Sara Hutt v. David M. Hutt

• Court: New Jersey Superior Court Appellate Division
• Decided: February 20, 2025
• Docket: A-2278-23
• Status: Unpublished

Opinion

RECORD IMPOUNDED

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court ."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-2278-23

SARA HUTT,

Plaintiff-Appellant,

v.

DAVID M. HUTT,

Defendant-Respondent. ________________________

Submitted October 22, 2024 – Decided February 20, 2025

Before Judges Gilson, Bishop-Thompson, and Augostini.

On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Union County, Docket No. FM-20-0549-16.

Lum, Drasco & Positan LLC, attorneys for appellant (Gina M. Sorge, of counsel and on the briefs; Christa J. Tomasulo, on the briefs).

Wilentz Goldman & Spitzer, PA, attorneys for respondent (Edward T. Kole, on the brief).

PER CURIAM In this post-judgment matrimonial matter, plaintiff Sara Hutt appeals from

a February 16, 2024 Family Part order vacating a January 2, 2024 order that held

defendant David M. Hutt in violation of litigant's rights and awarded plaintiff

$10,575.50 in attorney's fees and costs. She contends the Family Part judge:

abused his discretion in vacating three provisions of the January 2, 2024 order

on reconsideration; vacated the order and made factual findings that were not

based on adequate evidence in the record; and the second judge applied the

incorrect standard of review. We affirm the Family Part order, finding no

reversible abuse of discretion.

I.

The parties are fully familiar with the facts, so we recite only those facts

from the motion record that are relevant to this appeal. The parties were married

in 1997.

During their marriage, the parties acquired assets, including interests in

seven real estate entities and businesses. Defendant acquired a 16.66% minority

interest in Daufuskie Island Water and Sewer Utility Company (DIUC), along

with 66.66% majority member Terry R. Lee and 16.66% minority member

Ronald Shimanowitz. In May 2013, Daufuskie Island Holding Company

(DIHC) was organized as the sole shareholder of DIUC with the same

A-2278-23 2 membership structure. Shortly thereafter, 100% of DIUC stock was acquired by

JJK Utilities Holdings, LLC (JJK) pursuant to a Membership Resolution

Agreement between CK Materials, LLC and JJK. JJK then transferred the DIUC

shares to DIHC.

Divorce proceedings initiated in 2016. In a May 2017 response to

plaintiff's expert's document demand, defendant produced the July 9, 2008

Operating Agreement for JJK, the March 14, 2013 Operating Agreement for

DIHC, the DIUC stock certificate, and copies of two checks that reflected capital

calls relative to the investment. In August 2017, defendant also produced the

2016 federal tax return for DIUC to plaintiff's counsel and her expert.

Over a year later, in August 2018, the parties executed an operating

agreement for Hutt Holdings, LLC (HHL). The agreement appointed defendant

as the managing member and gave the parties equal ownership in the holding

company. The agreement also identified the seven real estate entities, including

defendant's twenty percent interest in Greenwood Plaza, Inc. (Greenwood) and

his 16.66% interest in DIUC.

A Partial Final Judgment (PFJ) was entered on September 7, 2018, which

memorialized defendant as the minority owner in the seven real estate entities

before their divorce was finalized. The PFJ also memorialized the parties' equal

A-2278-23 3 interest, equal entitlement, and equal responsibilities in those real estate entities.

In furtherance of those equal rights, the parties agreed to establish HHL.

Five days later, on September 12, 2018, the parties signed a Marital

Settlement Agreement (MSA), which reflected the parties' resolution of all

issues and claims concerning the dissolution of their marriage. Paragraph 4.8

of the MSA confirmed the execution of the HHL Operating Agreement. Under

that paragraph, defendant was obligated to provide "a copy of each document

confirming the transfer of [defendant's] interest [into the HHL] to [plaintiff]."

Defendant also agreed to "make diligent effort to obtain" and provide plaintiff

with the following:

• The operating agreement(s) for each underlying entity;

• Any and all notices, letters, e[]mails, accountings or other documents received by [defendant] in 2017 and 2018 year to date related to each entity; and

• A schedule of all distributions to [defendant] and contributions/capital calls made by [defendant] for 2017 and 2017 year to date related to each entity.

The MSA was incorporated in the Dual Judgement of Divorce (DJOD), which

was entered on September 25, 2018.

