ANTHONY MARRA, ETC. VS. MITCHELL T. BERLANTÂ (C-012067-11, SOMERSET 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NOT FOR PUBLICATION WITHOUT THE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-0149-15T3
ANTHONY MARRA, individually
and as a member of MARTINSVILLE
REALTY ASSOCIATES, LLC,
Plaintiff-Respondent/
Cross-Appellant,
v.
MITCHELL T. BERLANT, ROBERT D.
BERLANT, and MARTINSVILLE REALTY
ASSOCIATES, LLC,
Defendants-Appellants/
Cross-Respondents.
_____________________________________
Argued October 24, 2017 – Decided November 6, 2017
Before Judges Fasciale, Sumners and Moynihan.
On appeal from Superior Court of New Jersey,
Chancery Division, Somerset County, Docket No.
C-012067-11.
David P. Wadyka argued the cause for
appellants/cross-respondents (DiFrancesco,
Bateman, Kunzman, Davis, Lehrer & Flaum, PC,
attorneys; Mr. Wadyka, of counsel and on the
briefs; Allison L. Segal, on the briefs).
Matthew J. Lodge argued the cause for
respondent/cross-appellant (Carroll McNulty &
Kull LLC, attorneys; Mr. Lodge, of counsel and
on the briefs; Nicholas A. Vytell, on the
briefs).
PER CURIAM
These appeals reach us after a Chancery Division judge (the
judge) conducted a fifteen-day bench trial. Mitchell T. Berlant
(Mitchell), Robert D. Berlant (Robert), and Martinsville Realty
Associates, LLC (MRA) (collectively defendants) appeal from a
September 3, 2015 final judgment in favor of plaintiff Anthony
Marra, individually and as a member of MRA. Plaintiff cross-
appeals from the same judgment. We remand for recalculation of
the award after subtracting plaintiff's $10,000 capital
distribution plus related interest. We affirm in all other
respects.
Plaintiff pled the following causes of action: declaratory
judgment (Count One); removal of the Berlants from MRA (Count
Two); dissolution of MRA (Counts Three and Four); breach of
fiduciary duty (Count Five); breach of contract (Operating
Agreement) (Count Six); breach of contract (Loan Repayment
Agreement) (Count Seven); breach of the duty of good faith and
fair dealing (Count Eight); conversion (Count Nine); conspiracy
to commit conversion (Count Ten); fraudulent and negligent
misrepresentation (Count Eleven); conspiracy to commit fraud
(Count Twelve); promissory estoppel (Count Thirteen); unjust
2 A-0149-15T3
enrichment (Count Fourteen); and intentional infliction of
emotional distress (Count Fifteen). Defendants pled several
affirmative defenses, including laches and statute of limitations
(SOL).
Before the trial, defendants moved for summary judgment on
all counts except Count Seven. The motion judge granted their
motion solely as to Count Six holding plaintiff knew or should
have known, at the latest in 2004, that defendants had breached
the Operating Agreement, and therefore, plaintiff's claim was
filed outside of the six-year SOL. The motion judge issued a
lengthy written opinion further explaining the basis for his
ruling.
After the trial, the judge found that plaintiff owned fifty-
percent of MRA, which the judge did not dissolve. He also vacated
the grant of summary judgment entered by the motion judge on Count
Six. The judge found no evidence that plaintiff had reason to
believe that defendants had repudiated his interest in MRA. The
judge found that Mitchell had affirmed plaintiff's position as an
owner by executing two option agreements to purchase plaintiff's
interest and plaintiff continued to receive distributions. The
judge found defendants only repudiated plaintiff's ownership
interest in 2011 and plaintiff's claim was not barred by the SOL.
The judge entered a $794,673 judgment against Mitchell and
3 A-0149-15T3
Robert, which the judge reached by totaling $372,778 in capital,
$223,790 for fifty-percent of the equity, $35,500 for half of the
litigation costs paid by MRA, and $162,605 interest "on the
differential between Marra's capital account and the Berlants'
[capital] account over the years." The judge reconsidered his
interest calculation, but did not change the amount.
