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Roaring Fork Partners, L.L.C. v. Claremont Investment Partners

February 10, 2012

ROARING FORK PARTNERS, L.L.C. AND VIRGINIA DAWSON, PLAINTIFFS-APPELLANTS,
v.
CLAREMONT INVESTMENT PARTNERS, L.L.C., GERALD P. SULLIVAN, JOHN GREGORY AND LAURA SULLIVAN, DEFENDANTS-RESPONDENTS, AND ROADHOUSE GROUP, L.L.C, DIANE GREGORY, PETER GREGORY, MARGI GREGORY, MICHAEL GREGORY, ELENA GREGORY, CLAREMONT INVESTMENT PARTNERS EMPLOYEES TRUST, L.L.C., DEFENDANTS.



On appeal from Superior Court of New Jersey, Chancery Division, Union County, Docket No. C-173-09.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued December 7, 2011 -

Before Judges Fuentes, Harris and Koblitz.

Plaintiffs Roaring Fork Partners, LLC (Roaring Fork) and Virginia Dawson filed a complaint against eleven defendants, including Claremont Investment Partners, LLC (CIP) and Gerald P. Sullivan. Plaintiffs' cause of action arises from Dawson's employment with CIP. After filing an amended complaint, plaintiffs' attorney was granted leave to withdraw. Dawson alleges she did not receive notice of the attorney's application to withdraw. After plaintiffs failed to attend a prescheduled case management conference, defendant Sullivan sought dismissal of plaintiffs' complaint, which was granted. When plaintiffs failed to answer counterclaims filed by CIP, CIP requested a default judgment. The motion judge granted defendants' motions unopposed, entering judgment on CIP's counterclaims for $18,321.47.

Dawson brought a pro se motion on behalf of herself and Roaring Fork to vacate the dismissals and the default judgment. The motion judge found that Roaring Fork could not bring a motion while unrepresented and that Dawson did not have standing to bring the motion as an individual. Although the motion judge stated briefly that dismissal with prejudice was appropriate because plaintiffs' failures to attend court were not excusable, he found the standing issue dispositive.

On appeal, plaintiffs argue that: (1) the dismissal with prejudice was an inappropriate sanction; (2) the dismissal was entered without a formal motion by defendants; (3) the motion to vacate the default judgment should have been granted because the default judgment was entered simultaneously with an improperly entered default; and (4) the default judgment was entered in an inappropriate amount. We agree that Dawson's motions should have been granted. We therefore reverse and remand to allow Roaring Fork to file a motion through counsel pursuant to Rule 4:50-1.

Dawson was hired as President and CEO of CIP in April 2009. As part of her employment agreement, CIP gave her a twenty percent membership interest in the company. Dawson then formed Roaring Fork, a limited liability company, to hold her shares. Roaring Fork became a member of CIP after the transfer of shares. Dawson alleges that defendants violated CIP's operating agreement, diluting Roaring Fork's shares, thereby causing their value to diminish.

Roaring Fork and Dawson filed a verified complaint and order to show cause. On December 15, 2009, the court granted a preliminary injunction temporarily barring CIP from conducting a members' meeting and requiring defendants to produce certain documents. CIP and Sullivan filed an answer and counterclaims.*fn1

Plaintiffs answered defendants' counterclaims.

In March 2010, plaintiffs filed a motion for leave to file an amended complaint to add new defendants and to remove CIP's attorney. The motion judge granted both applications. In their amended complaint, plaintiffs raised allegations of: (1) tortious interference with economic advantage, (2) breach of fiduciary duty, (3) breach of contract, (4) corporate waste, (5) conversion, (6) breach of oral agreement, (7) fraud, (8) violation of the business judgment rule, (9) breach of duty of loyalty, and (10) a member's derivative action. Sullivan filed an answer and counterclaims to plaintiffs' first amended complaint on September 1, 2010. The trial court dismissed Sullivan's counterclaims in late October 2010.

In a September 30, 2010, case management order, the motion judge scheduled a status conference for January 21, 2011, noting that "[n]o further notice will be given."

In November 2010, CIP filed an answer and asserted counterclaims in response to plaintiffs' amended complaint. CIP raised nine counts: (1) breach of contract, (2) breach of the covenant of good faith and fair dealing, (3) conversion, (4) unjust enrichment, (5) interference with prospective economic advantage, (6) theft of trade secrets and confidential and proprietary information, (7) breach of fiduciary duty, (8) breach of duty of loyalty, and (9) malicious use of process. Dawson alleges that she began experiencing difficulties with her mail delivery around this time.

Also in November, plaintiffs' attorney filed a motion to be relieved as counsel. Dawson asserts that she was not informed of the motion and thus did not receive a copy from counsel. She acknowledges receipt of an email dated October 27, 2010, in which her counsel intimated he was considering withdrawal because of a fee dispute. She further acknowledges receipt of another email dated November 4, 2010, with an attachment labeled "Resp from Roberts re motion to be relieved." According to Dawson, the motion to ...


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