MOHAMMAD RAHAMI v. MOHAMAD ELKHOGA
Annotate this CaseNOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
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SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-2579-17T2
MOHAMMAD RAHAMI,
Plaintiff-Appellant,
v.
MOHAMAD ELKHOGA and
M & M, LLC,
Defendants-Respondents.
_____________________________
Submitted January 8, 2019 – Decided January 23, 2019
Before Judges Gilson and Natali.
On appeal from Superior Court of New Jersey,
Chancery Division, Union County, Docket No. C-
000024-17.
The Law Firm of Hassen I. Abdellah, attorneys for
appellant (Noelle van Baaren, on the brief).
Andril & Espinosa, LLC, attorneys for respondents
(Alcides T. Andril, on the brief).
PER CURIAM
Plaintiff Mohammad Rahami and defendant Mohamad Elkhoga were the
sole members of M & M, a limited liability company, whose sole asset was a
building located at 104-106 Elmora Avenue in Elizabeth (Elizabeth property).
Disputes arose between the parties regarding their respective ownership interests
in the building and the management of M & M resulting in the filing of
complaints and counterclaims, which were ultimately consolidated in the
Chancery Division. After a bench trial, the court issued a January 22, 2018 order
granting a partition of the property, dissolving M & M, awarding defendant
$6664 in damages, and ordering plaintiff's counsel to prepare a deed for
defendant to sign to effectuate the sale of the Elizabeth property. We affirm.
I.
We glean the following facts from the trial record. From 2002 through
2016, plaintiff was a tenant at the Elizabeth property where he operated a
restaurant and lived in a three-bedroom apartment. On December 31, 2008, he
signed a two-year lease for his apartment and in January 2009, he signed a ten-
year lease for the restaurant. In an August 31, 2010 lease agreement, plaintiff's
landlord agreed to rent a second commercial unit at the Elizabeth property for
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five years to a new tenant, H.R.,1 who would operate a computer store next to
plaintiff's restaurant.
In 2012, plaintiff's landlord declared bankruptcy and Kearny Federal
Savings Bank (Kearny) instituted foreclosure proceedings on the Elizabeth
property. During the foreclosure proceedings, plaintiff began paying rent
directly to Kearny. Kearny contacted plaintiff and inquired if he was interested
in purchasing the Elizabeth property for $300,000. Plaintiff agreed to purchase
the property for $250,000, and paid a $5000 deposit. Kearny granted plaintiff
three months to obtain the funds necessary to pay the rest of the purchase price.
In early June 2013, plaintiff met defendant. Shortly thereafter, plaintiff
discussed the Elizabeth property with him and the parties agreed to jointly
purchase the building. Plaintiff contacted Gregory Juba, Esq., to prepare an
agreement of sale and to form M & M.
On May 21, 2013, Kearny, as seller, and plaintiff and defendant, as
purchasers, signed a sales agreement. The agreement listed the purchase price
as $250,000, acknowledged that plaintiff made a $5000 deposit, that $20,000
was due upon execution of the agreement, and that $225,000 would be due at
closing.
1
We use initials to protect the tenant's privacy.
A-2579-17T2
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Prior to closing, plaintiff and defendant formed M & M. The operating
agreement prepared by Juba named plaintiff and defendant as the sole members
of the company, and further stated that defendant had provided an initial capital
contribution of 85% and, accordingly, held an 85% ownership interest. The
agreement listed plaintiff's capital contribution and ownership interest as 15%.
The operating agreement identified defendant as the "Managing Member," and
provided that "[i]n consideration of [plaintiff's] receipt of 15% of the LLC as
opposed to his actual 10% monetary contribution, it shall be the responsibility
of . . . [plaintiff] to manage and maintain the premises . . . as his normal duties."
On September 16, 2013, Kearny and M & M finalized the sale of the
Elizabeth property. Also on that day, Andrew Antanaitis, on behalf of Kearny,
and plaintiff and defendant, on behalf of M & M, signed an assignment of lease,
which assigned plaintiff's December 31, 2008 lease agreement to M & M.
Moreover, the August 31, 2010 lease between plaintiff's former landlord and
H.R. was also assigned to M & M. By the time of closing, plaintiff had provided
nearly $30,000 for the deposit, and defendant had provided $220,000. Three
years later, in September 2016, plaintiff closed his restaurant.
On January 19, 2017, defendant's counsel sent a letter to plaintiff notifying
him to cease all activities as manager of the Elizabeth property and that a
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members meeting was scheduled for January 24, 2017. The letter explained that
the purpose of the meeting was "to amend the certificate of formation and to
remove [plaintiff] from all functions as manager of the premises and further to
propose a resolution granting [defendant] authority to dissolve the company in
the event the parties cannot agree as to the disposition of [plaintiff's]
membership interest[.]" On that same date, M & M sued plaintiff in the Special
Civil Part for $7,072.68 for unpaid rent, late charges, and court costs.
On March 29, 2017, plaintiff leased the commercial unit previously
occupied by his restaurant to Deisy's Café Bakery LLC (Deisy's Café). The
lease ran from April 1, 2017 through April 1, 2019, with a monthly rent of $1800
and listed M & M and plaintiff as the landlords. In addition to renting the
premises, the lease included an equipment lease pursuant to which Deisy's Café
paid a $5000 deposit and agreed to pay plaintiff $700 per month.