On the appeal, defendants argue the judge erred by finding
plaintiff was a fifty-percent owner of MRA; failing to apply the
appropriate SOL or doctrine of laches; and calculating plaintiff's
award. On the cross-appeal, plaintiff contends the judge
erroneously concluded the Revised Uniform Limited Liability
Company Act (RULLCA), N.J.S.A. 42:2C-1 to -94, was inapplicable,
and as a result, plaintiff seeks a remand for the judge to award
him fees.
Our standard of review requires deference to a judge's
findings "unless they are so wholly unsupportable as to result in
a denial of justice." Greenfield v. Dusseault, 60 N.J. Super.
436, 444 (App. Div.), aff'd o.b., 33 N.J. 78 (1960); see also Rova
Farms Resort, Inc. v. Inv'rs Ins. Co. of Am., 65 N.J. 474, 483-84
(1974). We review questions of law de novo. Greenfield, supra,
60 N.J. at 444.
4 A-0149-15T3
I.
We begin by addressing defendants' contention that the judge
erred by failing to apply the SOL or doctrine of laches. Although
not expressly stated in his written opinions, it appears the judge
found for plaintiff on Counts One, Two, Three, Four, Six and Seven.
Some of the Counts sought equitable relief and some sought money
damages.
We agree with the judge that the doctrine of laches does not
bar plaintiff's complaint. "Laches is an equitable doctrine,
operating as an affirmative defense that precludes relief when
there is an 'unexplainable and inexcusable delay' in exercising a
right, which results in prejudice to another party." Fox v.
Millman, 210 N.J. 401, 417-18 (2012) (quoting Cty. of Morris v.
Fauver, 153 N.J. 80, 105 (1998)). Our Supreme Court has found
laches to be "an equitable defense that may be interposed in the
absence of the [SOL]." Lavin v. Hackensack Bd. of Educ., 90 N.J.
145, 151 (1982).
The Court has explained that laches is "invoked to deny a
party enforcement of a known right when the party engages in an
inexcusable and unexplained delay in exercising that right to the
prejudice of the other party." Knorr v. Smeal, 178 N.J. 169, 180-
81 (2003). "Laches may only be enforced when the delaying party
had sufficient opportunity to assert the right in the proper forum
5 A-0149-15T3
and the prejudiced party acted in good faith believing that the
right had been abandoned." Id. at 181. "Our courts have long
recognized that laches is not governed by fixed time limits, but
instead relies on analysis of time constraints that 'are
characteristically flexible.'" Fox, supra, 210 N.J. at 418
(citation omitted) (quoting Lavin, supra, 90 N.J. at 151). Whether
laches applies "depends upon the facts of the particular case and
is a matter within the sound discretion of the trial court."
Mancini v. Twp. of Teaneck, 179 N.J. 425, 436 (2004) (quoting
Garrett v. Gen. Motors Corp., 844 F.2d 559, 562 (8th Cir.), cert.
denied, 488 U.S. 908, 109 S. Ct. 259, 102 L. Ed. 2d 248 (1988)).
In determining whether to apply laches, the court should
consider the length of the delay, the reasons for the delay, and
any changing circumstances of the parties during the delay.
Fauver, supra, 153 N.J. at 105. As to the delay, the court should
look to an analogous SOL, and laches applies where "a claim derived
from a statutory right had been lost through failure to make a
timely demand therefor." Fox, supra, 210 N.J. at 420 (citing
Lavin, supra, 90 N.J. at 152).
"The [SOL], by its express terms, applies only to actions at
law and may not be invoked as a defense against a claim exclusively
equitable." Farbenfabriken Bayer, A.G. v. Sterling Drug, Inc.,
197 F. Supp. 627, 629 (D.N.J. 1961), aff'd, 307 F.2d 210 (3d Cir.
6 A-0149-15T3
1962), cert. denied, 372 U.S. 929, 83 S. Ct. 872, 9 L. Ed. 2d 733
(1963). Contract claims have a six-year SOL. N.J.S.A. 2A:14-1.
