DEBARON ASSOCIATES v. BARBARA R. VAN SLOOTEN

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

 

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

DEBARON ASSOCIATES (a Partnership)

and RONALD A. DURANTE,

Plaintiffs-Appellants,

v.

BARBARA R. VAN SLOOTEN and

DEBRA S. SCHEIBEL,

Defendants-Respondents.

____________________________________________

January 23, 2014

 

Argued December 2, 2013 - Decided

 

Before Judges Kennedy and Guadagno.

 

On appeal from the Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-34-10.

 

William J. Pinilis argued the cause for appellants (PinilisHalpern, LLP, attorneys; Mr. Pinilis, on the brief).

 

Frank Holahan argued the cause for respondent Barbara R. Van Slooten (McElroy, Deutsch, Mulvaney & Carpenter, LLP, attorneys; Mr. Holahan, on the brief).

 

Respondent Debra S. Scheibel has not filed a brief.

 

 

 

PER CURIAM

Ronald A. Durante appeals from portions of an April 30, 2012 Law Division order holding him in contempt of an order entered August 4, 2011, and compelling him to pay certain counsel fees and costs. Durante also appeals from two orders entered May 18, 2012, ordering him to pay $14,264.72 to DeBaRon1 as reimbursement for payments made to Botta & Associates and Hacker Murphy, LLP, and $6,279.30 to McElroy, Deutsch, Mulvaney & Carpenter, counsel for respondent Barbara Van Slooten. As the record is completely devoid of any findings of fact by the Law Division judge establishing contumacious behavior by Durante, we vacate the three orders and remand for an evidentiary hearing and for findings of fact and conclusions of law pursuant to Rule 1:7-4(a).

I.

We glean the following facts from the limited record before us and from our 2012 opinion affirming the judgment appointing a receiver for DeBaRon and ordering its dissolution. See DeBaRon Assocs. v. Van Slooten, No. A-6209-10 (App. Div. June 28, 2012).

Ronald Durante, Debra Durante Scheibel, and Barbara Van Slooten are the children of John and Helen Durante. In 1977, as part of John Durante's estate planning, he formed a partnership, DeBaRon Associates, to develop and manage real estate. He transferred title to his real estate assets to the partnership, and made his three children equal one-third partners. Although not a named partner, John Durante controlled and managed DeBaRon until his death in 1999.

At the time of [John] Durante's death, the partnership owned twenty-three condominium units and one commercial property in Ramsey, New Jersey, and four commercial properties in Albany, New York. The partnership also owned property in Lake George, New York, consisting of a vacant lot, a tennis court lot, a building lot with a large dock (the Lake George building lot), and two small boathouse docks (the Lake George boathouse docks).

 

The Lake George building lot abuts the Durante family home, which the parties jointly inherited after their father died. Because [John] Durante wanted Scheibel and her husband to have the building lot, in 1989 he assisted, albeit unsuccessfully, in their application to local zoning and planning boards for approval to build a house on the lot. [Ronald] admitted in his deposition that his father told him about the application and that his father said "[h]e would like to get a house approved for the lot so that [Scheibel] could have a house[,]" and he "was making peace as a father, so that was his way of working out the long-term peace of the family."

 

In October 1984, the parties signed an Amended and Restated Partnership Agreement (the partnership agreement). Article III states that the partnership's purpose is to

 

acquire, own, mortgage, develop, improve, maintain, lease and sell real and personal property, to invest in partnerships, corporations and other entities which may be engaged in such activities, and to do such other business as the partners may determine from time to time and which is allowed by law.

 

Article IV provides that the partnership's term "shall commence on the date of this agreement and shall continue until terminated as hereinafter provided." Article XI provides, in pertinent part, that "[t]he partnership may be dissolved upon the vote of all of the partners," and establishes the procedures for such voluntary liquidation.

 

After [John] Durante's death, Scheibel advised [Ronald] and Van Slooten that she wanted to withdraw as a partner and have her partnership interest purchased. The parties consulted the partnership's accountant, Tony Torso, to determine how to dissolve the partnership. Torso advised that they had to wait five years in order to avoid negative tax consequences, and provided a dissolution plan. The parties agreed at that time to dissolve the partnership in five years.

