May 19, 2011
ARSENIO D. ONG, PLAINTIFF-APPELLANT,
SAMUEL ONG, DEFENDANT-RESPONDENT.
On appeal from the Superior Court of New Jersey, Law Division, Atlantic County, Docket No. L-3379-08.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted March 28, 2011 -
Before Judges Sabatino and Alvarez.
This case involves a financial dispute between two brothers, plaintiff Arsenio Ong and defendant Samuel Ong. The trial court granted defendant summary judgment, concluding that plaintiff's complaint seeking to collect a debt from him was time-barred and otherwise legally deficient. We affirm.
The following chronology of relevant events appears from the record. On April 16, 1992, plaintiff loaned defendant $42,500 to facilitate the purchase of a condominium in the California Hills development in Absecon. At that time, defendant signed a short handwritten statement acknowledging his receipt of the funds, the debt's due date of September 1992, a ten percent interest rate, and his agreement that the condominium would be used "as collateral."
The brothers purchased the condominium with the express mutual purpose of immediately re-selling it, as they had already identified a third party who had given his tentative assent to buy the property for $55,000. When that anticipated resale occurred, plaintiff would be reimbursed the $42,500 loan, and the remaining profit after costs would be divided evenly between the parties.
It is undisputed that only the names of defendant and his wife*fn1 appear on the property's title. No partnership or other business association was ever formally created by the parties. Plaintiff made no effort to obtain or record any mortgage interest or lien on the property.
Ultimately, the anticipated buyer walked away from the transaction, and defendant retained possession of the property. For a period of time he derived rental income from a holdover tenant that he allowed to stay on the premises. Plaintiff, who resided in a different unit in the California Hills subdivision, was aware of this arrangement.
In 1998, the parties' elderly mother and plaintiff's wife*fn2 moved into the property. The mother passed away in 2004. Plaintiff's wife remained on the premises. Despite having made some initial unsuccessful demands upon his brother's wife for rent, defendant allowed her to remain at the property rent-free until it could be sold.
From April 1992 through October 2007, defendant did not repay plaintiff any of the initial $42,500 loan. In November 2007, December 2007, and January 2008, defendant made three consecutive, monthly payments of $1,000 to plaintiff. Plaintiff asserts that these three payments were related to the condominium purchase. Defendant, on the other hand, contends that he paid the $3,000 to his brother for unrelated reasons. The parties agree there is no writing documenting the purpose of the three payments.
On October 6, 2008, plaintiff filed a complaint in the Law Division against defendant, seeking $39,500, plus interest and costs, representing what he believed to be the outstanding balance due on the 1992 loan. Defendant denied the key factual averments in the complaint and also asserted a statute of limitations defense. As part of the affirmative defenses accompanying his answer, defendant alluded to the parties having "established a partnership" as to the Absecon property.
Seizing on this "partnership" reference, plaintiff filed an amended complaint, requesting that any implied "partnership agreement" be enforced, "disgorging the defendant of profits received by him, memorializing [plaintiff's] ownership, [and] partitioning and selling same with recovery to plaintiff for all his share of profits." In turn, defendant filed a counterclaim asserting that, at some unspecified time and for some unspecified reason, he had loaned plaintiff $11,687.50 that was never repaid.*fn3 Plaintiff denied such a loan.
During his ensuing deposition, defendant stated in pertinent part that, subsequent to its purchase, he and his brother didn't "discuss the detail[s]" of the condominium at all. Defendant testified that he had made efforts at the time of sale to have plaintiff's name put on the deed, but plaintiff refused because he "never want[s] to get involved." Defendant was adamant in his deposition that the payments he made to his brother in 2007 and 2008 were unrelated to the 1992 loan.
Following discovery, defendant moved for summary judgment. He mainly argued that plaintiff's claims were barred by the applicable six-year statute of limitations, N.J.S.A. 2A:14-1. He further asserted that, in the absence of a writing to revive the debt, the 2007 and 2008 payments could not be used to restart the limitations period under N.J.S.A. 2A:14-24.
Plaintiff countered that the underlying dispute was really about the termination of a partnership, not the collection of an individual debt, and thus N.J.S.A. 2A:14-1 was inapplicable. In addition, plaintiff argued that the six-year limitations period should not apply because defendant owes him fiduciary duties as his brother and as the party with superior knowledge of finance and real estate. Even if, for the sake of argument, the statute of limitations applies, plaintiff maintained that it has been tolled because the 1992 agreement contemplated repayment upon the sale of the property, and the limitations period should not begin to run until its sale, which has yet to occur.