The "discovery" doctrine "provides that in an appropriate case 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).
"Whether a particular cause of action is barred by a [SOL] is
determined by a judge" and is a determination of legal consequence.
Estate of Hainthaler v. Zurich Commercial Ins., 387 N.J. Super.
318, 325 (App. Div.), certif. denied, 188 N.J. 577 (2006). We
therefore owe no deference to the judge's decision and review de
novo. Ibid.
Defendants contend that the causes of action "appeared to
accrue in August 2001 when [p]laintiff signed documents indicating
he was not a member of MRA." Defendants argue that plaintiff knew
about his causes of action in September 2002, when he obtained
counsel and asked Mitchell to sign an amended operating agreement.
Defendants argue further that when Mitchell refused to sign,
plaintiff should have known that Mitchell did not believe plaintiff
was a member of MRA. According to defendants, plaintiff did not
receive a K-1 or distributions from MRA, which they maintain
"strongly suggest to a reasonable person that he was not considered
7 A-0149-15T3
by the Berlants to be a member of MRA."
The judge disagreed with defendants' position, finding:
The Berlants[] did not . . . manifest their
position that Marra was not an owner until
2011 when they stopped making monthly payments
to him . . . and Marra had no reason to believe
before then that the Berlants took the
position that he was merely a creditor. Even
at trial Mitchell was equivocal stating that
Marra could have become an owner if he
fulfilled certain obligations. This action
was timely filed within a few months after MRA
stopped paying Marra.
. . . .
There is no evidence that defendants
repudiated Marra's interest in MRA until 2011.
Moreover, during the six years beginning on
January 1, 2003, Mitchell affirmed Marra's
ownership interest when he executed . . . the
option[] agreements to acquire Marra's
interest. Similarly, J-41, undoubtedly
drafted by a Berlant or a Berlant employee,
affirms Marra's status as an owner . . . and
pursuant to that letter, dated December 15,
2005, MRA began disbursing $4[]000 a month to
Marra, all within the six-year period
commencing January 1, 2003. The court finds
that during 2003 and 2004 Mitchell assured
Marra that all was well with the project and
that the Berlants were not receiving
distributions either. Thus, the full trial
record establishes that during the '03-'04
period Marra had no reason to believe that
defendants were repudiating his interests in
MRA.
We conclude that there is sufficient evidence in the record
to support the judge's findings. Although plaintiff signed both
the August 31, 2001 letter and operating agreement removing him
8 A-0149-15T3
from ownership, he believed that it was a formality only to satisfy
the bank to obtain a loan, and Mitchell hand-wrote on the letter
that plaintiff was still a fifty-percent owner of MRA.
The record demonstrates plaintiff's first objectively
reasonable indication that he was not considered a member of MRA
occurred in the spring of 2011, when he stopped receiving his
monthly loan repayment checks, and when he received a series of
correspondence from Mitchell. He filed suit in August 2011, within
months of learning of the Berlants' position. Whether considering
his actions under the SOL or laches, plaintiff's actions were
reasonable.
II.
We reject defendants' contention that the judge erred by
finding plaintiff was a fifty-percent owner of MRA. Here, there
exists substantial credible evidence in the record to support the
judge's findings.
The judge referenced a December 2002 letter that Mitchell
sent to plaintiff with financial information regarding a MRA
project, finding "[i]t is the type of information that would be
provided to an owner." The judge also pointed to the June 2005
proposed option agreements, noting that "[o]ne does not enter into
an option to buy an owner's interest if the seller is not an owner;
these documents constitute Mitchell's acknowledgment in June 2005
9 A-0149-15T3
that Marra is an owner." The judge further noted plaintiff's
December 2005 letter, in which he recognized that plaintiff
granting the Berlants rights to manage the project would not have
made sense unless plaintiff had a stake in the company.