 

[Ronald] later refused to dissolve the partnership. He also refused to conduct any partnership business or participate in any partnership matters unless defendants agreed to give him the Lake George boathouse docks, as well as their interest in the Durante family home. Also, except for a partnership meeting in October 2007, beginning in 2006, [Ronald] refused to attend any partnership meetings. The parties could not unanimously agree on any partnership matters, as required by Article V of the partnership agreement . . . . In May 2006, defendants advised [Ronald] that they would seek judicial dissolution of the partnership.

 

In addition, the partnership had not acquired or sold any real estate since Durante's death, and had no plans to do so. Although the partnership continued to operate profitably . . . it lacked direction, and it was at a stalemate because the parties could not agree on anything. . . .

At the October 2007 partnership meeting, the parties agreed that Scheibel would submit an application for approval to build a house on the Lake George building lot, and she would purchase the property from the partnership if she obtained the approval. [Ronald] and Van Slooten later authorized Scheibel to use $15,000 of partnership funds for the application, and the parties agreed that any excess sums would be paid from her personal funds.

 

Scheibel incurred $35,000 to obtain the approval. The additional $20,000 was charged to her partnership capital account because [Ronald] later refused to sell the Lake George building lot to her unless she agreed to transfer the Lake George boathouse docks to him. The capital accounts became unequal, which violated Article VII of the partnership agreement. As a result, [Ronald] filed a complaint against defendants in December 2009, to equalize the capital accounts. Scheibel filed a counterclaim seeking, in part, a declaration that the partnership was an at-will partnership subject to dissolution pursuant to N.J.S.A. 42:1A-39(a), or a partnership subject to judicial dissolution pursuant to N.J.S.A. 42:1A-39(e).

 

Scheibel eventually obtained a permit to build a home on the Lake George building lot and asked [Ronald] to consent to her purchasing the property but he refused. Despite plaintiff's refusal, Scheibel began clearing the lot and digging the foundation, allegedly because the building permit would expire if construction did not commence within one year. [Ronald] obtained a temporary stop work order, which was subsequently vacated; Scheibel completed construction of the house, expending approximately $600,000 of her own funds to do so.

 

Plaintiffs voluntarily dismissed the complaint prior to trial and agreed to a bench trial on Scheibel's counterclaim for dissolution of the partnership. The trial judge rendered an oral decision on July 6, 2011. He found that this matter was "a family dispute between three parties who can't get along on anything. They are at loggerheads[,] . . . they will obstruct everything[,] . . . they haven't gotten along or agreed" since their father died, they were "incapable of agreeing or managing anything[,]" and "there have been ongoing contretemps between [them] for years." The judge found that . . . it was necessary to appoint a receiver because the partnership needed someone to take control of it "since the parties cannot agree on anything, or any operation and . . . [Durco Services's] personnel appear to be in [desperate] fear of which master to [heed]." The judge concluded that continuing the parties' control of the partnership was not in the partnership's best interest, the partnership was being harmed, the management was being disturbed, and the "chaos in terms of ownership and title of the [partnership] properties . . . has erupted, certainly in Lake George[.]"

 

The judge also ordered the partnership's dissolution, permitted Scheibel to purchase the Lake George building lot at the price of the unimproved lot, and ordered the sale or division of the remaining properties among the partners.

 

[Id. slip op. at 2-8.]

On June 28, 2012, we affirmed the August 4, 2011 judgment appointing a receiver and ordering DeBaRon's dissolution. The judgment authorized the receiver, Christopher C. Botta, "to operate, manage, sell, dissolve, liquidate, distribute and apportion the assets and liabilities of the Partnership." Pursuant to that authorization, Botta listed a parcel of property located at Terminal Drive, Colonie, New York, for sale through a broker, Robert Cohn Associates, Inc. (Cohn).2 Ronald learned of the listing in January 2012 and advised Cohn that he was the owner of a portion of the property that had been listed for sale, identified as 284 Wolf Road. Ronald provided Cohn with a copy of his deed and objected to the listing. Cohn responded that it would continue to market the property at the direction of Botta.

