Hasib, R. v. Choudhury, M. ( 2020 )

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NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
RUKHSANA HASIB, A/K/A : IN THE SUPERIOR COURT OF
RUKHSANA CHOUDHURY : PENNSYLVANIA
:
:
v. :
:
:
MAHMOOD CHOUDHURY :
: No. 2623 EDA 2019
Appellant :
Appeal from the Order Entered August 9, 2019
In the Court of Common Pleas of Bucks County Civil Division at No(s):
2010-60229-D-E-Q-R-Y
BEFORE: LAZARUS, J., KING, J., and STRASSBURGER, J.*
MEMORANDUM BY LAZARUS, J.: FILED DECEMBER 15, 2020
Mahmood Choudhury (Husband) appeals from the order, entered in the
Court of Common Pleas of Bucks County, following this Court’s June 10, 2019
decision reversing, in part, the trial court’s order distributing the marital
property between Husband and Appellee Rukhsana Hasib (Wife), and
remanding with instructions. After careful review, we affirm.
This case has a protracted procedural history and is before this Court
for the second time in two years. On January 26, 2010, Wife filed a complaint
in divorce. Following seven years of litigation, the parties appeared before a
master on July 12, 2017. The master issued a report and recommendation,
and Husband filed exceptions. The trial court scheduled an equitable
distribution hearing for January 9, 2018. The day before the hearing, Husband
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* Retired Senior Judge assigned to the Superior Court.
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sought a continuance, which the court denied. The hearing, presided over by
the Honorable James M. McMaster, proceeded as scheduled. Husband did not
appear.
On January 17, 2018, Judge McMaster entered a final decree in divorce
and an order distributing the parties’ marital property. On February 14, 2018,
Husband appealed to this Court, challenging various aspects of the equitable
distribution order, in particular the trial court’s redistribution of interests in
the parties’ family owned limited partnerships. These partnerships, created
for purposes of estate and tax planning, were set up with Husband as general
partner and Wife and adult children as limited partners. Husband challenged
the following language in Judge McMaster’s order:
[Wife] is awarded 50% of [Husband’s] 1% interest as General
Partner of Sovereign Realty Investments, LP, and the parties are
hereafter Co-General Partners, with equal rights, responsibilities,
duties and obligations.
[Wife] is awarded 50% of [Husband’s] 1% interest as General
Partner of Cabochon Properties, LP, and the parties are hereafter
Co-General Partners, with equal rights, responsibilities, duties and
obligations.
[Wife] is awarded [Husband’s] 1% interest as General Partner of
Orchards Industrial Land, LP, and shall be the sole General
Partner.
Order and Decree, 1/17/18, at ¶¶ 12, 13, 15 (emphasis added).1 Husband
argued the trial court erred or abused its discretion in removing him as General
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1 In addition, the trial court ordered the parties to complete the pending sale
of the property owned by Orchards Industrial Land, LP. The proceeds of the
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Partner and naming Wife as sole General Partner of Orchards Industrial Land,
LP, or in naming Wife co-General Partner of the other entities. This Court
agreed, concluding that the trial court overreached its authority in altering the
corporate structure.2 On June 10, 2019, we remanded the case with
instructions. See Hasib v. Choudhury, 2623 EDA 2020 (Pa. Super. filed
June 10, 2019) (unpublished memorandum) (citing 15 Pa.C.S.A. §§
6883(7)(i)-(iii), 8641(b)(1)-(4)).3 The Court stated:
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sale were to be distributed among the partners, with the partnership dissolved
after the sale. Hasib v. Choudhury, supra at 3-4. In May of 2018, Wife
filed a petition for contempt. The trial court found Husband in contempt for
the following: (1) misappropriating funds from the business accounts for
personal use; (2) delaying sale of the Orchards Industrial Land, LP property;
(3) testifying that he intended to reinvest the funds from the sale of the
property instead of redistributing the funds per the court’s equitable
distribution order; (4) failing to pay Wife for her buy-out of assets and interest
in marital home; (5) refusing to allow Wife to remove her personal property;
and (6) failing to pay attorney’s fees. Order, 7/19/18. The court’s remedy
was to give Wife sole control over the business accounts and the sale of the
property and distribution of proceeds. Id. at 3. The court also ordered
Husband to allow Wife to collect her property and to pay her the money owed.
Id. at 5-6.
2We have uncovered no case law or statute that allows a court to dissolve a
partnership or alter corporate structure to effectuate an equitable distribution
order.