The judge continued:
The Berlants' position is that Marra is not
an owner because he failed to make required
contributions of dollars and effort to MRA.
The court rejects this position. There is no
letter, e-mail or other document or
corroborative evidence to establish that the
Berlants ever made a demand or even a polite
request of Marra to do anything regarding MRA
that he had not done. Mitchell was the
managing member and the court finds that he
preferred to control, without interference,
the construction, financing and operation of
MRA. The court notes, in this regard, that
money went into and out of MRA to and from
other Berlant entitles without adequate
explanation of the purpose of those
transactions. Indeed, there is not an invoice
or other objective record to establish the
actual cost of the office buildings
constructed by MRA under Berlant supervision.
The court finds that on some occasions the
Berlants used MRA as a bank for their other
entities, and on other occasions used other
entities as banks for MRA. Thus it suited
them to keep Marra uninvolved and at a
distance.
The Berlants also contend that they
eliminated Marra's ownership interest because
with Marra as a debtor they would be unable
to limit their debtor liability to several
guarantees instead of joint and several
guarantees. The court rejects this
contention. The Berlants were required to
10 A-0149-15T3
provide joint and several guarantees even
without Marra's participation as a debtor.
Furthermore, the New Jersey Limited Liability Company Act,
N.J.S.A. 42:2B-1 to -70, was in effect.1 The act addressed how an
LLC should address members who fail to comply with an operating
agreement:
An operating agreement may provide that
a member who fails to perform in accordance
with, or to comply with the terms and
conditions of, the operating agreement shall
be subject to specified penalties or specified
consequences, and at the time or upon the
happening of events specified in the operating
agreement, a member shall be subject to
specified penalties or specified
consequences.
[N.J.S.A. 42:2B-26.]
Similarly, N.J.S.A. 42:2B-33(c) stated:
An operating agreement may provide that
the limited liability company interest of any
member who fails to make any contribution that
he is obligated to make shall be subject to
specified penalties for, or specified
consequences of, such failure. Such penalty
or consequence may take the form of reducing
or eliminating the defaulting member's
proportionate interest in a limited liability
company, subordinating his limited liability
company interest to that of nondefaulting
members, a forced sale of his limited
liability company interest, forfeiture of his
limited liability company interest, the
lending by other members of the amount
necessary to meet his commitment, a fixing of
1
This section was repealed and replaced effective March 18,
2013, with the RULLCA, N.J.S.A. 42:2C-1 to -94.
11 A-0149-15T3
the value of his limited liability company
interest by appraisal or by formula and
redemption or sale of his limited liability
company interest at such value, or other
penalty or consequence.
None of the operating agreements here provided for any
consequences to members who did not perform as expected.
Defendants did not take any action against plaintiff, not even so
much as a letter asking for compliance, when plaintiff allegedly
failed to perform as they had expected. The lack of formal
appropriate documents further supports the judge's finding that
the Berlants liked having little oversight and no formal rules so
that they could operate MRA in concert with their other businesses
as it suited them.
III.
Defendants argue that the judge erred when he failed to credit
loans to MRA from Berlant-owned companies against plaintiff's
interest in MRA.
Defendants argue the judge failed to consider C-1, a document
marked after the trial concluded, which was a balance sheet for
MRA as of July 1, 2015, reflecting a balance due to other Berlant
entities totaling $454,265.
The judge rejected, as being credible, defendant's contention
that the Berlant entities loaned MRA $454,265 for expenses,
including the cost of litigation. He found:
12 A-0149-15T3
These loans are not credible. The court
addressed in its . . . opinion the manner in
which the Berlants moved money into and out
of their various entities in a process the
court now characterizes as a financial shell
game. The court also found that "[d]efendants
also mismanaged MRA's books and ignored
accounting standards, as catalogued by
Chodor." . . . The Berlants have no
credibility regarding the integrity and
reliability of their bookkeeping. Moreover,
defendants['] loan claims are an attempt to
supplement the trial record. For example, J-
56 is a collection of MR[A] balance sheets for
the period through December 31, 2012. C-1,
marked on July 15, 2015, adds a balance sheet
"as of July 1, 2015."
