RANJIT BENIPAL VS. TRI-STATE PETRO, INC. (C-000060-17, MERCER COUNTY AND STATEWIDE)

NOT FOR PUBLICATION WITHOUT THE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-0894-17T3
RANJIT BENIPAL, DIWAN
BENIPAL, BHAGWAN SINGH
and SUBHAN SINGH,
Plaintiffs-Appellants,
v.
TRI-STATE PETRO, INC. and
AMAR GILL,
Defendants-Respondents.
Argued October 29, 2018 – Decided January 4, 2019
Before Judges Messano, Gooden Brown and Rose.
On appeal from Superior Court of New Jersey,
Chancery Division, Mercer County, Docket No. C-
000060-17.
Michael L. Kichline argued the cause for appellants
(Dechert, LLP, attorneys; Michael L. Kichline, on the
briefs).
Jerrold S. Kulback argued the cause for respondents
(Archer & Greiner, PC, attorneys; Stephen M. Packman
and Jerrold S. Kulback, on the brief).
PER CURIAM
In this action to quiet title to investment property, and for fraud
surrounding its conveyance, plaintiffs appeal from a September 15, 2017
Chancery Division order granting defendants' motion to dismiss their complaint
with prejudice. For the reasons that follow, we vacate the order and remand the
matter for a Lopez hearing 1 to address fact-dependent and credibility-dependent
issues of equitable tolling.
Because the record will be developed further on remand, we need not
recite the facts fully or conclusively. We confine our review to the allegations
set forth in plaintiffs' complaint, treating those allegations as true and extending
to plaintiff all favorable inferences. Craig v. Suburban Cablevision, Inc., 140
N.J. 623, 625-26 (1995).
Sometime in 1994, 2 plaintiffs Ranjit Benipal, Diwan Benipal, Bhagwan
Singh, Subhan Singh, and their cousin, defendant Amar Gill, agreed to purchase
commercial real estate in West Windsor for $500,000 through G&B Business
Associates, Inc. (G&B), a jointly-owned entity. Plaintiffs collectively
1
Lopez v. Swyer, 62 N.J. 267, 275 (1973).
2
Plaintiffs' complaint, dated July 12, 2017, avers that the agreement was made
"[a]pproximately twenty-three years ago."
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contributed $250,000 and Gill solely contributed $250,000. The parties operated
a gas station on the property.
Instead of titling the property in G&B's name, however, Gill titled the
property in the name of defendant Tri-State Petro, Inc. (TSP), a company Gill
owned with his family. Pursuant to a deed dated January 24, 1994, and duly
recorded on February 9, 1994, TSP purchased the property from V.P. Realty
Company for $500,000.
For twenty-two years, Gill and his family handled G&B's operations,
finances, and "all paperwork connected with the [p]roperty." Accordingly, Gill
led plaintiffs to believe G&B owned the property. For example, in 2008, Gill
asked plaintiffs for their permission to list the property for sale. The property
was not, however, sold at that time.
Plaintiffs contend they did not discover that TSP owned the property until
June 2016. Thereafter, Gill and his family claimed they would "make things
right," but would need approximately one year to "fix" things. In an email dated
April 10, 2017, Gill acknowledged that the property should have been titled in
G&B's name, "as per [plaintiffs'] initial investment in the business."
Nonetheless, Gill failed to correct the title.
A-0894-17T3
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In July 2017, plaintiffs filed a two-count complaint, seeking to quiet title
against TSP and alleging fraud against Gill. Two months later, before filing an
answer, defendants filed a motion to dismiss the complaint, arguing plaintiffs'
claims were barred by the respective statutes of limitations and the statute of
frauds. Plaintiffs countered that the statutes of limitations should be tolled
through application of the discovery rule.
