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Moschillo v. Jovanov

Superior Court of New Jersey, Appellate Division

November 18, 2013

MARK MOSCHILLO, Plaintiff-Respondent,
v.
CANDO JOVANOV and LINVAS CORPORATION, Defendants-Appellants.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued May 23, 2012

On appeal from Superior Court of New Jersey, Chancery Division, Passaic County, Docket No. C-116-08.

David J. Tencza argued the cause for appellants, (Walter J. Tencza, attorneys; Mr. Tencza, on the brief).

Peter R. Bray argued the cause for respondent (Bray & Bray, L.L.C., attorneys; Mr. Bray, on the brief).

Before Judges Fuentes, Graves, and Koblitz.

OPINION

FUENTES, P.J.A.D.

In this corporate dissolution case, defendant Cando Jovanov appeals from the order of the Chancery Division, General Equity Part, directing him to convey his interest in Linvas Corporation to plaintiff Mark Moschillo, and awarding plaintiff counsel fees incurred in connection with the prosecution of this case against defendant pursuant to N.J.S.A. 14A:12-7(10). We affirm.

Linvas Corporation operates a gentlemen's club located in Paterson, New Jersey, doing business as Sunrise Gentlemen's Club, (Sunrise). Plaintiff filed an action under N.J.S.A. 14A:12-7(1)(c) to involuntarily dissolve Jovanov's interest in Linvas, alleging the latter was crude, vulgar, and belligerent towards patrons and did not perform his fair share of managing the business. This is the second time this case has been before us on appeal.

In the first appeal, we provided the following summary of the legal issues and factual contentions the parties brought before the trial court, as well as the determination reached by the General Equity judge after a bench trial that prompted the appeal:

Plaintiff Mark Moschillo brought suit alleging oppressive conduct and endangerment under N.J.S.A. 14A:12-7 (Oppressed Shareholder Statute) and breach of fiduciary duty by defendants Cando Jovanov and Linvas Corporation . . ., regarding the business of Sunrise Gentlemen's Lounge . . . . Plaintiff requested that the trial court award him Jovanov's one-half interest in Linvas. Jovanov claimed that plaintiff was not a shareholder of Linvas, and that the documents purportedly bearing Jovanov's signature used by plaintiff at trial to prove plaintiff's one-half interest in the corporation were forged. After trial, the Chancery Court declined to decide the forgery issue and ordered Jovanov to buy out plaintiff for $70, 776, the money plaintiff invested in the company as well as a reasonable salary for his managing the company for five months.
[Moschillo v. Jovanov, Docket No. A-3500-09 (App. Div. Dec. 29, 2010), slip op. at 1-2 (Emphasis added).]

We identified the issues raised for our review in that appeal as follows:

Defendants appealed, disputing only the amount of money the court awarded plaintiff, and repeating the claim that the documents introduced by plaintiff were forgeries. Plaintiff cross-appealed, arguing that the court found all the facts in plaintiff's favor and yet denied plaintiff the relief he sought.

[Ibid.]

After carefully reviewing the evidence presented by the parties and applying prevailing legal standards, "we reverse[d] and remand[ed] for further proceedings." Id. at 2. We concluded the trial court did not sufficiently explain why it awarded plaintiff and his brother only five months of fees for being Sunrise's "hands-on, primary manager[s], " despite finding "the brothers had renovated and run the establishment for longer than that." Id. at 6-7.

We also disagreed with the trial court's decision to decline to decide the forgery issue (which was Jovanov's only defense to plaintiff's claims). Id. at 9. We noted that a determination of this issue was crucial because if the documents were forged, plaintiff would not have standing to bring an action under N.J.S.A. 14A:12-7(2). Defendant's forgery claim was also relevant to the question of counsel fees because "[i]f, as the court implies, Jovanov has perpetrated a fraud on the court, then plaintiff should have been awarded legal fees, as the entirety of Jovanov's defense, which necessitated prolonged litigation, was completely manufactured." Id. at 10.

We thus remanded for the trial court "to determine whether or not the documents in question were forged." Id. at 11. The appropriate remedy would depend on how the court ruled on this issue. If the documents were forged, plaintiff was not entitled to any relief. We also emphasized, however, that even if the court found plaintiff forged the documents, Jovanov would still not be entitled to any affirmative relief because he did not prosecute a counterclaim[1] against plaintiff. Id. at 11.

On the other hand, if the court found the documents were valid, "it should then consider whether or not to grant the relief sought by plaintiff, including a buy-out of Jovanov's share of the business at the value presented by plaintiff's expert, should the court find that expert testimony reliable." Ibid.

Following our remand, the trial court reviewed the evidence presented at trial and did not find any "competent [or] credible evidence to question the signatures on all of the relevant documents that were identified as those of Mr. Jovanov." Believing that it had implicitly made this credibility finding the first time around, the Chancery Division emphatically stated: "Perhaps this Court's trial decision was too polite. So that it is clear, this Court found nothing credible in Mr. Jovanov's testimony with regard to the status of his signatures."

