LUCY F. DEMARCO v. J. GARFIELD DEMARCO

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-6573-05T36573-05T3

LUCY F. DEMARCO,

Plaintiff-Appellant,

v.

J. GARFIELD DEMARCO,

Defendant-Respondent.

 

Argued September 18, 2007 - Decided

Before Judges Skillman and Winkelstein.

On appeal from the Superior Court of New Jersey, Law Division, Atlantic County, L-2589-04.

Howard E. Drucks argued the cause for appellant (Cooper Levenson April Niedelman & Wagenheim, attorneys; D. Rebecca Higbee, on the brief).

Anne M. Patterson argued the cause for respondent (Riker Danzig Scherer Hyland & Perretti, attorneys; Ms. Patterson and Marc C. Groves, on the brief).

PER CURIAM

Following a bench trial, plaintiff appeals from a July 14, 2006, judgment that dismissed her complaint. We affirm.

Plaintiff is married to Mark DeMarco, the brother of defendant, J. Garfield DeMarco. Defendant, his brother, and their sister, Anna Papinchak, are one-third shareholders of a family-owned cranberry business known as A.R. DeMarco Enterprises, Inc. (ARD) and Chatsworth Cranberry Association, Inc. (Chatsworth), now known as ARD. In 1994, Mark DeMarco filed a lawsuit against defendant, his sister and others alleging acts of corporate misconduct. In August 1995, plaintiff filed a personal injury lawsuit against defendant, claiming that he assaulted her.

On September 14, 1995, defendant and Mark DeMarco agreed to settle Mark DeMarco's lawsuit. The agreement to settle was conditioned on defendant settling plaintiff's assault claim against him. Consequently, on October 3, 1995, plaintiff and defendant settled the assault claim. Under the terms of the settlement agreement, defendant agreed to pay plaintiff $40,000 annually through 2009. Defendant's attorney physically drafted the agreement, but he did so with input from plaintiff's attorney as to the terms and the language employed.

The settlement agreement includes a discharge clause that releases defendant's obligation to continue payments to plaintiff if two conditions are met:

[I]n the event at any time . . . (B) [plaintiff] or any person or entity holding record title to shares (of which [plaintiff] is the beneficial owner either directly or through a trust or any other entity) of the capital stock of either [ARD] or [Chatsworth] . . . institutes any action, lawsuit or claim (whether or not [defendant] is a party thereto) that actions taken by [defendant] prior to the date of this Agreement or that [defendant's] failure to take an action or actions prior to the date of this Agreement with respect to [ARD] and/or [Chatsworth] were improper in any respect, then, upon the occurrence of any such event, [defendant] shall be released from his obligation to make Annual Installments and [defendant's] obligation to pay Annual Installments shall be forever discharged.

Defendant invoked the discharge clause in April 2004, terminating his $40,000 per year payments to plaintiff, after Mark DeMarco filed a lawsuit in May 2003 in which he sued defendant, his sister, ARD, and other entities, seeking injunctive relief, an accounting and damages.

This lawsuit followed. Prior to trial, on April 14, 2005, plaintiff and defendant entered into the following stipulation:

Plaintiff Lucy F. DeMarco is the beneficiary of a testamentary trust set forth in a November 30, 2004 Will executed by plaintiff's husband, Mark A. DeMarco, creating a marital deduction trust. Therefore, the plaintiff is the owner of a beneficial interest in a trust which would receive the capital stock of either [ARD] or [Chatsworth] . . . as referred to 3(B) of the attached Settlement Agreement between the parties dated October 3, 1995. Mark A. DeMarco has been, at all relevant times, a "person or entity holding record title to shares (of which Lucy [DeMarco] is the beneficial owner either directly or through a trust or any other entity) of the capital stock of either [ARD] or [Chatsworth] . . ." as set forth in 3(B) of the attached Settlement Agreement between the parties dated October 3, 1995.

The only issues remaining in dispute are (1) whether the [2003 lawsuit] constitutes an "action, lawsuit or claim (whether or not Garfield [DeMarco] is a party thereto) that actions taken by Garfield [DeMarco] prior to the date of this Agreement or that Garfield [DeMarco]'s failure to take an action or actions prior to the date of this Agreement with respect to [ARD] and or [Chatsworth] were improper in any respect," as set forth in 3(B) of the attached Settlement Agreement between the parties dated October 3, 1995; and (2) whether the Court in interpreting the Agreement finds that the specific clause in question is enforceable against Lucy F. DeMarco.

The case was tried for three days before Judge Kane without a jury. The court issued a written opinion on June 28, 2006, which included the following findings:

Based upon the facts as set forth above, there is ample evidence in the record to indicate that the actions of Mark in filing the complaint . . . violated the prohibition as contemplated by the settlement agreement dated October 3, 1995.

