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Balsamo v. Ortuso

Superior Court of New Jersey, Appellate Division

September 17, 2013

JOSEPH BALSAMO, Plaintiff-Appellant,
v.
GAIL ORTUSO, Defendant-Respondent, and BACKSTAGE INTERNATIONAL, INC., Defendant.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued September 10, 2013

On appeal from the Superior Court of New Jersey, Chancery Division, Hunterdon County, Docket No. C-14019-11.

Robert A. Ballard, Jr. argued the cause for appellant (Ballard & Dragan, attorneys; Mr. Ballard, on the brief).

Joseph F. Trinity argued the cause for respondent (Gebhardt & Kiefer, attorneys; Mr. Trinity, on the brief).

Before Judges Fisher and Koblitz.

PER CURIAM

Plaintiff Joseph Balsamo commenced this action against his alleged partner, defendant Gail Ortuso, in a hair salon business – Backstage International, Inc. – claiming, in the wake of the business's failure, that Ortuso is liable for half the balance due on a line of credit that Balsamo personally guaranteed. On cross-motions for summary judgment, the trial judge held that Ortuso could not be held liable because the line of credit was obtained by Balsamo prior to the formation of the parties' alleged partnership. Although the record reveals no dispute about this factual premise for the judge's holding, the critical question is whether the line of credit was drawn upon before or after formation of the alleged partnership. Because the facts relevant to this pivotal question are disputed, we reverse.

As the opponent of a summary judgment motion, Balsamo was entitled to have the trial judge assume the truth of his factual allegations in ascertaining the existence of a triable issue. Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995). In reviewing such a determination, we are bound to that same standard. Estate of Hanges v. Metropolitan Prop. & Cas. Ins. Co., 202 N.J. 369, 374 (2010); Greenberg v. Pryszlak, 426 N.J.Super. 591, 603 n.7 (App. Div. 2012).

In granting summary judgment, the trial judge implicitly recognized a factual dispute about the nature of the parties' relationship but determined that even if, as Balsamo alleged, Ortuso was a shareholder in Backstage or was Balsamo's "de facto partner, "[1] Ortuso could not be held personally liable for debts incurred by Balsamo prior to the formation of that relationship. Although the judge's legal conclusion may be generally true, see, N.J.S.A. 42:1A-18(b) (declaring that "[a] person admitted as a partner in an existing partnership is not personally liable for any partnership obligation incurred before the person's admission as a partner"); see also Conklin Farm v. Leibowitz, 140 N.J. 417, 422 (1995), and although there is no dispute that Balsamo possessed the line of credit prior to the formation of the parties' alleged partnership, the critical issue is whether the line of credit was accessed before or after the alleged partnership was formed.

In examining the factual record relevant to that question, we observe that Balsamo opposed Ortuso's summary judgment motion by relying upon, among other things, the following excerpt from his deposition testimony:

Q. Where did the $75, 000 from [the] line of credit go?
A. We originally used some of it to start the actual start up costs of the business. We also used our own credit cards which we both paid off and we made monthly payments. As the business progress[ed] it was not bringing in the income it was supposed to be bringing in at the end of the month or whatever point of the month I remember Ms. Ortuso would say we need to do more and she ...

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