July 25, 2012
AFSANEH YAFAR, PLAINTIFF-APPELLANT/ CROSS-RESPONDENT,
PAYMAN YAFAR, DEFENDANT/THIRD-PARTY PLAINTIFF-RESPONDENT/ CROSS-APPELLANT,
AZADAH KAFTARI, THIRD-PARTY DEFENDANT-RESPONDENT.
On appeal from Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-6350-07.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted March 13, 2012 -
Before Judges Payne and Reisner.
In this action by plaintiff, Afsaneh Yafar, against her brother, defendant Payman Yafar, Afsaneh*fn1 has appealed from the judgment in a bench trial resulting in an award to her of $75,000 and the dismissal of the remainder of her claims. Payman, who counterclaimed and filed a third-party complaint against his other sister, Azadah Kaftari, has cross-appealed from the dismissal of all of his claims.
On appeal, Afsaneh argues as follows:
Point One: The Court erred in finding that there must be a certainty of purpose for which money is advanced[.] Counts affected, Count 1 $20,000.00, Count 2 $10,000.00, Count 3 $25,000.00.
Point Two: The Court erred in finding that the wired money was not proven to be a loan[.] [C]ounts affected[,] Counts 4 $17,000.00, Count 5 $13,000.00, and Count 6 $45,000.00.
Point Three: Court erred in finding that plaintiff failed to meet burden of proof as to amounts owed under lease[.] [C]ounts affected, Count 8.
Point Four: Court erred in finding that it was necessary to determine if loans were personal loans or business loans[.] [C]ounts affected, Count 9 $5,000.00 and Count 10 $2000.00.
Payman, who has appeared pro se on appeal, argues that he should have been recognized as a one-third owner, along with his two sisters, of properties located in Wharton and Fair Lawn, New Jersey.
We affirm the trial court's judgment as to both parties.
The record discloses the following factual background of relevance to this matter. In 1979, Afsaneh, at age seventeen, and her sister, Azadah, at age fifteen, emigrated to the United States from Iran. When Afsaneh was twenty and Azadah was eighteen, the two moved to New Jersey, where they worked and attended school. In 1984, they were joined in this country by their younger brother, Payman, who was then age sixteen or seventeen.
In 1984, the sisters purchased property in Wharton, allegedly utilizing their combined earnings to pay a down-payment of $50,000 or $55,000 as well as money sent to them by their parents in Iran that, according to their mother in later trial testimony, eventually totaled approximately $300,000.
In 1986, the Yafars' father moved from Iran to the United States and came to live at the Wharton property. Soon thereafter, Afsaneh purchased another house in Fair Lawn, for which she paid a down-payment of $70,000. As with the Wharton house, the names of both sisters were placed on the deed. Payman's name was not on the deed for either of the two properties.
At some point between 1986 and 1988, Azadah married and moved from the Wharton property. Additionally, Afsaneh married Farhad Parzivand, the owner of a jewelry shop, and also moved from Wharton. In 1988, the mother arrived from Iran to live in Wharton with her husband and Payman. The parents were not employed, and after the mortgage on the Wharton property was paid off, the sisters permitted them to keep the rental receipts from that portion of the property that was leased out. Payman helped out by collecting rent and overseeing repairs to the two properties.
Eventually, the father opened an ice cream truck business to supplement the rental income and, in 1992, Payman opened a cigarette and candy store called Paterson Market.
In 1998, Azadah and Payman purchased a house on Farview Avenue in Paramus, and Payman and his parents moved there. Although the names of both Azadah and Payman appear on the deed to that house, and Azadah contributed approximately one-half of the down-payment, Payman paid the mortgage. Payman continued to reside at that property until 2003 when he married.
In 1999, Afsaneh and Payman jointly purchased another income-producing house on Farview Avenue, which later became the subject of litigation.*fn2 Payman managed the property, collected the rents and paid the mortgage. His sister Afsaneh earned no income from the rental of that property. Just prior to 2003, Payman took out a loan of $150,000, secured by a second mortgage on the Farview Avenue property.
In 2003, Payman was expelled from the family as the result of his marriage to a woman who was not of the Jewish faith as were the Yafars. In 2004, Payman filed suit against Afsaneh claiming a ninety-five percent ownership interest in the Farview Avenue property and seeking partition. No claim was presented to equalize the distribution of past profits and/or losses from the operation of the premises.