3There are three statutory circumstances whereby an individual can properly
be dissociated from being a general partner:
(i) the individual dies;
(ii) a guardian for the individual is appointed, or
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None of the events or conditions described in this section are
instantly applicable. Accordingly, we find no statutory authority
for the trial court, in determining equitable distribution, to fashion
its own rules for the appointment of a co-general partner. While
we understand the trial court’s motives in attempting to
restructure the limited partnership agreements to ostensibly
provide a more secure and stable base for the ongoing business
activities of the partnership, ultimately, the trial court lacks the
authority to act in this manner. Therefore, we must reverse those
portions of the order that (1) appoints Hasib as co-general partner
in Sovereign Realty Investments, L.P. and Cabochon
Investments Florida, L.P., and which (2) dissociates Choudhury
as general partner of Orchards Industrial Land, L.P. and
replaces him with Hasib. Further, regarding paragraph 15 and
Orchards Industrial Land, L.P., we also reverse that portion of
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(iii) a court orders that the individual has otherwise become
incapable of performing the individual’s duties as a general
partner under this title or the partnership agreement.
15 Pa.C.S.A. § 8663(7)(i)-(iii). Section 8641(b)(1)-(4) describes the
statutory method of becoming a general partner, and admission as a general
partner after formation of a limited partnership:
(b) Admission after formation.—After formation of a limited
partnership, a person becomes a general partner:
(1) as provided in the partnership agreement;
(2) as the result of a transaction effective under Chapter 3
(relating to entity transactions);
(3) with the affirmative vote or consent of all the partners;
or
(4) under section 8681(a)(3)(ii) or (5) (relating to events
causing dissolution) following the dissociation of a limited
partnership’s last general partner.
15 Pa.C.S.A. § 8641(b)(1)-(4). See also supra, n.2.
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the order that directs Hasib, as the newly appointed
General Partner, to sell the 16-acre parcel of land held by
Orchards Industrial Land, L.P., and then to dissolve that
partnership. Because we have determined the trial court abused
its discretion in appointing Hasib as the sole General Partner of
Orchards Industrial Land, L.P., she cannot now legally fulfill those
duties. The effect of our decision on this issue is to return
the corporate structure of the three limited partnerships
involved in this matter to the status quo ante. . . .
Essentially, we have determined that the trial court
possessed the authority to reallocate the finances of the
parties to achieve a financial balance. However, the trial
court did not possess the authority to reallocate the
corporate power within the three Limited Partnerships.
Id. at *3-4 (emphasis added).4
Following this Court’s decision, the trial court held a conference on July
2, 2019, and directed the parties to file memoranda of law to address this
Court’s remand order. The parties filed their respective memoranda, and on
August 9, 2019, the trial court entered an amendment to the January 17, 2018
equitable distribution order. The court adopted Wife’s proposed order, which
reads:
AND NOW, this 9th day of August, 2019, upon consideration of the
parties[’] respective submissions of Memorand[a] to the [c]ourt
with respect to their respective interpretations of the effect of the
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4 We note that this Court referred to three partnerships. Husband states in
his appellate brief that the trial court’s orders correctly refer to four
partnerships: Sovereign Realty Investments, L.P., Cabochon Properties, L.P.,
Cabochon Investments Florida, L.P., and Orchards Industrial Land, L.P. It
appears this Court erroneously combined the two Cabochon entities. In the
August 9, 2019 Amendment to the January 17, 2018 Decree and Order, the
trial court refers to the four entities. See Order, 8/9/19. However, in its
November 6, 2019 opinion following remand, the trial court references three
entities: Sovereign Realty Investments, L.P., Cabochon Properties, L.P., and
Orchards Industrial Land, L.P. See Trial Court Opinion, 11/6/19, at 1.
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Superior Court of Pennsylvania’s June 10, 2019 [d]ecision entered
in the matter of Hasib v. Choudhury at docket 514 EDA 2018, it is
ORDERED and DECREED that:
1. Husband is reinstated as General Partner of Sovereign
Realty Investments, LP, Cabochon Properties, LP, Cabochon
Investments Florida, LP, and Orchards Industrial Land, LP.
2. The 16-acre parcel of land owned by Orchards
Industrial Land, LP shall continue to be sold with the
proceeds distributed as previously ordered.
3. All other terms and conditions of the January 17, 2018
Decree and Order shall remain in full force and effect,
unaltered in any way.
