NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court ."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 NOS. A-3523-23 A-0581-24
WARREN DIAMOND, individually and derivatively on behalf of 147 BROAD ST., LLC,
Plaintiff-Respondent,
v.
SCOTT DIAMOND,
Defendant-Appellant. _____________________________
WARREN DIAMOND, individually and derivatively on behalf of 147 BROAD ST., LLC,
Defendant-Respondent. _____________________________
147 BROAD ST., LLC, Intervenor-Appellant. _____________________________
Argued January 15, 2026 – Decided March 31, 2026
Before Judges Gilson, Firko, and Perez Friscia.
On appeal from the Superior Court of New Jersey, Law Division, Monmouth County, Docket No. L-3090-18.
Marc J. Gross argued the cause for Scott Diamond, appellant in A-3523-23 and respondent in A-0581-24 (Fox Rothschild LLP, attorneys; Marc J. Gross, of counsel and on the briefs; Jordan B. Kaplan, on the briefs).
Darren C. Barreiro argued the cause for appellant 147 Broad St., LLC (Greenbaum, Rowe, Smith & Davis, LLP, attorneys; Darren C. Barreiro and Joseph A. Natale, of counsel and on the briefs).
Timothy C. Moriarty argued the cause for respondent Warren Diamond (Charles Moriarty, LLC, attorneys; Timothy C. Moriarty, of counsel and on the briefs; Matthew K. Blaine, on the briefs).
PER CURIAM
These two appeals arise out of disputes between a father, Warren Diamond
(Warren), and his son, Scott Diamond (Scott), over the ownership and operation
of an investment property located at 147 Broad Street, Red Bank, New Jersey
A-3523-23 2 (the Property).1 The Property was purchased and owned by a limited liability
corporation, 147 Broad St., LLC (147 Broad). Warren, on behalf of himself
individually and claiming to be a representative of 147 Broad, sued Scott
alleging that Scott had mismanaged the Property, engaged in self-dealing, and
damaged Warren. Following a ten-day bench trial, the trial court entered a final
judgment, finding that Scott had converted monies belonging to Warren and had
unjustly enriched himself by misappropriating funds and mismanaging the
Property at Warren's expense. The court also found Warren and Scott had
entered a joint venture to acquire and operate the Property. As a remedy, the
trial court ordered the Property to be sold and the sale proceeds to be distributed
with fifty percent going to Scott, forty-nine percent going to Warren, and one
percent going to Melissa Diamond, who is Warren's daughter and Scott's sister.
Scott appeals from the final judgment, which was entered on June 30,
2024. He argues the trial court had no right to compel the sale of the Property
and that the court's findings of conversion, unjust enrichment, and a joint venture
were unsupported by the evidence presented at trial.
1 To avoid confusion, we use first names because Warren and Scott share a common surname. In doing so, we mean no disrespect. A-3523-23 3 147 Broad intervened after the trial and filed a separate appeal from the
final judgment. 147 Broad primarily argues that its due process rights were
violated because the trial court's remedy of compelling the sale of the Property,
which the corporation owns, was granted when 147 Broad was not a party to the
action.
We issue this consolidated opinion to address all challenges raised by
Scott and 147 Broad. Having reviewed the record and law, we affirm the trial
court's findings that Scott converted Warren's monies and unjustly enriched
himself, thereby causing damage to Warren. We also affirm the trial court's
finding that Warren and Scott had entered a joint venture to purchase and operate
the Property.
We vacate the remedy compelling a sale of the Property, and remand for
a limited hearing on the remedies that can be accorded to Warren. In so doing,
we hold that both law and equity allow the court to compel the sale of the
Property provided that 147 Broad is afforded an opportunity to be heard.
Accordingly, on remand, 147 Broad will be a party and will have the right to
address whether one of the remedies should be compelling the sale of the
Property and the distribution of the sale proceeds.
A-3523-23 4 I.