The court conducted a bench trial on November 8, 9, and 14, 2017. At
trial, plaintiff testified that he believed he owned a one-half interest in M & M.
He further stated that he and defendant had an agreement that he would pay
$4000 to $5000 monthly to defendant until he paid the $95,000 owed for half of
the purchase price of the Elizabeth property. Plaintiff testified it was never the
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parties' intent that he be considered a tenant, and denied any obligation to pay
rent to M & M for the commercial or residential units.
Defendant disputed plaintiff's testimony and stated that after the closing,
both he and plaintiff understood that plaintiff was obligated to pay rent for the
commercial and residential units. Defendant further testified that after plaintiff
closed his store in September 2016, he stopped paying rent.
Juba testified that he was initially contacted by plaintiff. When he met
with the parties, plaintiff had already prepared the letter of intent for the
purchase of the building. Juba stated that during his meeting with the parties,
they spoke English and neither he nor plaintiff had any difficulty understanding
each other. Juba testified that he discussed the operating agreement and lease
assignments with plaintiff and that the parties "absolutely" agreed to provide
plaintiff with a 15% ownership interest in M & M, despite his 10% contribution.
On January 22, 2018, Judge Katherine R. Dupuis issued a comprehensive
written opinion in which she concluded that plaintiff was bound by the operating
agreement and deed of sale, and was obligated to pay rent to M & M for the
commercial and residential units. Judge Dupuis specifically found "incredible"
plaintiff's testimony that he did not understand English and that he signed the
operating agreement and lease assignments without first reading the documents.
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In contrast, the court found that Juba and defendant testified credibly
when they stated that plaintiff spoke and understood English. The court
explained that while the operating agreement did not explicitly provide that
plaintiff was to continue paying rent on the commercial and residential units,
plaintiff knew that both leases had been assigned to M & M, and thus the leases
were enforceable against him. The court also noted that plaintiff had "placed
his rent, as well as the rent for the other tenants, into the M & M bank account
until September 2016," which demonstrated his understanding that he was
obligated to pay rent to M & M. The court further found that plaintiff's claim to
a one-half interest in the company, as opposed to a 15% interest, was
contradicted by his acceptance of his share of profits in 2014 and 2015.
Accordingly, the court entered a January 22, 2018 order: 1) partitioning
the property and dissolving M & M; 2) establishing plaintiff's interest in the
company at $31,000; 3) declaring defendant entitled to $37,664 from plaintiff
for funds withheld from M & M; 4) awarding defendant the net outstanding
balance of $6664; and 5) compelling the parties to execute the documents
necessary to effectuate the sale of the Elizabeth property. This appeal followed.
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II.
Plaintiff maintains the court committed error in concluding that there was
a meeting of the minds between the parties with respect to the operating
agreement. Plaintiff also claims the court mistakenly determined that the lease
agreements were assigned to M & M at closing, and that his monthly payments
constituted rent. We disagree and affirm substantially for the reasons stated in
Judge Dupuis' well-reasoned opinion. We add the following comments.
III.
Appellate courts conduct a limited review of the findings of fact of a trial
court. Cesare v. Cesare, 154 N.J. 394, 411 (1998). Indeed, "findings by the trial
court are binding on appeal when supported by adequate, substantial, credible
evidence." Id. at 411-12 (citing Rova Farms Resort, Inc. v. Inv'rs Ins. Co., 65 N.J. 474, 484 (1974)). "Deference is especially appropriate 'when the evidence
is largely testimonial and involves questions of credibility.'" Id. at 412 (quoting
In re Return of Weapons to J.W.D., 149 N.J. 108, 117 (1997)). Accordingly, an
appellate court should only disturb the factual findings of a trial court when
"they are so manifestly unsupported by or inconsistent with the competent,
relevant and reasonably credible evidence as to offend the interests of justice."
Ibid. (quoting Rova Farms Resort, Inc., 65 N.J. at 484).
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With respect to plaintiff's understanding of the terms of the operating
agreement, defendant and Juba both stated that plaintiff spoke and understood
English and Judge Dupuis found plaintiff's claim that he did not understand
English and signed the operating agreement without reading it not to be credible.
Juba also testified that plaintiff and defendant were "adamant" about including
plaintiff's 15% interest in the text of the operating agreement. The court also
noted that plaintiff's actions in 2014 and 2015 in accepting his 15% share of M
& M's profits demonstrated he was aware of his 15% ownership interest. Thus,
there was substantial evidence in the record to support the court's finding that
plaintiff understood he would own only 15%, and not 50%, of M & M.
The September 16, 2013 "Assignment of Lease," which listed M & M, and
plaintiff and defendant as "members" of M & M, as assignees, furnished a
sufficient evidentiary basis to support the court's finding that M & M was
assigned the leases at closing, and thus M & M, and not plaintiff, was the lessor.
Finally, from the time M & M purchased the Elizabeth property, the monthly
deposits made by plaintiff into the M & M bank account routinely totaled $5019,
which represents plaintiff's $1669 rent obligation for the commercial unit where
he operated his restaurant, his $1150 rent obligation for the residential unit, $750
for a studio apartment rented out at the Elizabeth property, and $1450 rent for
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the second commercial unit. Thus, the court's finding that the payments made
by plaintiff were rent payments has ample support in the record.
To the extent we have not specifically addressed any of plaintiff's
arguments, we find them without sufficient merit to warrant discussion in a
written opinion. R. 2:11-3(e)(1)(E).
Affirmed.
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