Sometime in 2018, tenant Aucliar Corporation initiated litigation against

its landlord Greenwood, Auclair Corp. v. Greenwood Plaza, Inc., docket number

A-2278-23 4 MID-L-2436-18. The parties resolved the litigation in September 2019.

Throughout the litigation, Greenwood was represented by defendant's firm. 1

In October in 2019, defendant became aware that JJK shareholder,

Jadwiga Karabinchak, retained counsel to inquire about the status of the family's

interest in DIUC from a letter from Karabinchak's counsel to Lee. In essence,

Karabinchak asserted that in an October 29, 2013 email, Lee "promised" to

establish a trust for the Karabinchak children and place "one-third of the net

proceeds from either profits or net proceeds from the sale of [DIUC]" to

"convince" Karabinchak to execute the Membership Redemption Agreement

and related documents. Prior to 2019, neither defendant, Shimanowitz, nor

DIUC Manager John Guastella were aware of any agreement between Lee and

Karabinchak and had not been provided with any communication that obligated

DIUC or DIHC to make payments to a trust fund for the benefit of Karabinchak's

children.

On March 22, 2023, defendant forwarded plaintiff an email, as the "first

of several emails about a proposed refinance of DIUC" to pay off the then-

existing loan, real estate taxes, and make improvement to the systems.

1 Defendant and Shimanowitz are partners in a New Jersey law firm.

A-2278-23 5 Defendant told plaintiff that he had "no advance notice." Several unsigned

documents were attached to the email: the loan closing statement, the loan

agreement, the promissory note, the security agreement, the addendum to the

promissory note, and the draft authorization for loan closing fees and loan

payment and fees.

After receiving notice, DIUC counsel provided plaintiff's counsel with

DIHC's filings with the South Carolina Public Service Commission (SCPSC)

and a copy of the SCPSC's order approving the refinancing. Plaintiff's counsel

was told the funds were needed to "keep functioning and providing service to its

customers," "address accounts payable," and "to fund necessary capital

improvements to the system." Plaintiff was also told that "no other distributions

[would] be made."

Plaintiff filed a motion in aid of litigant's rights, asserting defendant failed

to comply with his disclosure obligation under Paragraph 4.8 of the MSA, the

HHL Operating Agreement, and the PFJ. Plaintiff specifically asserted that: (1)

she "discovered" on November 1, 2022, that DIUHC was formed and acquired

DIUC prior to signing the MSA in August 2018; (2) she learned in a March 24,

2023 email from defendant that DIUC's existing loan was being refinanced, and

further stated they had not received any distribution, dividend, or other financial

A-2278-23 6 benefits from DIUC since HHL was established in 2018; (3) in 2013 DIUC made

agreements with the Karabinchak's to establish and fund a trust for the benefit

of their children; (4) defendant held an interest in 7 Broadway; (5) defendant

had ownership of 114 Longfield Court in East Brunswick; (6) defendant had a

beneficiary interest in the Weingarten Trust; (7) defendant held shares of

Columbia stock; and (8) she was unaware a tenant had sued Greenwood prior to

the entry of the MSA nor did defendant disclose that he represented Greenwood.

Accordingly, plaintiff requested that defendant produce documents concerning

each allegation, and an award of attorney's fees and costs.

Defendant cross-moved for attorney's fees, asserting that he produced

documents to plaintiff five years ago during the divorce litigation. In his

supporting certification, defendant argued: (1) all documents plaintiff requested

prior to the entry of the MSA were made available for inspection by plaintiff

and her expert during litigation; (2) he was no longer in possession of any

documents held prior to the MSA; and (3) DIUC documents were readily

accessible to plaintiff. Defendant also points to an October 26, 2021 email from

Guastella to plaintiff that "[t]here [had] never been dividends or other payments

to [defendant], [HHL], or other owners. . . ."

A-2278-23 7 Defendant's assertion that he was "unaware" of whether a trust was set up

for or by another member of the DIUC was supported by emails. He explained

that he had no documents related to CK Materials, JJK, the Karabinchak's

membership in DIUC or DIUHC, the establishment of a trust, and DIUC or

DIUHC's annual net profits other than what had already been provided to

plaintiff.