A bench trial was held in the Chancery Division in the matter in 2005, after which the trial judge rendered an opinion in which he awarded Afsaneh a fifty-percent ownership interest in the property and ordered its sale. In the course of his decision, the judge remarked on the difficulties he had encountered in the matter, "in large part brought about by minimal writings between the parties, by the part[ies'] propensity in dealing with cash and a party or part[ies'] lack of candor with governmental entities and/or banking institutions." Further, the judge found "this family, plaintiff, defendant and all other members, have a method of doing business whereby their affairs are private to the family and not open to the public, that is[,] the non-family." As a consequence, the details of their business dealings were very difficult to discern.
In concluding that Afsaneh held a fifty-percent interest in the property, the judge found that she and her brother had obtained a loan for purchase of the property, secured by a mortgage, in the amount of $227,400, upon which they were jointly obligated, leaving a balance due at closing of $159,719.12. Although Payman's bank account reflected a withdrawal of $154,000, the judge was unable to determine how that sum came to exist in the account, which Payman stated came "from his paychecks, from other friends, his sisters or cousins." In any event, the judge concluded from the evidence that, prior to the purchase, Afsaneh had contributed $50,000 in cash toward the down-payment. Additionally, the judge found that Afsaneh's check number 1846 in the amount of $25,000, written on February 21, 1999, shortly after the closing on the Farview property and made payable to Payman, was, despite Payman's testimony otherwise, in fact a contribution to the down-payment.
The record reflects that, following the judge's decision, Afsaneh bought out her brother's interest in the house. However, she claimed that, before the sale took place, he had negotiated three-year leases with the tenants at a significantly lower rent than they had previously paid. She claimed that the rent on one unit had been $1,650 and the rent on the other had been $2,000. Both were reduced to $1,400.
Thereafter, in a complaint filed on October 7, 2008, Afsaneh sued Payman. In a subsequently-filed first-amended complaint, Afsaneh claimed that she had made a series of loans to defendant that had not been repaid, as follows: A $20,000 loan on or about August 29, 1998 for defendant's business, Paterson Market (Count One); a $10,000 loan on or about May 1, 1999 (Count Two); a $25,000 loan on or about February 21, 1999 (Count Three); a $17,000 loan on or about March 1, 2000 (Count Four); a $13,000 loan on or about February 23, 2000 (Count Five); and a $45,000 loan on or about May 9, 2000 (Count Six). Additionally, Afsaneh alleged in Count Seven that Payman had obtained a loan of $150,000, secured by a second mortgage against the Farview Avenue property, for use in his business, that the property was being sold, and that defendant refused to reimburse plaintiff for the $75,000 that she claimed was her share of the equity used to satisfy the mortgage. She also sought recovery of one-half of the mortgage payments paid from the property's profits. In Count Eight, Afsaneh alleged that Payman had failed to account for profits on the Farview property generated from 1999 to the present. In Count Nine, Afsaneh alleged lending $5,000 to Paterson Market in 1992, and in Count Ten, she alleged a loan to Payman of $2,000 on December 18, 1992.*fn3
In an answer, counterclaim and third-party complaint, Payman denied Afsaneh's allegations, and he asserted in his thirteenth affirmative defense that: "Any money given to the Defendant from the Plaintiff was never a loan, but rather a disguise by Plaintiff, as the said monies were intended to be given to Plaintiff's husband from Defendant, thus making Plaintiff's husband believe that the money was being lent to him by the Defendant." In his counterclaim against Afsaneh and his third-party complaint against Azadah, Payman alleged that the money for the down-payments on the Wharton and Fair Lawn properties had been provided by the sisters' parents, with the intent that the properties be titled in Payman's name, in whole or in part, in accordance with the custom of the parties' country of origin, Iran. However, because at the time of the purchase Payman was a young adult and unemployed, his name was omitted from the deeds. Payman sought to be added to them and to obtain partition. Although the counterclaim contained two additional accounts, they were withdrawn at trial.