On February 23, 2012, Ronald filed an order to show cause in New York State Supreme Court in Albany, New York to quiet title to the Wolf Road parcel. Ronald named DeBaRon, Cohn, and a tenant in the premises, as defendants. The New York court set March 15, 2012, as a return on the order to show cause.

On February 28, 2012, Botta filed a motion to enforce litigant's rights before the Law Division seeking the following relief:

1) Compelling Ron Durante to comply with [the] August 4, 2011 Order; and

 

2) Deeming the Terminal Drive Properties located in Albany as DeBaRon assets; and

 

3) Compelling Ron Durante to cooperate with the sale of the Albany Properties and execute any documents which would effectuate the sale of the Terminal Drive Properties; and

 

4) Directing that all proceeds from the sale of the Albany Properties be disbursed to DeBaRon Associates and not solely to Ron Durante; and

 

5) Granting such other relief as may be deemed appropriate.

 

Ronald opposed the receiver's motion and cross-moved seeking an order staying the sale of all DeBaRon properties pending our decision on the still-pending appeal.

Van Slooten cross-moved for an order finding Ronald in contempt and enjoining him "against the continued bad faith prosecution of the [New York litigation]." Van Slooten also sought costs and counsel fees in connection with her cross-motion, as well as the fees of the receiver and his counsel, expended in the New York litigation.

On April 13, 2012, without hearing oral argument, and apparently based solely on the submissions of the parties, the Law Division ordered Ronald to comply with the August 4, 2011 order. The order provided "that the Terminal Drive Albany Properties are considered DeBaRon assets" and compelled Ronald to "cooperate with the sale of Albany Properties and execute any documents which would effectuate the sale of the Terminal Drive Properties[.]" The court also ordered "all proceeds from the sale of the Albany Properties be disbursed to DeBaRon Associates and not solely to Ron Durante[.]" In the rider to the order, the court provided the following:

Christopher Botta, Esq., the Court appointed receiver of the Plaintiff, DeBaRon Associates, submits to this Court a Motion to Enforce Litigant's Rights. Plaintiff Ronald Durante opposes this relief and cross-moves for a stay of sale of all DeBaRon properties pending appeal. The Court has considered the written submissions and determines that the Receiver's motion is GRANTED and Mr. Durant[e]'s cross-motion is DENIED.

 

Plaintiff Durant[e] is seeking to circumvent this Court's prior Order by having a New York court void this Court's directive that property be sold and distributed among the DeBaRon partners. On August 4, 2011, this Court directed that "the real property and improvements owned by the Partnership in Latham, New York will be sold by the Receiver in such manner and time frame as he determines in his reasonable discretion."

 

This Court has the jurisdiction to grant the relief sought by Mr. Botta, as the matter has been fully litigated in this Vicinage. It is this Court's order after trial that brought about the motion at bar. Furthermore, there is no stay in place pending appeal.

 

On April 30, 2012, the Law Division entered an order holding Ronald in "violation and contempt" of the August 4, 2011 order. He was enjoined from continuing the New York litigation and was ordered to execute any documents necessary to sell the Terminal Drive properties in New York. Finally, Ronald was ordered "to pay the reasonable costs and attorney fees associated with Barbara Van Slooten, Receiver Christopher C. Botta, Esq. and the Receiver's New York attorneys having to respond and oppose to Plaintiff's Cross Motion and litigation in New York[.]"

On May 18, 2012, two orders were entered compelling Ronald to pay $6,279.30 to Van Slooten's counsel, McElroy, Deutsch, Mulvaney & Carpenter, and $14,264.72 to DeBaRon as reimbursement for payments made to Botta and local New York counsel he retained.