Regarding DIUC's refinancing, defendant relied on his March 2023 email

to plaintiff about the proposed refinancing of the existing bank loan. On at least

three occasions, defendant sent emails with the Unanimous Consent Form for

plaintiff's signature, which was required to close on the loan and sale of DIUC.

Plaintiff "refused" to sign the form.

As to Greenwood, defendant asserted HHL holds a "minority interest" as

a "passive investor" and has "no control" over the operations of the entity. He

restated that he provided all documents regarding Greenwood during the

ligation, except for documents deemed privileged. He also argued plaintiff had

subpoenaed Auclair's President Ralph Mocci to produce documents and

"presumably obtained or could have obtained all the information from him." A

settlement agreement was entered in September 2018, and defendant provided a

A-2278-23 8 copy of that agreement to plaintiff and a letter to Mocci regarding an allegation

of a breach of the settlement agreement.

As to plaintiff's remaining document requests, defendant certified that

plaintiff was provided with K1s for the HHL entities each year. He explained

that: he was a trustee of certain trusts held by the Weingarten Family and not a

beneficiary, he was the registered agent for 7 Broadway and had no interest in

the property, and "many years ago" he quitclaimed his interest in 114 Longfield

Court, which was purchased prior to the parties' marriage. Lastly, defendant's

ownership of the Columbia stock was listed on his case information statement

and documents were provided to plaintiff and her expert during the litigation.

He no longer has that information nor owns the stock.

While the motions were pending, in a May 24, 2023 letter to DIHC's

counsel, plaintiff's counsel confirmed her "understanding" that "the funds to be

disbursed to DIUC [were] to be used to pay outstanding property taxes and for

construction and other capital improvements."

Following oral argument, in a January 2, 2024 order (January 2024 order),

the judge found defendant in violation of plaintiff's rights. Defendant was

directed to produce documents regarding the "initial formation, amendments,

identification of all members and their respective percentages from the date of

A-2278-23 9 formation to date for DIUC/DIHC, HHL entities, loan/refinancing transaction

related to DIUC/DIHC, the Weingarten Trust, and Greenwood Plaza recorded

liens within thirty days." The judge also awarded plaintiff $10,575.50 in

attorney's fees and costs, as well as a potential $400 per day sanction in the event

defendant failed to produce the documents.

Thereafter, defendant moved for reconsideration of that order, asserting

that he had complied with his discovery obligations during the divorce litigation.

Plaintiff cross-moved to enforce the January 2024 order and sought attorney's

fees and costs.

Oral argument was conducted before a different judge than the judge who

entered the January 2024 order. The second judge was the Family Part judge

who had previously presided over the parties' pre-judgment motions. On

February 16, 2024 (February 2024 order), the second judge vacated the

provisions of the January 2024 order, finding defendant was in violation of

litigant's right, awarding plaintiff's attorney's fees, and imposing potential

sanctions of $400 per day. A memorializing order was entered that same day.

At the outset of hearing, on the record the judge noted the January 2024

order was an interlocutory order; and therefore, he considered the motions under

Rule 4:42-2 because a final order had not been entered. In the statement of

A-2278-23 10 reasons, the judge determined that "[t]o the extent [p]laintiff was seeking

documents in accordance with the parties [MSA], Paragraph 4.8, those

documents have been provided." The judge further reasoned that, "[w]ith

regards to [some] documents, such as [those concerning DIUC/DIHC],

correspondence from prior to the settlement between [the] parties indicates

clearly that the documents were provided at that time[] [and] [o]ther documents

either did not exist or were beyond the control [of] [d]efendant." Lastly, the

judge "[was] not satisfied that [p]laintiff was entitled to the discovery she

sought, especially regarding assets not subject to Paragraph 4.8."

Regarding attorney's fees, the second judge reasoned defendant should not

be liable for plaintiff's attorney's fees because of the "paucity of information"—

no updated Case Information Statement from the parties, defendant's income

was "misstated" by the first judge, there was no income information for plaintiff,

and plaintiff resided in Florida. This appeal follows.

II.

On appeal, plaintiff presents three arguments for our consideration.

Plaintiff argues, for the first time on appeal, the second judge abused his

discretion in vacating the January 2024 order. Second, the judge abused his

discretion by applying the wrong standard of review. Lastly, plaintiff argues the

A-2278-23 11 judge's vacation of the order was not based on adequate evidence in the record

and the wrong standard of review was applied to the factual findings.