Following oral argument on September 15, 2017, the motion judge
determined plaintiffs could have discovered the deed was not titled in G&B's
name because it was duly recorded pursuant to New Jersey's recording statute,
N.J.S.A. 46:26A-1 to -12. Citing our Supreme Court's decision in Cox v. RKA
Corp., 164 N.J. 487 (2000), the motion judge reasoned that, because TSP's deed
was recorded, it had "the effect of putting all those with an interest in the
property on notice." Accordingly, the judge concluded plaintiffs' claims were
barred on statutes of limitations grounds, but did not consider defendants' statute
of frauds argument. This appeal followed.
On appeal, plaintiffs primarily contend that principles of equity justify
tolling the statutes of limitations to 2016, when plaintiffs first had reason to
know defendants caused them harm. In doing so, plaintiffs challenge the judge's
conclusion that they had constructive notice of TSP's deed pursuant to the
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recording statute. Plaintiffs contend the judge, at the very least, should have
conducted a Lopez hearing to determine whether they were entitled to the benefit
of the discovery rule. Because plaintiffs did not request a Lopez hearing before
the motion judge, we review the omission under the plain error standard. R.
2:10-2. We will not reverse unless plaintiffs show error clearly capable of
producing an unjust result. Ibid.3
We review an order granting a motion to dismiss de novo, following the
same standard employed by the motion court. Castello v. Wohler, 446 N.J.
Super. 1, 14 (App. Div. 2016). A motion to dismiss a complaint for failure to
state a cause of action must be denied if, affording plaintiffs the benefit of all
allegations and all favorable inferences, a cause of action has been set forth. R.
4:6-2(e); see Tisby v. Camden Cty. Corr. Facility., 448 N.J. Super. 241, 247
(App. Div. 2017). "Rule 4:6–2(e) motions to dismiss should be granted in 'only
the rarest [of] instances.'" Banco Popular N. Am. v. Gandi, 184 N.J. 161, 165
(2005) (alteration in original) (quoting Lieberman v. Port Auth. of N.Y. & N.J.,
132 N.J. 76, 79 (1993)).
3
In their reply brief, plaintiffs further contend the statute of frauds does not
apply to either of their claims, in response to the argument raised in defendants'
brief. See R. 2:6-5.
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"[O]ur inquiry is limited to examining the legal sufficiency of the facts
alleged on the face of the complaint." Printing Mart-Morristown v. Sharp Elecs.
Corp., 116 N.J. 739, 746 (1989). We search the complaint "in depth and with
liberality" to determine whether the basis for a cause of action may be found
even in an obscure statement of a claim; and opportunity should be given to
amend if necessary. Ibid. "Dismissal is appropriate only if the complaint states
no basis for relief and discovery would not provide one." J-M Mfg. Co. v.
Phillips & Cohen, LLP, 443 N.J. Super. 447, 453 (App. Div. 2015) (internal
quotation marks omitted).
We first consider plaintiffs' contention that the court should have applied
the discovery rule to toll the statutes of limitations for their quiet title and fraud
claims. See The Palisades At Fort Lee Condo. Ass'n, Inc. v. 100 Old Palisade,
LLC, 230 N.J. 427, 435 (2017). Pursuant to this rule, "a cause of action will be
held not to accrue until the injured party discovers, or by an exercise of
reasonable diligence and intelligence should have discovered that he may have
a basis for an actionable claim." Lopez v. Swyer, 62 N.J. 267, 272 (1973).
The Supreme Court in Lopez set forth the seminal principles of equitable
tolling of a statute of limitations, sometimes referred to as the "discovery rule."
Id. at 272-76. A plaintiff has the burden of proof in establishing the equitable
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grounds for the indulgence of the discovery rule. Id. at 276. The determination
is "highly fact-sensitive," Catena v. Raytheon Co., 447 N.J. Super. 43, 54 (App.
Div. 2016), varying "from case to case, and . . . from type of case to type of
case." Vispisiano v. Ashland Chemical Co., 107 N.J. 416, 434 (1987).