We summarize the facts from the record, primarily relying on the evidence
presented at trial. The main issues at trial were determining Warren's interest in
the Property, determining whether Scott had misappropriated monies Warren
had lent to purchase, develop, and maintain the Property, and determining
whether Scott had mismanaged the Property to unjustly enrich himself at
Warren's expense.
The Property is a two-story building with space for a commercial tenant
on the first floor and a garden apartment on the second floor. In 2010, Warren
became interested in purchasing the Property. In 2013, Warren negotiated and
agreed to a contract to purchase the Property from its then owner, All the
Flowers, Inc., for $1.375 million. To facilitate the purchase, Warren paid the
initial deposit of $20,000 and arranged an acquisition loan of $1,204,000 from
Amboy Bank.
As Warren was arranging the purchase, he had discussions with Scott
regarding management of the Property and Scott living in the second-floor
apartment. On December 18, 2013, Scott drafted and sent to Warren a
memorandum of understanding (the 2013 MOU) regarding the operation of the
Property. The 2013 MOU stated, among other things:
A-3523-23 5 • Warren "will assign the contract to 147 Broad St. LLC. This LLC is 99% owned by [Scott] and 1% by Melissa Diamond. [Scott is] the sole manager of this LLC. [Warren] will be [Scott's] named successor."
• "When and if [Scott] move[s] out of the sole apartment [Scott] will convey, at [Warren's] option, a 49% interest in the building."
Warren never signed or agreed in writing to the 2013 MOU.
Before sending the 2013 MOU, Scott formed 147 Broad in September
2013, as a New Jersey limited liability company. Approximately two months
later, in November 2013, Scott and Melissa signed an Amended and Restated
Operating Agreement for 147 Broad (the Operating Agreement). The Operating
Agreement stated that Scott and Melissa were the two members of 147 Broad,
with Scott owning ninety-nine percent and Melissa owning one percent.
Paragraph 11(a) of the Operating Agreement stated 147 Broad "shall be
dissolved upon . . . (iv) the sale of the Property and all or substantially all of the
assets of the Company and the collection and distribution of the proceeds of
such sale."
In January 2014, Warren assigned the contract for the purchase of the
Property to 147 Broad. That same month, 147 Broad purchased the Property
using the loan from Amboy Bank. At the closing, Warren lent 147 Broad
$280,000 and paid an additional $100,00 for furniture. Warren also signed a
A-3523-23 6 guaranty, which guaranteed the repayment of the acquisition loan from Amboy
Bank and the related mortgage.
Following the purchase of the Property, Warren continued to be involved
in developing the Property and invested more monies in the Property. In that
regard, Scott stipulated that Warren invested at least $440,000 into the Property
and 147 Broad.
On June 3, 2014, Warren and Scott signed a document entitled, "Consents,
Acknowledgments[,] and Agreements" (the June 2014 Agreement). The June
2014 Agreement addressed various properties and entities Scott and Warren had
interests in and resolved certain disputes. Relevant to the Property and 147
Broad, the June 2014 agreement stated:
Warren acknowledges approximately $200,000 in loans from Scott to Warren in June and July of 2013. Scott acknowledges Warren has invested $380,000 into 147 Broad Street LLC. They both have invested time, knowledge and expertise. In consideration thereof, the parties agree[] that when Scott no longer lives at 147 Broad St., Red Bank, [New Jersey], [] Scott will transfer to Warren 49% of the membership interest in 147 Broad Street LLC. The books and records of 147 Broad Street LLC will be maintained to indicate loans from Warren are credited [one half] to Warren's loan account and [one half] to Scott's loan account. Warren acknowledges and reaffirms that he is the guarantor of a loan taken with Amboy [B]ank in connection with the January 2014 closing of 147 Broad Street, Red Bank, NJ by 147 Broad Street LLC. In any event[,] whenever
A-3523-23 7 distributions are made[,] they shall be made 1% to Melissa Diamond, 49% to Warren and 50% to Scott.