[(first alteration in original).]
The judge correctly rejected what C-1 purported to say.
Alternatively, defendants argue that even if the judge
properly excluded C-1 from admission into evidence, a balance
sheet dated November 5, 2014, which the judge considered, reflected
a balance due to Berlant entities totaling $195,765. Defendants
contend "there is no evidence to establish that the loans made to
MRA by other Berlant-owned entities were fictitious," and thus the
judge erred by failing to include the alleged loan amounts due
other entities.
There is sufficient evidence in the record to support the
judge's findings to the contrary. There is no indication that the
amounts on the balance sheets were actually "loans." Defendants
could have produced records showing a loan or invoice to
13 A-0149-15T3
corroborate the "loan." The Berlants testified on the subject,
but the judge found their testimony incredible, finding that
defendants were involved in a "financial shell game." Applying
our standard of review, we have no reason to disturb those
findings.
IV.
Defendants argue that the judge erred when he included
plaintiff's $10,000 capital contribution as part of the judgment
against them. We agree.
It is undisputed that plaintiff was required to make a $10,000
capital contribution. Plaintiff testified that he made this
contribution by issuing a check in the amount of $50,000 made
payable to Monogram, a Berlant-owned business. He claimed that
he sat with Mitchell, who showed him "various costs that were
due," and Mitchell told him the contribution he needed to make to
cover the costs. Plaintiff wrote the check to Monogram, but he
supplied no backup information because plaintiff "trusted"
Mitchell. Mitchell and Robert both testified that plaintiff did
not make the capital contribution.
In his July 2, 2015 opinion, the judge stated:
Plaintiff's initial capital contribution
consisted of the Conroy property and another
$10,000 contribution for a total of $442,648.
The court rejects plaintiff's contention that
the capital contribution was $513,000 because
14 A-0149-15T3
there is insufficient evidence to support it.
Plaintiff relies on his unilateral
calculations and a check drawn to Monogram, a
Berlant entity not related to MRA.
Plaintiff claimed that the capital contribution was included
in the check to Monogram. The judge found plaintiff's testimony
unsupported, but concluded that plaintiff made the $10,000 capital
contribution. We therefore conclude that this limited finding as
to the contribution is unsupported by the record and remand for a
recalculation of the judgment minus the $10,000 alleged capital
contribution.
V.
Defendants argue that the judge's purported award of $162,605
in prejudgment interest was "grossly excessive and constituted an
abuse of discretion." We conclude that the judge's award of
"interest" did not constitute "prejudgment interest."
The judge awarded "interest on the differential between
Marra's capital account and the Berlants' [capital] account over
the years." Plaintiff's expert, Lawrence Chodor (Chodor),
provided a report and explanation of how the court should calculate
the "interest" owed to plaintiff. A review of Chodor's testimony
shows that this amount constituted a measure of plaintiff's
damages, not an award on top of the damages to compensate plaintiff
for the loss of the use of his money. The judge did not refer to
15 A-0149-15T3
prejudgment interest.
Chodor calculated the interest from the date the Berlants
refinanced MRA's mortgage in December 2005 and paid themselves
$843,570, but did not pay plaintiff. He compared the capital
accounts of plaintiff and the defendants each year, then
"calculated the interest based on the rate of . . . the mortgage
at 5.875 that they had just refinanced." He further explained:
Well, part of my process . . . in doing
forensics is to determine the appropriate
interest rate. So, there's a lot of variables
that go into account. . . . [W]hat I could
do with that is I could look at the risks
associated with an unsecured loan to a highly
leveraged property, and I could utilize
various databases to come up with the risk
adjusted rate. And that would probably be
much higher than 5.875. I had a recent
refinancing here, so I just went with that. I
thought that was a conservative approach.