Here, when plaintiffs filed their complaint in July 2017, both causes of
action would have been time-barred, unless the statutes of limitations were
equitably tolled by the discovery rule. In particular, pursuant to N.J.S.A. 2A:14-
7, a quiet title claim is an "action at law for real estate[,]" which must be
commenced within twenty years after the cause of action accrues. Further,
pursuant to N.J.S.A. 2A:14-1, a fraud claim must be commenced within six years
after the cause of action accrues. See The Palisades At Fort Lee Condo. Ass'n,
Inc., 230 N.J. at 434. The key issue in determining whether those statutes should
have been tolled, is whether plaintiffs knew, or had sufficient reason to know,
they had been harmed by the alleged fraudulent actions and inactions of Gill,
their business partner and family member.
The trial court determined that the recording statute placed plaintiffs on
constructive notice of TSP's duly recorded deed. The relevant portion of that
act provides: "Any recorded document affecting the title to real property is,
from the time of recording, notice to all subsequent purchasers, mortgagees and
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judgment creditors of the execution of the document recorded and its co ntents."
N.J.S.A. 46:26A-12(a) (emphasis added). The statute is silent, however, as to
current owners of a property interest.
Accordingly, the plain language of N.J.S.A. 46:26A-12 has questionable
applicability here. Put another way, we are uncertain whether the plain terms of
the recording statute imputed constructive notice to plaintiffs where, as here,
Gill allegedly led plaintiffs to believe G&B owned the property. Arguably,
however, the statute might be relevant to plaintiffs' actions, or inactions,
following their investment in the property.
Consequently, extending to plaintiffs the benefit of all favorable
inferences set forth in their complaint, as we must, we conclude the record is not
fully developed surrounding Gill's purchase of the property and recording of the
deed in TSP's name. Further, the present record is incomplete as to when, and
under what circumstances, plaintiffs discovered that the property was not titled
in G&B's name. Discovery has not yet commenced in this matter and more
information is needed, for example, to shed light on G&B's ownership structure
and assets held since 1994. Despite plaintiffs' obvious complacency over the
years, it is not clear on the record before us that even a prudent investor would
have uncovered concealment of the property's true ownership.
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Given these and other uncertainties, we conclude that the most appropriate
course of action is to remand the matter for an evidentiary hearing under Lopez.
As the Court noted in Lopez, such a hearing is not always necessary, but
"[g]enerally the [knowledge] issue will not be resolved on affidavits or
depositions since demeanor may be an important factor where credibility is
significant." Lopez, 62 N.J. at 275. That rationale is even more applicable here,
where no answer has yet been filed, discovery has not yet commenced, and we
are limited in our review to the four corners of plaintiffs' complaint.
Accordingly, we discern that credibility is an issue that is best explore d at an
evidentiary hearing. For these reasons we conclude the motion judge's failure
to conduct a Lopez hearing was plain error, capable of producing an unjust
result, and we remand for that purpose. 4
As indicated above, the trial court did not reach defendants' statute of
frauds argument. In essence, defendants claim the statute in effect at the time
the property was purchased required an agreement in writing. N.J.S.A. 25:1-5(d)
4
We hasten to make clear we are not determining that plaintiffs' allegations
regarding the substance, as well as the timing of their knowledge, are credible.
Nor are we determining Gill acted fraudulently or harmed plaintiffs in any way.
We are simply affording plaintiffs, as we must, all reasonable inferences from
their complaint. Craig, 140 N.J. at 625.
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(amended 1996). Plaintiffs counter that the statute, as amended, permits either
a writing or proof of an oral agreement by clear and convincing evidence,
N.J.S.A. 25:1-13, and that Gill's April 8, 2017 email satisfies that requirement.
However, we decline to consider defendants' statute of frauds argument in
our opinion because the record before us is insufficient to determine its
applicability here. Facts might be developed at the Lopez hearing that are
relevant to whether and when the parties executed a writing in connection with
the property, whether or not the statute is applied retroactively.
In sum, the trial court's order dismissing the complaint is vacated without
prejudice, and the matter is remanded for an evidentiary hearing consistent with
this opinion. The trial court shall schedule a case management confer ence
within thirty days to plan the logistics of the evidentiary hearing, including
setting deadlines to file an answer and manage discovery as to the issues
addressed in this opinion.
Reversed and remanded. We do not retain jurisdiction.
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