Despite its emphatic acknowledgment of defendant's fraud, the trial court continued to have serious reservations about the practical propriety of permitting plaintiff to "buy out" defendant's business interest. The court's misgivings in this respect are reflected in the following excerpt for its letter-opinion dated April 25, 2011:

As this is a Court of Equity, it would be unconscionable for this Court to allow the plaintiff to buy out the defendant's interest in the business when the defendant continues to own and live in the building upon the property which this business operates. This Court would simply be permitting an untenable situation to fester, creating additional litigation for the plaintiff as well as the landlord tenant court and potential other parties.

Plaintiff moved for reconsideration following this decision. The court heard argument from counsel on May 27, 2011, and made the following decision in its letter-opinion dated July 22, 2011:

As a matter of fact and law, because the Court found that the documents were not forged, it would be inequitable to not grant the relief plaintiff seeks. Therefore, consistent with the Appellate Division's ruling, the Court will grant the relief plaintiff seeks. If issues arise between the parties, they are free to take any disputes to the landlord tenant court. This Court should not stand in the way of the parties bargained for rights, or try to change the circumstances that the parties now find themselves. It is the parties who created the business relationship and that included the tenancy.
. . . .
Plaintiff's arguments concerning the payment for management services do not convince this Court that it used a palpably incorrect or irrational basis when deciding this issue in its prior opinion. In saying this, Plaintiff has failed to present sufficient proofs to satisfy the standard expressed under the rules for granting reconsideration as to the issue of management fees. Plaintiff has failed to provide any new evidence, or alert the Court to an error made in fact or law, that would demonstrate that the Court was irrational or failed to understand the evidence at hand in ordering that plaintiff only receive $17, 500.00 representing services and management fees rendered by the plaintiff Moschillo before he acquired his shares in the business.
. . . .
Therefore, the Court will not modify its ruling as to the management fees awarded
. . . .

The final order entered on July 25, 2011, directed all interest in Linvas Corporation held by Jovanov "transferred" to plaintiff "without the necessity of executing documents in connection therewith." The court also entered final judgment against Jovanov in the amount of $124, 633.62.

In this appeal, defendant argues the trial court erred in reaching these decisions because plaintiff did not prove he had previously acquired a shareholder interest in Linvas Corporation; plaintiff is not entitled to the relief granted by the court because he did not prove he was an "oppressed shareholder" within the meaning of N.J.S.A. 14A:12-7(1)(c); and the trial court abused its discretionary authority to award plaintiff counsel fees under N.J.S.A. 14A:12-7(10) because plaintiff did not prove defendant acted "arbitrarily, vexatiously, or otherwise not in good faith."

Plaintiff argues the record "overwhelmingly" supports the trial judge's findings that defendant acted against plaintiff oppressively and unfairly, as those terms are ordinarily understood and applied in a corporate dissolution action brought pursuant to N.J.S.A. 14A:12-7(1)(c). Under these circumstances, plaintiff also argues the trial judge properly exercised her discretionary authority under N.J.S.A. 14A:12-7(10) to award plaintiff counsel fees incurred in connection with this action.

We review the factual findings of the trial court under a sufficiency of the evidence standard. Our role is limited to determining whether there is sufficient, credible evidence in the record supporting the findings of the trial court. Rova Farms Resort, Inc. v. Investors Ins. Co., 65 N.J. 474, 483-84 (1974). As appellate judges removed from the actual experience of a live trial, we are not in a position to judge the credibility of witnesses. State v. Locurto, 157 N.J. 463, 470 (1999). We do not "weigh the evidence, assess the credibility of the witnesses, or make conclusions about the evidence." State v. Barone, 147 N.J. 599, 615 (1998). However, "[a] trial court's interpretation of the law and the legal consequences that flow from established facts are not entitled to any special deference." Manalapan Realty v. Manalapan Twp. Comm., 140 N.J. 366, 378 (1995).

With these legal principles as backdrop, we are satisfied defendants' arguments lack sufficient merit to warrant extensive discussion in a written opinion. R. 2:11-3(e)(1)(E). Here, the trial judge's findings of fact based on her credibility determination of Jovanov's testimony with regard to the status of his signatures are supported by the record and her conclusion based thereon is unassailable. There is no question the evidence supports the court's conclusion finding plaintiff is a minority shareholder and Jovanov's actions amounted to oppressive and unfair conduct under N.J.S.A. 14A:12-7(1)(c). Bonavita v. Corbo, 300 N.J.Super. 179, 188 (App. Div. 1996).

Defendant's arguments attacking the court's award to plaintiff of counsel fees incurred in connection with the prosecution of this case against defendant pursuant to N.J.S.A. 14A:12-7(10) are equally unavailing. We discern no basis to conclude the trial judge misused her discretionary authority in this respect. We thus affirm substantially for the reasons expressed by the trial court in its letter-opinion dated July 22, 2011.

Affirmed.


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