At a bench trial before a Law Division judge, Afsaneh testified concerning the various checks and wire transfers for which she was seeking payment, commencing with the payments of a total of $7,000 in 1992, which Afsaneh stated Payman needed to commence his business. She then testified to issuing a check in the amount of $20,000 in 1998 that was initially to have been utilized for the down-payment on the Farview house, but was not. She claimed that the check 1846 for $25,000, which had been found in the prior trial to be part of Afsaneh's contribution to the down-payment, remained owing, and that a separate check in the amount of $18,750 had been used to pay her share of the cost of the house. She testified that another check for $10,000, written on May 1, 1999, and wire transfers from her Swiss bank account in the total amount of $75,000, made in a four-month period in 2000, were all utilized by Payman for the purchase of inventory. According to Afsaneh, she had made additional loans to Payman that had been paid back. However, these loans had not, despite Payman's agreement to do so when financially able.*fn4
Afsaneh offered no evidence to support her claim that the monetary transfers to Payman were loans, and no books of account or other evidence to establish his payment history.
In addition to the alleged loans, Afsaneh sought compensation for the reduced rents being paid by tenants in the Farview house, although she lacked competent proof that those rents had actually been reduced. She also testified as to her lost profits on the Farview house, but on cross-examination, she exhibited no knowledge of the costs incurred in connection with the property. Her profit figures were based on a $1,000 per month profit that she claimed her mother had specified in a prior deposition.
Payman denied that the checks written in 1992 were to aid in the commencement of his business, testifying that his parents provided all necessary start-up money. He also testified that he did not need money for inventory, since he had ample lines of credit with his suppliers and a bank. Payman testified further that checks written to him and his business by Afsaneh, as well as the three wire transfers from her Swiss bank account, were either repaid or were actually reimbursements to him for cash payments he had made to Afsaneh's husband, Farhad Parzivand. He claimed that Parzivand often needed money for his jewelry business, especially around holidays, and that Afsaneh was reluctant to lend the money to him, because he would not repay it if he thought it was from her. As a result, Payman would loan the money, which Parzivand would repay to Afsaneh with the understanding that she would transmit the money to Payman. At all times, Afsaneh kept track of the transactions, rather than Payman, so he had no records to corroborate what had occurred. Parzivand, who also gave testimony at trial, denied receipt of money from Payman in this fashion.
At the conclusion of the trial, the judge issued a written decision that he prefaced by observing, as had the previous judge: "The main difficulty in this case is the general lack of writings between the parties and the parties' lack of candor with governmental entities and/or banking institutions." The judge then addressed the issue of whether there was an oral loan agreement between the parties. In that regard, the judge said:
The court notes that this history of borrowing and lending is not reflected by any agreement, nor is the interest that may have been garnered reflected on any tax returns. When the court inquired as to the lack of tax returns, both parties claimed that the returns were lost and that the accountant who prepared them was no longer talking to them. In addition, both parties testified that their mother kept a written record of the income collected in rents at the Paramus [Farview] property, however, the mother failed to produce this record during discovery or at trial.
Further, the judge expressed concern about the credibility of Afsaneh's testimony, particularly as it related to check 1846, which she insisted was a loan, despite the finding in the partition action that it constituted a part of her contribution to the down-payment on the Farview property. But then, the judge also expressed concern about Payman's credibility, noting that in the partition action he had claimed that the August 29, 1998 check for $20,000 was used for business purposes, whereas he gave different testimony at the present trial. Additionally, the judge noted as contradicting his present testimony Payman's assertion in the prior litigation that "all moneys extended by [Afsaneh] to him were either for business purposes or miscellaneous purposes."
After considering Afsaneh's testimony that the money was a loan and Payman's testimony that it was reimbursement for cash given to Afsaneh's husband, the judge concluded that there was no credible evidence that would enable him to determine with any certainty the purpose for which the money was advanced. Thus, the judge found that Afsaneh had failed to meet her burden of proof with respect to the loan claims.
The judge agreed, however, that Afsaneh had met her burden of establishing a right to reimbursement for one-half of the $150,000 loan secured by a second mortgage on the Farview property, which was paid off at the time that ownership of the property was transferred.
With respect to Count Eight, the judge found that Afsaneh had failed to meet her burden of proof as to the amount of rent charged in the leases that she claimed her brother had renegotiated. Addressing Afsaneh's request for an accounting for profits derived from the Farview property, he found that there were no credible records, such as tax returns, that would support a grant of relief.