But, the difference is the bank at 5.875
is secured and has the property as collateral.
Mr. Marra doesn't have any collateral, so his
risk is higher. It would justify a higher
rate, but I went conservative, and I just used
the bank rate.
Chodor again explained that he only applied interest to the
spread between plaintiff's capital account and defendants' capital
account; had he applied interest to the entire balance, the total
interest would have been much higher.
In his July 2, 2015 opinion, the judge found:
16 A-0149-15T3
Chodor calculated interest based on the
excess of Marra's capital over Berlant[s']
capital. . . . But, Chodor's calculation of
Marra's capital included the loan balance of
$123,898. The parties' property contributions
were booked as loans to be interest free.
Interest will have to be recalculated based
on the differential capital excluding the loan
balance. Plaintiff's expert shall prepare an
amended interest calculation; defendant[s']
expert may respond to that calculation.
In his August 5, 2015 opinion, the judge noted Chodor's
interest calculation of $242,728, but found it was "flawed by the
inclusion of the balance of Marra's original contribution which
was to be without interest." The judge adjusted "Chodor's interest
amount by backing out of the interest calculation $123,898, the
balance of Marra's original capital contribution" and awarded
"interest on the differential between Marra's capital account and
the Berlants' [capital] account over the years." The judge did
this by calculating
the annual average of excess Marra capital for
the [ten]-year period shown on Chodor's
[calculation]. That average is: $375,339.
The court then divided $123,898 by the
average, which resulted in a ratio of 33%.
The court then reduced Chodor's interest
amount by 33%, leaving interest due to Marra
of $162,605. The court recognizes that its
interest adjustment is unsophisticated,
perhaps even naïve. It is, however,
rationally based on the evidence in the trial
record. Nevertheless, either party may submit
a recalculation of interest that excludes the
$123,898 interest-free capital. . . . In the
absence of a recalculation, judgment shall be
17 A-0149-15T3
entered in the amount of $632,068 + $162,605
= $794,673.
In his final opinion, dated August 18, 2015, the judge noted
that both parties submitted recalculations; plaintiff was "limited
to my instructions" but "defendants have exceeded them." He
rejected plaintiff's new calculations as "excessive." He kept the
interest at $162,605.
There was no indication in Chodor's testimony that this
"interest" was intended to be a "prejudgment interest" award. He
made no mention of prejudgment interest; nor would it have been
appropriate for an expert to testify to that, as the application
and rate of prejudgment interest is solely within the discretion
of the trial court. Musto v. Vidas, 333 N.J. Super. 52, 74 (App.
Div.), certif. denied, 165 N.J. 607 (2000). Moreover, defendants'
argument that the judge never gave any reason for awarding
prejudgment interest supports that conclusion: the judge never
gave any reason because he was not awarding prejudgment interest.
VI.
On the cross-appeal, plaintiff argues the judge erred by
concluding that the RULLCA was inapplicable. Plaintiff maintains
that the consequence of that conclusion deprived him of a counsel
fees award. We conclude that the judge erred in his conclusion,
but such error was harmless because plaintiff was not entitled to
18 A-0149-15T3
counsel fees under the RULLCA.
In 2011, LLCs were governed by the New Jersey Limited
Liability Company Act, N.J.S.A. 42:2B-1 to -70. The RULLCA became
effective March 18, 2013. L. 2012 c. 50 § 96. Before March 1,
2014, the RULLCA governed only an LLC formed on or after the
effective date of the act and LLCs choosing to amend their
operating agreements. N.J.S.A. 42:2C-91(a). However, "[o]n and
after March 1, 2014, this act governs all limited liability
companies." N.J.S.A. 42:2C-91(b). Pursuant to N.J.S.A. 42:2C-
90, "[t]his act does not affect an action commenced, proceeding
brought, or right accrued before this act takes effect." The
judge interpreted the statute, which is entitled "Savings clause,"
to mean that the RULLCA "does not govern the issues in this
litigation."
