuant to the operating agreement, Horner and Richard were the managing members of the company.

Richard was also the sole shareholder of Aircraft Support, a fixed-base operation which maintained and repaired aircraft. Aircraft Support conducted its business on Central Jersey's premises. After Horner and Richard acquired Kupper Airport, Richard's daughter and son-in-law formed Millstone Valley Flight School, Inc. (Millstone), which operated a flight school on Central Jersey's premises. Subsequently, Central Jersey purchased Millstone in 1997.

In 2001, Richard agreed that Aircraft Support and Millstone would each pay $1000 per month in rent for use of Central Jersey's facilities. The companies began paying rent in July 2001. Also around this time, Richard entered into an agreement with John Jones, another tenant at the airport, pursuant to which Richard would have use of Jones's fuel storage tank at the airport and Jones's rent payment would be waived. Jones accordingly did not make any further rent payments.

Central Jersey filed a Chapter 11 bankruptcy petition in March 2002. After the filing of the bankruptcy petition, Richard caused Aircraft Support and Millstone to stop paying rent. Pursuant to a provision of the reorganization plan, Central Jersey was ultimately converted from a limited liability company to a corporation in September 2004. Richard did not object to the reorganization plan but did object to Central Jersey's incorporation. Horner retained seventy percent of the shares, Richard retained twenty percent, and a third party retained ten percent. Central Jersey continued to manage and operate the airport. Horner and Richard's relationship thereafter broke down, and Richard made no attempt to participate in running the affairs of Central Jersey.

The deterioration of the relationship culminated in the filing of the instant lawsuit. In the First Count of their second amended complaint, plaintiffs alleged that James and Benjamin Jones were in possession of Hangar C after their written lease had expired and a Notice to Quit had been served upon them. Also, at that time they were indebted to Central Jersey for $11,606.48 in unpaid rent. Horner alleged that he was not aware of any side deal respecting payment of rent Richard made with the Joneses in breach of his fiduciary duty to Central Jersey. In the Second Count, plaintiffs alleged that Horner and Richard were equal shareholders in Millstone. They further alleged that Richard handled its day-to-day operations and had refused to allow it to pay rent to Central Jersey in breach of his fiduciary duty to Central Jersey. In the Third Count, plaintiffs alleged that Richard used space at the airport and refused to pay rent for it, again in breach of his fiduciary duty to Central Jersey. In their Fourth Count, plaintiffs alleged that Richard had previously operated a company known as Taft Air at Central Jersey, again without paying rent in breach of his fiduciary duties to Central Jersey. In the Fifth Count, plaintiffs alleged that Richard failed to pay Kerry Kilpatrick for leased planes, causing Kilpatrick to refuse to pay its rent to Central Jersey. Finally, plaintiffs sought removal of Richard as a shareholder of Central Jersey.

In the counterclaim filed in response to the original complaint, Richard alleged that he was an oppressed minority shareholder, sought access to financial information, and requested an order compelling Horner to purchase his interest in the corporation. A Special Civil Part case in which Aircraft Support sought payment of $10,209.40 ...


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