SCOTT FISHBONE VS. CHASE PARTNERS, LLC (L-2283-12, ESSEX COUNTY AND STATEWIDE) ( 2019 )

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the
internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-1394-17T1
SCOTT FISHBONE,
Plaintiff-Appellant,
v.
CHASE PARTNERS, LLC and
CLARK I. HAMILTON,
Defendants-Respondents.
Argued November 28, 2018 – Decided February 5, 2019
Before Judges Koblitz, Currier, and Mayer.
On appeal from Superior Court of New Jersey, Law
Division, Essex County, Docket No. L-2283-12.
Jay J. Rice argued the cause for appellant (Nagel Rice,
LLP, attorneys; Jay J. Rice, of counsel and on the brief;
Randee M. Matloff, on the briefs).
Tod S. Chasin argued the cause for respondents (Budd
Larner, PC, attorneys; James B. Daniels and Tod S.
Chasin, on the brief).
PER CURIAM
In this matter, before this court for a second time after a remand and bench
trial, plaintiff Scott Fishbone appeals from the May 22, 2017 final judgment
dismissing his complaint. We affirm.
Plaintiff was an employee of Advance Residential Communities, Inc.
(ARC). In 2003, ARC entered a joint venture agreement to develop residential
properties with defendants Chase Partners, LLC and Clark Hamilton.
Thereafter, the parties executed an incentive compensation agreement (incentive
agreement). The incentive agreement entitled plaintiff to compensation for his
role in the joint venture's projects if: 1) a "capital event" occurred; or 2) ARC
and defendants terminated the joint venture agreement and the termination
resulted in a "distribution" to defendants.
In 2010, ARC and defendants terminated their joint venture agreement.
As part of the settlement of the ensuing litigation, defendants transferred their
interest in a residential property located in Union, New Jersey to ARC . All
parties then dismissed their respective claims. Defendants received $167,600
"[i]n exchange for [Hamilton's and Chase's] execution of this Agreement and the
Transfer Agreement."
Upon learning of the payment, plaintiff requested compensation for the
Union property under the incentive agreement, which defendants denied. As a
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result, plaintiff filed a complaint, alleging breach of the incentive agreement.
The trial court granted summary judgment to plaintiff, finding he was entitled
to incentive compensation because defendants received a "distribution" from the
2010 settlement agreement. On appeal, we reversed and remanded, finding an
issue of fact due to the ambiguity of the term "distribution" in the incentive
agreement. See Fishbone v. Chase Partners, LLC, No. A-4003-13 (App. Div.
Feb. 26, 2016).
On remand, after conducting a bench trial, the trial judge found the
$167,600 defendants received from the 2010 settlement agreement was not a
distribution, precluding plaintiff from collecting incentive compensation. The
judge assessed the parties' intent of the term "distribution" at the time of their
contract, and found the parties "understood the term distribution in the context
of such an incentive compensation arrangement to mean not merely any payment
received by Hamilton . . . but payment representing Hamilton's share . . . of net
profits from a project." As the Union property generated no net profits a t the
time of the 2010 settlement agreement, the trial court concluded no distribution
occurred and, therefore, plaintiff was not entitled to incentive compensation.
On appeal, plaintiff argues the trial court erred in: 1) its interpretation of
"distribution"; 2) failing to shift the burden of persuasion to defendants to show
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the $167,600 was not a distribution; and 3) not holding an ambiguous term
against the party who insisted on its inclusion, the doctrine of contra
proferentem.
Our review of a trial court's fact-finding in a non-jury case is limited.
Seidman v. Clifton Sav. Bank, S.L.A., 205 N.J. 150, 169 (2011). "The general
rule is that findings by the trial court are binding on appeal when supported by
adequate, substantial, credible evidence. Deference is especially appropriate
when the evidence is largely testimonial and involves questions of credibility. "
Ibid. (quoting Cesare v. Cesare, 154 N.J. 394, 411-12 (1998)). This court
"should not disturb the factual findings and legal conclusions of the trial judge
unless [we are] convinced that they are so manifestly unsupported by or
inconsistent with the competent, relevant and reasonably credible evidence as to
offend the interests of justice." Ibid. (quoting Cesare, 154 N.J. at 412).
The parties disputed the interpretation of "distribution." As a result, the
trial judge conducted a bench trial, assessed the parties' credibility, and issued a
comprehensive oral decision on May 9, 2017.