Plaintiff argues on appeal that the judge misinterpreted the
Savings clause in that savings clauses are "designed to preserve
a party's rights to pursue claims under a statute being repealed,
not to prevent them from asserting rights under the new statute".
Plaintiff relies on Parsippany Hills Assocs. v. Rent Leveling Bd.
of Parsippany-Troy Hills Twp., 194 N.J. Super. 34, 42-43 (App.
Div.) (citations omitted), certif. denied, 97 N.J. 643 (1984),
which states:
19 A-0149-15T3
In this State it is the general rule that
where a statute is repealed and there is no
saving clause or a general statute limiting
the effect of the repeal, the repealed
statute, in regard to its operative effect,
is considered as though it had never existed,
except as to matters and transactions passed
and closed. Furthermore, it is settled law
in this State that, unless vested rights are
involved, the law in effect at the time of the
disposition of the cause by an appellate court
governs, rather than the law in effect at the
time the cause was decided by the trial court.
If a statute has no savings clause, a person who brought an
action under the previous law would lose those rights, even though
an action had already been commenced. Ibid. We agree with
plaintiff that the Savings clause in the RULLCA was intended to
preserve rights that accrued under the former law, not extinguish
rights that the party may have gained by the passage of the new
law. The judge allowed plaintiff to amend his complaint without
objection to include a claim for relief under the RULLCA. The
RULLCA was in effect before the decision in this action. Thus,
the judge was obliged to apply the law in effect at the time of
the decision and consequently erred in finding that the RULLCA did
not apply.
Plaintiff believes, however, that he is entitled to counsel
fees under the RULLCA. Plaintiff makes that assertion relying on
N.J.S.A. 42:2C-48(c), which states:
20 A-0149-15T3
If the court determines that any party
to a proceeding brought under paragraph (4)
or (5) of subsection a. of this section has
acted vexatiously, or otherwise not in good
faith, it may in its discretion award
reasonable expenses, including counsel fees
incurred in connection with the action, to the
injured party or parties.
Defendants, on the other hand, contend that N.J.S.A. 42:2C-48(c)
is only applicable in cases of dissolution, which did not happen
here. We agree with defendants.
Article 7 of the RULLCA is entitled "Dissolution and Winding
up." The first part of Article 7, N.J.S.A. 42:2C-48, is entitled,
"Events causing dissolution." It states:
a. A limited liability company is dissolved,
and its activities shall be wound up, upon the
occurrence of any of the following:
. . . .
(4) on application by a member, the entry by
the Superior Court of an order dissolving the
company on the grounds that:
(a) the conduct of all or substantially
all of the company's activities is
unlawful; or
(b) it is not reasonably practicable to
carry on the company's activities in
conformity with one or both of the
certificate of formation and the
operating agreement; or
(5) on application by a member, the entry by
the Superior Court of an order dissolving the
company on the grounds that the managers or
those members in control of the company:
21 A-0149-15T3
(a) have acted, are acting, or will act
in a manner that is illegal or
fraudulent; or
(b) have acted or are acting in a manner
that is oppressive and was, is, or will
be directly harmful to the applicant.
[N.J.S.A. 42:2C-48(a).]
The judge did not dissolve the company, but rather, ordered
defendants to buy-out plaintiff's share. Thus, by its plain terms,
N.J.S.A. 42:2C-48(c) is inapplicable.
We conclude that the parties' remaining arguments are
"without sufficient merit to warrant discussion in a written
opinion." R. 2:11-3(e)(1)(E).
We remand for recalculation of the final award after
subtracting plaintiff's alleged $10,000 capital distribution plus
its related interest. We affirm in all other respects. We do not
retain jurisdiction.
22 A-0149-15T3