Ac Ocean Walk, Llc. v. Blue Ocean Waters, Llc.

CourtNew Jersey Superior Court Appellate Division
DecidedMay 28, 2024
DocketA-2312-22
StatusPublished

This text of Ac Ocean Walk, Llc. v. Blue Ocean Waters, Llc. (Ac Ocean Walk, Llc. v. Blue Ocean Waters, Llc.) is published on Counsel Stack Legal Research, covering New Jersey Superior Court Appellate Division primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Ac Ocean Walk, Llc. v. Blue Ocean Waters, Llc., (N.J. Ct. App. 2024).

Opinion

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION DOCKET NO. A-2312-22

AC OCEAN WALK, LLC, d/b/a OCEAN CASINO RESORT,

Plaintiff-Respondent, APPROVED FOR PUBLICATION v. May 28, 2024

APPELLATE DIVISION BLUE OCEAN WATERS, LLC, PIYUSH VIRADIA, and JITEN PARIKH,

Defendants-Appellants. ____________________________

Argued April 9, 2024 – Decided May 28, 2024

Before Judges Sumners, Smith 1 and Torregrossa- O'Connor.

On appeal from an interlocutory order of the Superior Court of New Jersey, Chancery Division, Atlantic County, Docket No. C-000006-21.

Ahmed A. Massoud argued the cause for appellants (Massoud & Pashkoff, LLP, attorneys; Ahmed A. Massoud, on the briefs).

Gilbert L. Brooks argued the cause for respondent (Duane Morris LLP, attorneys; Gilbert L. Brooks,

1 Judge Smith did not participate in oral argument. He joins the opinion with counsel's consent. R. 2:13-2(b). James Robert Hearon and Justin G. Mignogna, on the brief).

The opinion of the court was delivered by

SUMNERS, JR, C.J.A.D.

In this interlocutory appeal, defendants Blue Ocean Waters, LLC and its

members Piyush Viradia and Jiten Parikh seek to vacate two orders of the

Chancery court. First, its January 18, 2023 order granting partial summary

judgment to plaintiff AC Ocean Walk, LLC to judicially dissociate Blue Ocean

Waters and dissolve the parties' partnership agreement under the Uniform

Partnership Act (UPA), N.J.S.A. 42:1A-1 to -56. Second, its March 13, 2023

order denying defendants' motion for reconsideration and amending the partial

summary judgment order to reflect that the partnership had dissolved on October

10, 2020.

We affirm the January 18, 2023 order granting judicial dissociation and

dissolution of the parties' partnership agreement. Defendants' failure to respond

to AC Ocean Walk's September 30, 2020 notice of breach of the agreement is a

clear indication that judicial dissociation was appropriate under N.J.S.A. 42:1A-

31(e) as "it [was] not reasonably practicable to carry on the business in

partnership with the partner." Although no case law in our State has interpreted

the "not reasonably practicable" standard for judicial dissociation of a partner,

A-2312-22 2 our conclusion is supported by the interpretation of like statutes in other

jurisdictions.

We, however, reverse the March 13, 2023 order by amending the effective

date of the dissociation and dissolution to coincide with the date of the January

18, 2023 order. Based on the record before us and the plain language of N.J.S.A.

42:1A-39(e)(3), judicial dissolution occurs when there "is a judicial

determination that . . . it is not otherwise reasonably practicable to carry on the

partnership business in conformity with the partnership agreement." Again, in

the absence of our State's case law defining the effective date of dissociation

and dissolution under N.J.S.A. 42:1A-39(e)(3), our conclusion is supported by

the interpretation of like statutes in other jurisdictions.

I

In January 2018, AC Ocean Walk acquired ownership of the Ocean Casino

Resort (casino), the former Revel Casino Resort, in Atlantic City. At the time,

IDEA Boardwalk LLC's (IDEA) lease of the casino's nightclub and daytime

beach club (collectively, the clubs) was still in effect despite the clubs' closure

in 2014 and dormant status for three-and-a-half years thereafter. AC Ocean

Walk agreed with IDEA to purchase the clubs' lease rights for $8 million, with

A-2312-22 3 $3 million to be paid upfront and the remainder to be paid in five annual $1

million installments.

On April 11, 2018, AC Ocean Walk formed a partnership agreement with

Blue Ocean Waters, which among other terms, provided it would operate the

clubs and the parties would equally own the clubs' "assets plus any future . . .

enhancements and/or additions to the clubs." To help cover the purchase of the

clubs' lease, Blue Ocean Waters agreed to pay one third of the $3 million upfront

costs and, thereafter, pay half of any year's shortfall when the clubs' revenues

did not fully cover the $1 million annual payment obligation. Blue Ocean

Waters also "agreed to fund all renovations and capital costs to" the clubs and

"pay [fifty percent] of the pre-opening costs." Blue Ocean Waters further agreed

to "prepare an annual budget" for AC Ocean Walk's approval.

On June 28, 2018, the clubs reopened. Over the next two years, the parties

disagreed over numerous issues –– renovation costs, the validity of various

invoices to contractors, personnel, use of partnership assets, recordkeeping and

accounting, and control over the clubs.

Seeking resolution, AC Ocean Walk, on September 29, 2020, sent

defendants a notice of breach dated September 30, 2020. The notice stated Blue

Ocean Waters had "breached its material obligations under" the agreement "for

A-2312-22 4 some time" and the agreement would terminate if Blue Ocean Waters did not

cure the breach within ten days. Specifically, AC Ocean Walk alleged Blue

Ocean Waters: (1) did not contribute its half of the capital expenditures incurred

through July 2020; (2) did not pay off a lien "incurred in connection to

preopening capital expenditures"; (3) did not contribute its half of the annual

settlement payments in 2019 and 2020 (when the clubs did not generate enough

revenue to cover the payments); (4) never submitted an annual budget for

plaintiff's approval; and (5) did not cover its half of the partnership's losses from

June 2018 to July 2020. AC Ocean Walk claimed Blue Ocean Waters owed it

$2,439,296.

Defendants did not respond to the notice. So, on February 10, 2021, AC

Ocean Walk filed a Chancery Division complaint against defendants, seeking:

damages for breaches of contract and the duty of good faith and fair dealing;

judicial dissociation of Blue Ocean Waters from the partnership under N.J.S.A.

42:1A-31(e) and dissolvement of the partnership under N.J.S.A. 42:1A-39(e);

and piercement of Blue Ocean Waters' corporate veil to hold Viradia and Parikh

personally liable for plaintiff's damages. Defendants answered the complaint

and raised several counterclaims, which are not relevant to this appeal.

A-2312-22 5 In August 2022, while discovery was progressing, AC Ocean Walk asked

defendants whether it should allocate partnership profits to Blue Ocean Waters

when filing the partnership's 2021 tax returns. Defendants responded the next

day relaying that they believed the partnership "remain[ed] in full force and

effect" and AC Ocean Walk "must file tax returns for 2021 allocating the

profits/income generated from the clubs to the parties equally, and AC Ocean

Walk LLC cannot file a tax return designating all such gains to itself only." AC

Ocean Walk complied with the request.

At the close of discovery, defendants moved for partial summary

judgment on liability regarding their breach of contract counterclaim. AC Ocean

Walk cross-moved for summary judgment on all issues. Following oral

argument, the court reserved judgment, and on January 18, 2023, issued an order

and written decision denying defendants' motion, granting AC Ocean Walk's

cross-motion as to judicial dissociation of Blue Ocean Waters from the

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