4. This Order does not supersede any Order entered by this
[c]ourt after the January 17, 2018 Decree and Order.
Amendment to January 17, 2018 Decree and Order, 8/9/19 (emphasis added).
On September 7, 2019, Husband filed this appeal followed by a court-
ordered Pa.R.A.P. 1925(b) concise statement of errors complained of on
appeal. He raises the following issues for our review:
1. Did the trial court err and abuse its discretion when it failed
to return the corporate structure of the partnerships owned
in part by the parties[] to the [s]tatus [q]uo [a]nte, and
specifically with regard to Husband’s responsibilities and
duties as the General Partner in violation of the Partnership
Agreements, applicable Pennsylvania law, and the Superior
Court’s June 10, 2019 [d]ecision?
2. Did the trial court err and abuse its discretion by ordering
the continued sale of a partnership asset by the parties as
minority partners and directing how the partnership should
distribute the proceeds of said sale in violation of the
Partnership Agreements, applicable Pennsylvania law, and
the Superior Court’s June 10, 2019 [d]ecision?
3. Did the trial court err and abuse its discretion by ordering
that no part of its Order was to supersede any order entered
by the trial court after the original January 17, 2018 Decree
and Order, although its subsequent order provided Wife
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continuing powers as general partner, sole control of the
sale of partnership assets owned in part by the parties[,]
and the business bank accounts of the other partnerships,
in violation of the Partnership Agreements, applicable
Pennsylvania law, and the Superior Court’s June 10, 2019
[d]ecision?
Appellant’s Brief, at 5-6. We address these claims as one. Our standard of
review is well settled:
We review a challenge to the trial court’s equitable distribution
scheme for an abuse of discretion. We do not lightly find an abuse
of discretion, which requires a showing of clear and convincing
evidence. We will not find an abuse of discretion unless the law
has been overridden or misapplied or the judgment exercised was
manifestly unreasonable, or the result of partiality, prejudice,
bias, or ill will, as shown by the evidence in the certified record.
When reviewing an award of equitable distribution, we measure
the circumstances of the case against the objective of effectuating
economic justice between the parties and achieving a just
determination of their property rights.
Hess v. Hess, 212 A.3d 520, 523 (Pa. Super. 2019) (citations and quotations
omitted).
Husband argues the trial court erred in failing to return the corporate
structure of the partnerships to the status quo ante,5 “specifically with regard
to Husband’s responsibilities as the General Partner in violation of the
Partnership Agreements, Pennsylvania [l]aw, and [this] Court’s June 10, 2019
[d]ecision.” Appellant’s Brief, at 19. Husband also claims the trial court’s
order did not specifically reinstate Wife as a limited partner and, therefore,
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5 The status quo ante is that “last actual, peaceable and lawful uncontested
status which preceded the pending controversy.” Commonwealth v.
Coward, 414 A.2d 91, 99 (Pa. 1980).
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Wife “continues to hold rights granted only to the General Partner pursuant to
the existing Partnership Agreements,” and is contrary to this Court’s remand
order. Id. at 24. Further, Husband argues that the court’s order directing
him to continue with the sale of the 16-acre parcel of land held by Orchards
was error. Finally, Husband claims the trial court’s order, directing that “all
other terms and conditions of the [e]quitable [d]istribution order shall remain
in full force and effect[,]” violated this Court’s remand order and was contrary
to the partnership agreements. Id. at 25. Each of these arguments is
meritless.
First, the trial court’s August 9, 2019 amended order clearly reinstated
Husband as General Partner of the partnerships—returning the partnerships
to the status quo ante, the original corporate structure. The trial court
complied with this Court’s remand order. At the November 19, 2019 hearing
on Husband’s application for stay pending appeal, the trial court made it clear
that Husband is “the sole general partner[.]” N.T. Stay Hearing, 11/19/19, at
50. Despite Husband’s insistence that Wife retains General Partner powers,
she does not.
