On appeal from the Superior Court of New Jersey, Chancery Division, Cape May County, Docket No. C-43-09.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Carchman and Fisher.
In this appeal, we conclude that the findings of the Chancery judge, rendered at the conclusion of a non-jury trial, resulted in an equitable division of partnership assets and a proper resolution of the claims for credits. Finding no merit in any of the parties' arguments, we affirm.
The evidence adduced at a three-day trial revealed that, in 1987, plaintiff Joseph R. Foster, defendant Joseph P. Stampone, and others, formed Sunset Lake Associates, a partnership, to purchase and hold property in Wildwood Crest. The partnership renovated the single-family home on the property when purchased and utilized it as the partners' summer home for a few years as they investigated whether the property could be developed so as to contain four condominium units with a dock. Upon learning that only two units could be developed on the property, two partners were bought out, and in 1992, the remaining partners borrowed funds, encumbered the property with a mortgage as a result of that borrowing, and began construction of two side-by-side, multi-story condominium units.
When, in 1995, defendant Stampone decided to construct two separate condominium units, another member withdrew, leaving Stampone and Foster as the partnership's only remaining members. At the same time, without Foster's knowledge, legal title to the property was transferred to Stampone and his wife -- Foster's brother-in-law and sister.
By 2003, Foster and Stampone's capital accounts were unequal. As a result, the property was refinanced, and Stampone obtained sufficient cash from the loan to equalize the capital accounts. From those loan proceeds, Stampone set aside $30,000 to do repair work, which he referred to as giving the property a "facelift."
The increased loan payments resulting from the refinance, as well as divorce proceedings in which Foster became embroiled, made difficult Foster's ability to make capital contributions to the degree sought by Stampone. Additionally, it quickly became apparent that Stampone had more in mind than a "facelift" for the property. In November 2004, Stampone sent Foster plans for renovations that would purportedly cost between $100,000 and $150,000. Foster, who was in the construction business, anticipated these proposed renovations would exceed Stampone's estimate. He wrote to Stampone urging him to "stop" because the project was "over the top," and he could not "foot half the bill." Stampone proceeded with the renovations notwithstanding Foster's objections, the cost eventually exceeded $300,000, and Stampone asked Foster to pay half. Foster forwarded more than $150,000 in contributions in 2005, although not enough to cover his capital contributions because of other operating expenses. Their disagreements led Stampone, an attorney, to write to Foster on November 9, 2005, advising Foster he expected him to "vacate the premises . . . within thirty (30) days of receipt hereof" and, if Foster refused, he would "avail" himself of his "legal remedies."
Stampone thereafter exclusively possessed the property. He and his wife borrowed $1,650,000 against the property, using $542,000*fn1 of those proceeds to retire the existing mortgage; they retained the balance for their sole use.
In July 2009, Foster and his wife filed a complaint in the Chancery Division against Stampone and his wife, Julia Stampone (Julia). His three-count complaint sought a determination that a partnership existed, and the imposition of either a resulting or constructive trust. Stampone filed a counterclaim, alleging that Foster breached the partnership agreement and violated the fiduciary duties he allegedly owed Stampone; he also sought a judgment declaring that Foster "abandoned, withdr[e]w, and/or [sic] was expelled from" the partnership.
Julia moved for summary judgment, alleging she had "no interest in the property" and wherever her name appeared in relevant documents, including the deed to the property, it was as a nominee. The parties executed a consent order, which was entered on May 18, 2010, that: dismissed the counts of the complaint that sought the imposition of a trust; dismissed Foster's wife as a plaintiff; added the partnership as a defendant; dismissed the claims asserted against Julia; confirmed that the disposition of the action was to be governed by the partnership agreement; and conceded the property was owned exclusively by the partnership. By way of the consent order, Julia also agreed to submit to the court's jurisdiction to the extent necessary, and Stampone and Julia agreed they would "seasonably . . . execute such documents as reasonably are necessary to effectuate" the court's disposition, if any, of the property.
Following a trial that explored the parties' disagreements and claims for credits, the Chancery judge determined that the partnership should be deemed dissolved as of November 2005. The judge also decided that the equitable way to divide the partnership assets was for Stampone to retain the property and for Foster to receive from Stampone $738,357 "representing the distribution due [Foster] as a result of the dissolution of the partnership," which was based on the principal amount of $718,596, together with an award of prejudgment interest. The July 20, 2010 judgment directed that if payment was not made by Stampone by November 1, 2010, Foster would be entitled to seek a sale of the property.
Stampone timely moved for a new trial, arguing that the judge erred by, among other things: entering judgment against him instead of against the partnership; failing to properly credit the $542,000 mortgage payoff in assessing Foster's share of the partnership assets; and erroneously refusing to apply the partnership agreement's section 2.6(b), which provides a methodology for repayment when one ...