Our review of a Family Part order is limited. See Cesare v. Cesare, 154

N.J. 394, 411 (1998). Trial court rulings are "binding on appeal when supported

by adequate, substantial, credible evidence." Id. at 411-12 (citing Rova Farms

Resort, Inc. v. Invs. Ins. Co., 65 N.J. 474, 484 (1974)). "Because of the family

courts' special jurisdiction and expertise in family matters, appellate courts

should accord deference to family court factfinding." Id. at 413.

We review a Family Part's factual findings under an abuse of discretion

standard. See Gonzalez-Posse v. Ricciardulli, 410 N.J. Super. 340, 354 (App.

Div. 2009). A court abuses its discretion "when a decision is 'made without a

rational explanation, inexplicably departed from established policies, or rested

on an impermissible basis.'" Pitney Bowes Bank, Inc. v. ABC Caging

Fulfillment, 440 N.J. Super. 378, 382 (App. Div. 2015) (quoting Flagg v. Essex

Cnty. Prosecutor, 171 N.J. 561, 571 (2002)) (internal quotation marks omitted).

We, however, review all legal conclusions de novo. Ricci v. Ricci, 448 N.J.

Super. 546, 565 (App. Div. 2017).

An order to enforce litigant's rights under Rule 1:10-3 is reviewed for

abuse of discretion. Wear v. Selective Ins. Co., 455 N.J. Super. 440, 458-59

A-2278-23 12 (App. Div. 2018) (citing Barr v. Barr, 418 N.J. Super. 18, 46 (App. Div. 2011)).

We also review a trial judge's decision on whether to grant or deny a motion for

reconsideration for an abuse of discretion. JPC Merger Sub LLC v. Tricon

Enters., Inc., 474 N.J. Super. 145, 160 (App. Div. 2022).

We first address plaintiff's argument that the Family Part judge abused his

discretion in vacating the January 2024 order. We discern no reversible error

because there is no evidence in the record supporting plaintiff's contention that

defendant was obligated post-judgment to provide information outside of the

scope of the MSA. Here, the second judge reviewed the parties' submissions,

heard arguments, and based on his "intimate familiarity" with the matter pre-

judgment, determined that defendant had complied with Paragraph 4.8 of the

MSA. The record shows defendant had produced documents related to JJK,

DIUC, DIHC, the Weingarten trust, and 114 Longfield Court prior to the

execution of the MSA. There was also no proof that defendant was in possession

of documents related to any trust or to 7 Broadway. Lastly, defendant

nevertheless provided plaintiff with documents concerning Greenwood that

were not privileged.

The record does not support plaintiff's argument that defendant failed to

fully disclose information regarding the DIHC financing in March 2023.

A-2278-23 13 Defendant told plaintiff he had no "advance notice" of the refinancing and

immediately forwarded the email with attachments. As an equal member of

HHL, plaintiff had access to DIHC's business operations and was free to seek

additional information directly from DIHC. After plaintiff's counsel sought

clarification for the loan's purpose, plaintiff understood how the funds would be

disbursed.

The record also supports the second judge's determination even if there

was a good faith dispute concerning the requirements for the disclosure of the

documents pursuant to a fiduciary duty, there was no showing that defendant

violated Paragraph 4.8 of the MSA. We discern no abuse of discretion in the

vacation of the January 2024 order because the judge's factual findings were

supported by adequate, substantial and credible evidence, and therefore are

binding on appeal. Rova Farms Resort, 65 N.J. at 484.

We next address plaintiff's argument that the Family Part judge analyzed

the motion for reconsideration using the incorrect standard of review. Plaintiff

further argues the judge erred in considering the motions under Rule 4:42-2

because she sought enforcement of a final order—the DJOD and the

incorporated MSA.

A-2278-23 14 Defendant moved for reconsideration of the January 2024 order. At the

time the second judge considered that motion, the January 2024 order was not

final because it provided for sanctions should defendant fail to produce the

documents. Moreover, given the second judge's knowledge of the case, the

judge had the discretion to review the January 2024 order. In short, we discern

no reversable error and see no grounds for reversal and remand.

Considering this ruling, we need not address plaintiff's argument that the

second judge abused his discretion in vacating the award of attorney's fees. To

the extent we have not addressed any arguments raised by plaintiff, they lack

sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).

Affirmed.

A-2278-23 15