On appeal, Ronald challenges the finding of contempt and claims the court failed to comply with the provisions of Rule 1:10-1. Ronald also claims the award of counsel fees was not supported by adequate findings. Ronald does not challenge that portion of the April 30, 2012 order directing him to discontinue the New York litigation and cooperate with the sale of the New York properties. At oral argument, we were told that these issues had been resolved by the parties.

II.

A court's power to punish for contempt extends to "[d]isobedience or resistance by any court officer, or by any party, juror, witness or any person whatsoever to any lawful writ, process, judgment, order, or command of the court." N.J.S.A. 2A:10-1(c). In addition to the statutory definition, Rule 1:10-1 governs the exercise of the court's power to address contempt in its presence. The rule provides that the court may "adjudicate contempt summarily" without the filing of an order to show cause if:

(a) the conduct has obstructed, or if continued would obstruct, the proceeding;

 

(b) the conduct occurred in the actual presence of the judge, and was actually seen or heard by the judge;

 

(c) the character of the conduct or its continuation after an appropriate warning unmistakably demonstrates its willfulness;

 

(d) immediate adjudication is necessary to permit the proceeding to continue in an orderly and proper manner; and

 

(e) the judge has afforded the alleged contemnor an immediate opportunity to respond.

 

[Ibid.]

 

Our court rules also provide that sanctions may be imposed for violation of a court order. Pursuant to Rule 1:10-3, a party may make a motion in aid of litigant's rights, seeking enforcement of a previously entered court order. On such motion, "[t]he court in its discretion may make an allowance for counsel fees to be paid by any party to the action to a party accorded relief under this rule." Ibid.

Although evidentiary hearings are normally required for contempt-of-court adjudications, such a hearing is not always mandatory before a trial court imposes sanctions. See Nerney v. Garden State Hosp., 229 N.J. Super. 37, 42 (App. Div. 1988) ("Discovery should be completed before the trial court decides the issue of prejudice and, if appropriate, an evidentiary hearing should be held."). An evidentiary hearing will be necessary "where the record before the trial court has not provided an adequate basis for a fully informed determination of the underlying issue, or where an evidentiary hearing would be helpful for a determination of the issue." Abtrax Pharm. Inc. v. Elkins-Sinn, Inc., 139 N.J. 499, 519 (1995).

In the rider attached to the April 13, 2012 order, the Law Division concluded that Ronald sought to "circumvent" the August 4, 2011 order "by having a New York court void this Court's directive that property be sold and distributed among the DeBaRon partners." Based on the sparse record before us, we find no support for that conclusion.

We note that the August 4, 2011 order does not identify with specificity which New York properties are to be sold by the receiver. While it may be argued that "the facility in Latham, New York in which Federal Express is currently a tenant" can only be understood as a reference to the property that became the subject of the New York litigation, it is equally clear that, at the time of the entry of the August 4, 2011 order, the Law Division was not aware that Ronald held title to that property by dint of a 1986 deed. Confronted with this facially valid claim of ownership, the Law Division's summary conclusion that Ronald's actions in initiating the New York litigation constituted a "bad faith prosecution," is unsupported in the record before us.

We are therefore constrained to vacate that portion of the April 30, 2012 order finding Ronald in contempt of the August 4, 2011 order, as well as both orders entered on May 18, 2012, awarding fees and costs. The matter is remanded for an evidentiary hearing on Van Slooten's cross-motion for the imposition of costs and attorney's fees against Ronald. We do not retain jurisdiction.

Reversed and remanded.

1 Although Durante's notice of appeal indicates that both he and DeBaRon are appealing the three orders, one of orders entered on May 18, 2011, compels Durante to pay DeBaRon.

2 The record before us is unclear as to the property that was at issue in the New York proceeding. The Law Division refers to 'Albany Property' 'Terminal Drive Albany Properties' 'Albany Properties' and 'the facility in Latham, New York.' Ronald's order to show cause refers to a parcel at 284 Wolf Road, Colonie, New York. While the precise identity of the property is not critical to our decision, we note these uncertainties because the identification of the property at issue may be material to the decision of the Law Division on remand.