This Court’s remand order also reversed that portion of the trial court’s
order directing Wife to sell the 16-acre parcel of land held by Orchards, as
Wife was not the General Partner. Our order, however, did not preclude the
trial court from directing Husband, as the General Partner, to “continue the
sale” of the property in order to effectuate the equitable distribution of the
parties’ marital property. Notably, prior to entry of the divorce decree,
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Husband had signed the agreement of sale with respect to that property. As
Wife points out, Husband does not actually object to the sale, and Husband
acknowledged this at the stay hearing.6 Rather, Husband objects to the
direction that the proceeds of the sale be used to effectuate the equitable
distribution order. Husband, as General Partner, believes it should be in his
discretion to reinvest 100% of the proceeds (the sale price is $7.2 million) as
he deems fit. However, allowing Husband to solely control marital property
would defeat the purpose and spirit of equitable distribution law—to effectuate
economic justice between the parties and insure a fair and just determination
of their property rights. See 23 Pa.C.S.A. § 3502; Isralsky v. Isralsky, 824
A.2d 1178 (Pa. Super. 2003); see also 23 Pa.C.S.A. § 3502(e)(4) (“If, at any
time, a party has failed to comply with an order of equitable distribution, as
provided for in this chapter or with the terms of an agreement as entered into
between the parties, after hearing, the court may, in addition to any other
remedy available under this part, in order to effect compliance with its order:
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6 At the hearing, Husband testified as follows:
Q: And so would it be fair to say that your issue is not with the
sale of the property? Would it be fair to say that your concern is
not with the sale of the property?
A: No, not at all, because we have been trying to sell it for [a]
long time.
N.T. Stay Hearing, 11/19/19, at 20.
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order and direct the transfer or sale of any property required in order
to comply with the court's order[.]”) (emphasis added).
Husband claims that his duties and responsibilities as General Partner
take precedence over his responsibilities as Husband and limit the way the
proceeds can be distributed. Id. at 24. Husband’s position is that this Court
“ordered it is [his] right and [his] decision to do what happens [sic] with the
proceeds[.]” N.T. Stay Hearing, supra at 22. That was not what our remand
order stated.
The trial court understood this Court’s order, and amended its order to
comply. The court made clear:
The Superior Court held that we abused our discretion by
restructuring the Partnership regarding the position of General
Partner and remanded the case. The Superior Court reversed
provisions that (1) appointed Wife as Co-General Partner in two
of the partnerships, (2) dissociated Husband as General Partner
of Orchards Industrial Lands, L.P., and appointed Wife as General
Partner, and (3) [] directed Wife to use her newly granted General
Partnership position to sell the 16[-] acre parcel of land owned by
Orchards Industrial Land, L.P., and then to dissolve that
partnership.
Trial Court Opinion, 11/6/19, at 1-2. At the stay hearing, the court again
clarified:
So the way the Order is right now, sir, when and if this settlement
takes place, and you’re obligated to do everything you can to
make it take place, whether that means granting an extension or
not granting [an] extension, you have the power to make that
decision, but when and if the settlement takes place, after the
time of settlement that money will come into the . . . limited
partnership account and then my [o]rder, unless it’s changed, will
require you to then distribute that in the fashion that I’ve told you.
[W]hen it comes to Orchards, which is an issue of sale, somebody
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has to make the business decision as to whether or not to grant
an extension of time [for settlement]. Prior to the Superior Court’s
decision, that had to be done jointly. Now [Husband] has the sole
ability to do that. That’s a business decision. As far as the
distribution is concerned, that’s not something he can individually
make.
Id. at 41-42, 51-52. Husband’s argument that the trial court’s order
contravenes our remand order is meritless.
Moreover, Husband cannot hide behind a partnership agreement,
particularly here, where the notes of testimony indicate the limited partnership
agreement for Orchards Industrial Land Associates was admitted into evidence
as H-1, see id., at 23, but was not included in the certified record on appeal.
This Court may review and consider only items that have been duly certified
in the record on appeal. Pa.R.A.P.1921. “For purposes of appellate review,
what is not of record does not exist.” Frank v. Frank, 587 A.2d 340, 343
(Pa. Super. 1991). See also Rosselli v. Rosselli, 750 A.3d 355 (Pa. Super.
2000) (same). The responsibility of ensuring that the transmitted record is
complete rests squarely upon the appellant, not the appellate courts.
Pa.R.A.P. 1931. Husband is entitled to no relief.
It is quite clear to this Court that Judge McMaster understood our
remand order. Judge McMaster’s order requires the net sale proceeds to be
distributed to the partners in proportion to their ownership interests as set
forth in the January 17, 2018 decree and order. That provision “does not
affect the structure or power of the Partnership[;] it merely is subjecting this
asset to equitable distribution.” Trial Court Opinion, supra at 4. See Buckl
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v. Buckl, 542 A.2d 65 (Pa. Super. 1988) (partnership interest is marital
property and is subject to equitable distribution). We find no error or abuse
of discretion. Hess, supra.
Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 12/15/2020
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