On appeal from Superior Court of New Jersey, Union County, Law Division, Docket No. L-429-08.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Graves and Messano.
Plaintiffs Michael Naso, Frank Naso, and Zeta Products, Inc. (Zeta), appeal from the part of a judgment entered on March 15, 2010, that ordered them to return "the molds that were supplied by [defendant] Barry Springel in a joint venture." The judgment also awarded plaintiffs $56,786.08, but that award is not challenged. We affirm.
The Nasos are the owners of Zeta, a manufacturing company engaged in the process of plastic injection molding. Springel is an entrepreneur who worked in the lighting industry for several years. During that time, he acquired approximately sixteen molds that were used to manufacture lighting fixtures. On March 10, 2004, Springel transferred his interest in these molds to his mother, defendant Myrna Springel (Myrna), under the following terms:
In consideration of another loan in the sum of $10,5000 [sic] made to me by Myrna Springel, I give and assign all of my rights and interest, ownership and otherwise to my 16 molds (inclusive of one owned by my friend and account, Jade Sade[)] to her and her principal company, Premier Moulding, Inc., a Pennsylvania corporation.
The loan is without interest and all told, I owe approximately $47,000 to her without any interest.
The molds had been bought by me during my years in business and used by me and my business known as Haven Enterprises. Myrna Springel has and will allow me to continue to use the molds as though they are stillmine in my business or any business [with] which I am affiliated . . . however, the said molds belong to her and her principal company Premier Moulding, Inc., which I operate for her. Upon payment of all monies to her owed by me, the molds will then again be mine.
In March 2005, Michael Naso replied "to an online ad for a business opportunity" posted by Springel. In response, Springel sent him some information, including "a number of line drawings, a sell sheet for lighting fixtures, and a handwritten note." According to Naso, Springel never mentioned that his mother or anyone else was involved with his business. However, these initial discussions "went nowhere," and the parties did not speak for several months.
Unbeknownst to the Nasos, Springel filed for Chapter 7 bankruptcy in August 2005. In his bankruptcy petition, he stated that Haven Enterprises had ceased doing business on July 5, 2005. Springel also reported total assets of $5500 and total liabilities of $299,944.18, and he denied the existence of "any property owned by another person that the debtor holds or controls."*fn1 The petition was granted, and Springel's debts were discharged in November 2005.
At some point in August 2005, Springel reinitiated contact with Michael Naso, and they met at Zeta's place of business. During the meeting, Springel and Naso discussed forming a partnership or joint venture to manufacture plastic covers for lighting fixtures using Springel's molds. According to Naso, "[e]verything was to be 50/50." Springel was to "continue the relationship with his current customers and [the Nasos] would take over the manufacturing" until the parties formed "an independent company which would be owned . . . 50 percent by Mr. Springel, 50 percent by the Naso brothers."
Michael Naso also testified that Springel indicated at the meeting that "Haven Enterprises was the company . . . through which he conducted his business." However, Springel explained the next day that he had closed Haven Enterprises and was doing business as Premier Moulding, Inc. Shortly thereafter, the parties orally agreed to proceed and Springel began accepting orders. Pursuant to the agreement, all payments from customers went into Premier Moulding's bank account.
On September 6, 2005, Springel shipped several molds to plaintiffs. However, the molds were in need of repairs and, according to Naso, the parties "agreed that the balance of those repair costs would be paid from proceeds from the profits or the money generated from the sales." Plaintiffs were able to manufacture and ship products beginning in November 2005.
In January and August 2006, the parties met with Milton Abelowitz, a Pennsylvania attorney, in an effort to formalize their arrangement by creating a limited liability company. They failed to reach a final agreement, however, and Springel suggested that they use his wife's uncle, defendant Aaron Pogach, as their attorney.*fn2
On October 17, 2006, Michael Naso provided Pogach with a written summary of the parties' joint operations. The summary explained that the parties planned to create a new business entity to which all joint assets and liabilities would be transferred. The new business was to have a "checking account under control of both parties."
In October 2006, Springel began taking a "draw" of $875 per week from the Premier Moulding bank account. According to Michael Naso, this idea had initially been discussed at an earlier meeting during which Springel had insisted that he needed a draw "if [he was] no longer permitted to accept receivables and control the account." Naso stated that he and his brother responded with "skepticism" and did not agree to the draw.*fn3 Plaintiffs did not learn about Springel's withdrawals until sometime in February 2007.
In January 2007, the parties started using the name "Premier Lighting Enterprises, LLC." They opened a checking account for the new company using $5000 from Premier Moulding's account.
The Nasos, Springel, and Pogach met in February 2007, because Premier Moulding owed Zeta "a considerable sum of money." In an effort to alleviate the Nasos' concerns, Springel provided them with copies of bank statements and online access to the Premier Moulding bank ...