The judge denied Payman any relief on his counterclaim for a declaration of an ownership interest in the Wharton and Fair Lawn properties, holding that the claim was barred by the Statute of Frauds. In conclusion, the judge reiterated his ruling in favor of Afsaneh on her claim for reimbursement of half of the $150,000 loan secured by the Farview property, but then stated: "On all other claims, both parties failed to meet their burden of proof due to their lack of credibility as witnesses and their lack of records to prove their case."
These appeals followed.
In considering the parties' appeals, we are required to accept the judge's factual findings if supported by credible evidence in the record. Rova Farms Resort, Inc. v. Investors Ins. Co., 65 N.J. 474, 484 (1974). We consider his legal conclusions anew. Manalapan Realty v. Manalapan Twp. Comm., 140 N.J. 366, 378 (1995).
On appeal, Afsaneh first focuses on the judge's holding that he could not determine the purpose for which the money was advanced as the basis for holding that she had failed to meet her burden of proof. She then assumes that the money was loaned to Payman, and she argues that, under those circumstances, its use was legally immaterial. However, we disagree with Afsaneh's initial premise. In this case, testimony conflicted as to whether the money was a loan or reimbursement for cash advanced by Payman to Parzivand. If the latter, the transfer of cash by Afsaneh to Payman would not have been a loan. We understand the judge to have referred to these two possibilities in his opinion, and to have concluded that the evidence presented did not permit him to conclude that a loan, rather than some other form of transaction, had taken place. Given the paucity of the proofs in this matter, and the serious issues of credibility surrounding both parties, we cannot conclude that the judge erred in ruling as he did.
"'[T]estimony to be believed must not only proceed from the mouth of a credible witness but must be credible in itself. It must be such as the common experience and observation of mankind can approve as probable in the circumstances[.]'" Spagnuolo v. Bonnet, 16 N.J. 546, 554-55 (1954) (quoting In re Perrone's Estate, 5 N.J. 514, 521 (1950)). Here, the findings of the judge in the prior partition trial rendered portions of the testimony by both parties in the present matter to have been suspect. Additionally, no reason was given why some loans would have been paid by Payman, while others were not, or why, if Payman had a history of nonpayment, his sister would have continued to loan him such substantial sums as those she claimed. Further, as both judges hearing matters involving Afsaneh and Payman remarked, the parties entirely lacked any corroborating books and records in support of the loan claims. That money was transferred by Afsaneh to Payman was demonstrated. However, the reason for the transfer remained unclear, thereby providing support to the judge's conclusion that Afsaneh's burden of proof had not been met.
Plaintiff also challenges the judge's determination not to order an accounting of Payman's profits from the rental of the Farview property. In essence, the judge held on that issue that, as the result of the manner in which the parties did business, such an accounting would not have been possible because of the absence of the requisite books and records. On appeal, Afsaneh basically admits as much, stating: "The rents were all received by defendant and all expenses paid by defendant, yet he could not come up with any ledger records or tax returns from 1999 to 2007."
Nonetheless, Afsaneh argues that her lost profits could be determined as the result of a reference in the record to deposition testimony by the parties' mother, at which time she stated that her son was making $1,000 per month profit on the Farview Avenue property. However, our review of the transcript discloses that the mother's response was that her "understanding" was that there was a $1,000 per month profit. Moreover, when questioned about that statement on the record by counsel for Afsaneh, the mother stated: "You and Afsaneh told me to say that." Given the unreliability of the statement, we find no error in any determination by the judge not to credit it.
In addition to an appeal from the denial of an accounting on alleged lost profits, Afsaneh also appeals the denial by the judge of any recovery of damages for the alleged reduction in rent by Payman at the time of the sale of the Farview property to Afsaneh. However, she failed to meet her burden of proof on that claim, since she did not provide evidence of executed leases in the lesser amount, and she did not provide any evidence that the rent received by her had, in fact, been reduced.
Addressing Payman's cross-appeal, we concur with the judge's conclusion that his claim to an ownership interest in the Wharton and Fair Lawn properties was barred by the Statute of Frauds, N.J.S.A. 25:1-13, because that interest was not established in a writing signed by Payman's sisters, and was not otherwise established by clear and convincing evidence. Morton v. 4 Orchard Land Trust, 180 N.J. 118, 125 (2004).
As a consequence, we affirm the judgment entered in this matter.