The trial court granted defendant's motion and dismissed the complaint. In its bench ruling and in its colloquy with counsel, the court found no indicia of a legal partnership, no legal interest of plaintiff in the real estate, and no writing to satisfy the requirements of N.J.S.A. 2A:14-24 with respect to the 2007 and 2008 payments. Consequently, the court enforced the six-year statute of limitations and declared plaintiff's claims time-barred.
On appeal, plaintiff argues that the trial court erred in granting summary judgment. He contends that his claims are not time-barred because: he and his brother had a valid partnership; his brother acknowledged the debt from 1992; his brother acted as a fiduciary or a trustee; and his brother acted fraudulently. Plaintiff also maintains that there are genuine issues of material fact that must be tried.
In reviewing the trial court's order, we bear in mind that summary judgment must be granted if "the pleadings, depositions, answers to interrogatories and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact challenged and that the moving party is entitled to a judgment or order as a matter of law." R. 4:46-2. The motion judge's role is not to "weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial." Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995). We apply the same standards under Rule 4:46 in reviewing summary judgment orders on appeal that are applied by the trial courts. See Estate of Hanges v. Metro. Prop. & Cas. Ins. Co., 202 N.J. 369, 374 (2010). Applying those standards here, we concur with the trial court's conclusion that plaintiff's claims are time-barred, and that his contentions about the nature of the parties' dealings are legally deficient.
The trial court correctly found that, as a matter of law, the evidence in this case is inadequate to prove that the parties formed a valid partnership. The Uniform Partnership Act, as codified in our State, N.J.S.A. 42:1A-1 to -56, defines a partnership as "an association of two or more persons to carry on as co-owners a business for profit formed under [N.J.S.A. 42:1A-10]." N.J.S.A. 42:1A-2. In turn, that section explicitly states that "[j]oint tenancy, tenancy in common, tenancy by the entireties, joint property, common property, or part ownership does not by itself establish a partnership, even if the co-owners share profits made by the use of the property." N.J.S.A. 42:1A-10(c)(1).
Both parties agree that no partnership was ever formed between them in a formalistic manner. Nonetheless, plaintiff argues that the absence of such formalities is irrelevant, in light of defendant's apparent personal belief, as suggested by the reference in his initial answer to the complaint, that some kind of a partnership existed. However, that argument overlooks several important deficiencies.
Plaintiff has no legal interest in the Absecon property. He is not the owner of any alleged partnership assets in dispute. Even assuming, arguendo, that defendant's 1992 handwritten memorandum could make plaintiff a part legal or equitable owner of the condominium, the partnership statute is unequivocal that possession of a property interest with the intent to sell, standing alone, is insufficient to create a partnership. Regardless of whether the brothers, as laypersons, conceived of their arrangements as a partnership, they failed to create one under the law.
The record is also insufficient to establish that defendant acknowledged a debt that could be collectible in a lawsuit filed in 2008. N.J.S.A. 2A:14-24 prescribes the standards by which acknowledgement of a pre-existing debt or promise can serve to set aside the statute of limitations bar. Specifically, [i]n actions at law grounded on any simple contract, no acknowledgment or promise by words only shall be deemed sufficient evidence of a new or continuing contract, so as to take any case out of the operation of [the statute of limitations], or to deprive any person of the benefit thereof, unless such acknowledgement or promise shall be made or continued by or in some writing to be signed by the party chargeable thereby. [Emphasis added.]
It is undisputed that there is no writing with respect to the three $1,000 payments made by defendant to plaintiff in 2007 and 2008. Such a writing acknowledging a debt is required under N.J.S.A. 2A:14-24 for the six-year statute of limitations to be tolled and the obligation to pay thereby extended. Moreover, "[i]n addition to the requirement of a writing[,] it is also necessary that the acknowledgment relied upon be such as in its entirety fairly supports an implication of a promise to pay the debt immediately or on demand." Denville Amusement Co. v. Fogelson, 84 N.J. Super. 164, 170 (App. Div. 1964) (emphasis in original).
By the time defendant made what plaintiff characterizes as his first repayment of $1,000 in 2007, the principal sum of $42,500, plus more than fifteen years of interest at ten percent (i.e., over $64,000), ostensibly would have been due on the original loan from 1992. Defendant's disbursement to his brother of the modest sum of $3,000 over a short interval in 2007 and 2008, before payments again ceased, does not objectively reflect a commitment on his part to pay an alleged balance from 1992 that was due "immediately or on demand." See ibid. There is no contemporaneous documentation establishing that, by paying his brother $3,000 in 2007 and 2008, defendant agreed to pay back a much larger loan that the brother had made to him more than fifteen years earlier.