It is important to step back and examine why and how the settlement agreement of October 3, 1995 came about. The purpose of the agreement was to draw a line in the sand which would be a financial [dis]incentive for Mark or Lucy to dredge up allegations of improper conduct against Garfield prior to the date of October 3, 1995 as it pertained to the running of the business. This settlement agreement, as drafted, did not prevent Garfield's brother Mark from raising these issues, but instead creatively asked Mark and Lucy to consider whether financially it would be worth it. Nothing in the agreement prevented the filing of a lawsuit; it simply made it monetarily disadvantageous to do so.

. . . .

In the context of litigation, the discharge provision was intended to apply to any use of pre-October 3, 1995 alleged misconduct by Garfield. In the "Mark" Complaint on May 20, 2005, he has alleged that Garfield's pre-October 3, 1995 conduct was improper.

The agreement was entered into between the parties after extensive negotiations. All concerned were represented by competent counsel who were all very familiar with the reason for the settlement agreement and the ends it hoped to achieve. Its language on its face is clear and encompasses not only claims for money damages but all claims or causes of action which would include conduct as alleged in the Mark litigation drawing into question the conduct of Garfield prior to the date of the settlement agreement. This is apparent in Mark's expert, Mr. Eagan's, affidavit dated November 3, 1995 wherein he indicates repeatedly that his current opinion and future trial testimony relies upon and incorporates the 1992-1995 IRS audit and alleged overspending by Garfield prior to October 3, 1995. In addition, Mark intends to use the conduct of Garfield in 1992 and 1993 to support his claim for injunctive relief wherein he is requesting that Garfield be removed as President of the family business.

The evidence confirms that in the context of litigation, the Discharge Provision was intended to apply to any use of pre-October 3, 1995 alleged misconduct by Garfield in support of Mark's "action, lawsuit or claim." The evidence regarding the intent of the parties also confirms that the Discharge Provision was not intended to constitute a confidentiality provision or to apply to any statements by Lucy outside of the context of litigation or another formal proceeding.

Therefore it is this Court's finding that the Complaint filed by Mark DeMarco on May 20, 2005 constituted an "action, lawsuit or claim" which triggered the Discharge Provision and effectively permitted Garfield to terminate any future payments to Lucy DeMarco.

On appeal, plaintiff claims the 2003 lawsuit did not trigger the discharge clause of her agreement with defendant; the 2003 lawsuit was not an "action, lawsuit or claim" for Garfield's pre-October 3, 1995 conduct; the discharge clause was an aleatory contract; the discharge clause was ambiguous; and the discharge clause results in a "retroactive forfeiture."

We have carefully reviewed these arguments in light of the record and the prevailing law. We find the arguments to be without sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(A), (E). We add only the following.

Plaintiff claims the discharge clause is not applicable to the 2003 lawsuit brought by her husband as she does not have the requisite interest in her husband's property that the clause requires. This position is contrary to her pre-trial stipulation in which she agreed to the requisite interest in her husband's shareholding. Her stipulation is binding. Kurak v. A.P. Green Refractories Co., 298 N.J. Super. 304, 325 (App. Div. 1997) (stipulations of fact are binding on the parties), certif. denied, 152 N.J. 10 (1997).

Plaintiff alleges the discharge clause was aleatory and void. She failed to raise that issue before the trial court and we decline to address it. Nieder v. Royal Indem. Ins. Co., 62 N.J. 229, 234 (1973) (issues not raised at trial will not be considered on appeal).

Plaintiff's primary argument is that the phrase "action, lawsuit, or claim" is limited to a claim for damages, not injunctive relief. The plain language of the discharge clause belies that argument. It makes no distinction between an action, claim or lawsuit for damages and one for injunctive or other relief, such as an accounting. For us to arrive at the conclusion plaintiff suggests would torture the contractual language. Stiefel v. Bayly Martin & Fay of Conn., Inc., 242 N.J. Super. 643, 651 (App. Div. 1990) (court will not torture contractual language to create ambiguity).

Finally, and significantly, we conclude that the credible evidence of record supports Judge Kane's conclusion that Mark DeMarco's 2003 lawsuit constituted an action, lawsuit or claim under the provisions of the discharge clause. The record is replete with examples of allegations in the 2003 lawsuit claiming improper actions by defendant that occurred prior to the settlement of the 1990s litigation. That evidence includes, but is not limited to, the May 26, 2003, certification of Mark DeMarco's accounting expert, Joseph Egan, alleging misconduct by defendant in the early 1990s; Mark DeMarco's May 26, 2003, certification, arguing that defendant's conduct with regard to an audit in the early 1990s was improper; and Mark DeMarco's attorney's June 26, 2003, certification, alleging defendant's improper use of ARD funds from 1992 through 1995. Judge Kane's findings that the discharge clause was violated are fully supported by credible evidence in the record. Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 484 (1974).

We affirm substantially for the reasons expressed by the trial judge in his written decision.

 

The court dismissed the lawsuit without prejudice; Mark DeMarco filed an amended complaint on May 10, 2004.

(continued)

(continued)

8

A-6573-05T3

October 4, 2007