The trial court reasoned that plaintiff had to demonstrate two elements to
"carry his burden of establishing entitlement to the $125,000.00 [incentive
agreement]." Plaintiff had to show "there was a 'capital event' or 'termination
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of the contractual relationship between ARC and Hamilton,'" and, "as a result of
either such event . . . or transaction, there was a 'distribution' to Hamilton from
ARC" for the Union project.
Although the trial judge determined plaintiff satisfied the first element as
ARC and Hamilton terminated their contractual relationship with the 2010
settlement agreement, he failed to establish the second prong because the
$167,600 paid to defendants in the 2010 settlement agreement was not a
"distribution" under the incentive agreement.
In his analysis, the trial judge found "the payment of $167,600 must be
understood in the context of a settlement in which the parties globally release
their claims," as "[t]he termination of Hamilton's interest in the Union [project]
was one component of the parties' settlement agreement." The other component
was the dismissal of the claims and counterclaims Hamilton and ARC had
lodged against each other. Therefore, the judge held,
Given the nature, purpose, and explicit text of the
agreement, it is certainly not possible to conclude that
the sole function served by the $167,600 payment was
a payment . . . for the transfer of the membership
interests, nor is it possible to determine if even a
specific quantifiable portion of the payment is
attributable solely to the membership interest in [the]
Union [project].
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Although the - - the amount itself, $167,600,
appears precise . . . [plaintiff] has not supplied any
evidence for that precision that would support his
claim, such as a calculated value of Hamilton's share of
Union's profits. The [c]ourt finds the record permits no
conclusion, other than the amount was simply a
component of the overall settlement.
Thus, the trial court reasoned the sum Hamilton received in the 2010
settlement "was a nominal payment given in consideration of the parties'
agreement to terminate what at the time was an unsuccessful project as to which
the parties have traded allegations of mismanagement and breach." As such, the
2010 settlement could not be a distribution because plaintiff and defendants
"understood the term distribution in the context of such an incentive
compensation arrangement to mean not merely any payment received by
Hamilton . . . but payment representing Hamilton's share . . . of net profits from
a project." Specifically, the court found,
Hamilton intended and Fishbone understood that
the incentive bonus compensation . . . [was] offered to
reward extraordinary performance above and beyond
that required for ARC salary and bonus participation
and to be paid upon a closing or comparable
transactional event generating profits for the venture
which Hamilton received as his percentage share.
Hamilton would pay these amounts from
Hamilton's share of such profits. Although the terms
on which Hamilton agreed to pay incentive
compensation bonuses to Fishbone changed in certain
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ways . . . the [c]ourt finds Hamilton always intended
and Fishbone understood these payments would be
made from Hamilton's share of profits resulting from a
successful project.
Since the settlement was not Hamilton's net profit, "as there were no profits on
the Union project to distribute," plaintiff was not entitled to a distribution.
The trial court also addressed plaintiff's argument regarding the doctrine
of contra proferentem, noting the doctrine is the "rule of interpretation of the
last resort." As the doctrine is only used if a court is unable to determine the
contracting parties' intent through the agreement's text or intrinsic evidence and
if there is unequal bargaining power between the parties, the judge concluded it
was inapplicable in this matter as there was "sufficient" extrinsic evidence to
determine the parties' intent when contracting, and "the parties were not of
unequal bargaining power."
The trial court's cogent findings are supported by the evidence presented
in the bench trial. In a 2004 email exchange, Hamilton offered, and plaintiff
accepted, incentive compensation "upon [property] closings" and "on the basis
of value creation." Additionally, plaintiff expressed interest in executing an
incentive agreement to ensure defendants' "success" and wanted incentive
compensation for the "significant profits" he previously created on defendants'
behalf for other projects. As defendants did not profit from a successful Union
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project, the trial court correctly determined plaintiff was not entitled to incentive
compensation under the parties' agreement.
Plaintiff also contends the trial court erred by not applying the doctrine of
contra proferentem. We agree the doctrine was inapplicable under these
circumstances. If a court is unable to determine the meaning of a term in a
contract, it may utilize the doctrine and "adopt the meaning that is most
favorable to the non-drafting party." Pacifico v. Pacifico, 190 N.J. 258, 267
(2007) (citing 5 Corbin on Contracts § 24.27 (Perillo ed., rev. ed. 1998)). Here,
however, after reviewing the evidence, the trial court made findings as to the
parties' intent at the time of their contract as to the term "distribution."
Therefore, resort to the doctrine was unnecessary.
Affirmed.
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