Plaintiff argues that the parties' relation by blood, combined with defendant's greater knowledge of finance and real estate, created a fiduciary relationship, through which fairness and equity demand waiver of the statute of limitations. In particular, plaintiff points to a statement that defendant made at his deposition, admitting that he knew plaintiff "rel[ied] . . . on what [defendant did] with the [condominium] unit." Even so, the circumstances are insufficient as a matter of law to create an enforceable fiduciary or confidential relationship.
In general, a confidential or fiduciary relationship springs out of relationships "'whether legal, natural or conventional in their origin, in which confidence is naturally inspired, or, in fact, reasonably exists.'" Estate of Ostlund v. Ostlund, 391 N.J. Super. 390, 401 (App. Div. 2007) (quoting Pascale v. Pascale, 113 N.J. 20, 34 (1988)). The legal inquiry in determining the existence of such a relationship focuses upon whether "'the relations between the parties are of such a character of trust and confidence as to render it reasonably certain that [ ] one party occupied a dominant position over the other and that consequently they did not deal on terms and conditions of equality.'" Estate of Ostland, supra, 391 N.J. Super. at 402 (quoting Blake v. Brennan, 1 N.J. Super. 446, 454 (Ch. Div. 1948)). Important factors include: whether trust and confidence between the parties actually exist, whether they are dealing on terms of equality, whether one side has superior knowledge of the details and effect of a proposed transaction based on a fiduciary relationship, whether one side has exerted over-mastering influence over the other or whether one side is weak or dependent. [Estate of Ostland, supra, 391 N.J. Super. at 402 (emphasis added).]
Such relationships do not accrue "'where the parties deal on terms of equality,' even though they are, at the same time, family members and business associates." Ibid. (quoting Stroming v. Stroming, 12 N.J. Super. 217, 224 (App. Div.), certif. denied, 8 N.J. 319 (1951)); see also Vezzetti v. Shields, 22 N.J. Super. 397, 405 (App. Div. 1952) (observing that "the mere existence of family ties does not create . . . a confidential relationship").
Here, the parties presumably had a degree of trust and confidence in each other as brothers. It also appears that defendant was better versed than plaintiff in finance and real estate. Nevertheless, no evidence was presented that the brothers dealt with one another on an unequal basis with respect to the acquisition of the Absecon property. Plaintiff does not contend he was coerced or threatened by his brother into making the loan. Indeed, as the lender, plaintiff was presumptively in a stronger position to exact terms and conditions from his brother regarding the financing arrangements. Plaintiff offered no evidence that defendant misrepresented the loan's purpose, or that he concealed his temporary receipt of rental income following the purchase. Likewise, there was no proof that defendant misled plaintiff between 1992 and 2007 that payments had been, or were about to be, made to satisfy the debt.
The original transaction, as proposed, was relatively simple: defendant would buy a property, sell it to an identified buyer, then split the expected proceeds with plaintiff. The transaction did not require a sophisticated degree of knowledge. Nor was specialized knowledge necessary to appreciate that once the real estate failed to sell, the fundamental premise of the purchase had vanished. Notably, even after the property did not sell, plaintiff made no timely demand that defendant satisfy the debt, and defendant made no secret of his failure to do so.
Instead, plaintiff waited sixteen years to seek payment, long after the expiration of the applicable statute of limitations and long after it became obvious that the property was not about to be resold. Based on the record, we discern no exertion by defendant of "over-mastering influence," Estate of Ostlund, supra, 391 N.J. Super. at 402, nor any creation or breach of a confidential or a fiduciary duty on his part that could affect the limitations period. Although there might have been (and may well continue to be) a moral impetus for defendant to pay back the money that he borrowed from his brother in 1992, any legal obligation to do so on his part has lapsed.
Lastly, plaintiff asserts in his appellate brief that he has been the victim of a fraud, and that the statute of limitations for contractual matters consequently should not apply. Those generic averments fall far short of the clear and convincing proof required to support a cause of action for common-law fraud. 539 Absecon Blvd., L.L.C. v. Shan Enters. Ltd., 406 N.J. Super. 242, 269 (App. Div.), certif. denied, 199 N.J. 541 (2009). His complaint, even as amended, does not even include a count for fraud, which must be pleaded with particularity. See R. 4:5-8(a). The fraud argument is unavailing to revive this time-barred action.
Plaintiff's remaining arguments, to the extent they have not been specifically addressed in this opinion, lack sufficient merit to warrant discussion. R. 2:11-3(e)(1)(E).