Consequently, under the June 2014 Agreement, Warren was to (1) have a
loan account with 147 Broad; (2) receive forty-nine percent of all distributions
made by 147 Broad; and (3) receive a forty-nine percent membership interest in
147 Broad "when Scott no longer live[d] at" the Property.
When 147 Broad closed on the purchase of the Property, it submitted to
Amboy Bank a lease agreement between 147 Broad and Scott. The lease
provided Scott would occupy the second-floor apartment and pay $3,200 per
month in rent, all utilities he used, and a $4,800 security deposit. Scott's rental
payments, together with the rental payments from other tenants of the Property,
were to be used to repay the loan and mortgage.
Following the acquisition of the Property, Red Bank Design Center
became the Property's first-floor commercial tenant. Between 2015 and 2024,
Red Bank Design Center paid approximately $1.2 million in rent, its utilities,
and fifty-seven percent of the maintenance costs for the common area of the
Property.
In and after 2015, Warren expected 147 Broad to make distributions and
repay his loans. At some point, he received a $50,000 distribution, but no other
distributions or payments were made to him.
A-3523-23 8 In August 2018, Warren sued Scott. He asserted individual claims and
derivative claims on behalf of 147 Broad. Counts one through five of Warren's
complaint were derivative claims asserted on behalf of 147 Broad and sought
relief under the Revised Uniform Limited Liability Company Act (RULLCA),
N.J.S.A. 42:2C-1 to -94. Specifically, in the counts asserting claims under
RULLCA, Warren sought (1) access to 147 Broad's books and records; (2)
removal of Scott as a managing member and sale of his interest in 147 Broad;
(3) a declaration that Scott had oppressed the interest of other members and
mismanaged 147 Broad; (4) a ruling Scott had breached his fiduciary duties; and
(5) a ruling Scott had breached an implied duty of good faith and fair dealing.
In count six, Warren asserted a claim for conversion, alleging Scott had
converted funds and other assets for his personal benefit. In count seven,
Warren asserted a claim for unjust enrichment, alleging Scott "has conferred
benefits upon himself that are not deserved and has otherwise unjustly benefited
himself at the expense of [147 Broad] and Warren Diamond." As relief, Warren
requested a judgment awarding (1) "compensatory and consequential damages;"
(2) "attorney[]s' fees, interest, and costs of suit;" and (3) "[a]ll other relief that
the [c]ourt deems equitable and just."
A-3523-23 9 After almost six years of discovery and pretrial proceedings, the matter
proceeded to a bench trial in 2024. Over ten days in January and March 2024,
the court heard extensive testimony from Warren and Scott, who were the only
witnesses. The court also reviewed and considered numerous exhibits that were
entered into evidence.
At trial, Warren asserted Scott had misappropriated monies and funds that
should have allowed 147 Broad to make distributions. In support of that claim,
Warren introduced evidence showing Scott had set up management agreements
under which 147 Broad paid ten percent of the Property's gross revenues to
separate entities that were owned and controlled by Scott. Between 2014 and
2024, Scott's separate companies billed 147 Broad for over $162,800 in
management fees. The management agreements that Scott made with the
entities he controlled also entitled those entities to ten percent of any proceeds
of a refinancing or sale of the Property in excess of the existing mortgage debt.
Warren also introduced evidence that Scott had not paid $3,200 in
monthly rent. Instead, he alleged Scott had paid himself ten percent interest on
his loans to 147 Broad and used that interest to pay rent of $2,500 per month.
In response, Scott argued that there was an agreement that he would pay $2 ,500
a month in rent. Scott, however, could not produce a written lease reflecting
A-3523-23 10 that rent agreement. Instead, Scott testified that he thought a monthly rent of
$2,500 was "fair" and reflected the fair market value. Scott acknowledged that
he paid the rent out of an "interest account" at 147 Broad.
During trial, there was also a dispute concerning the accuracy of the books
and records Scott maintained for 147 Broad. Despite prior discovery demands,
Scott first produced QuickBooks accounts during trial, which he represented
were for 147 Broad. Warren moved for sanctions, which the trial court granted.
Moreover, at trial, Scott could not explain many of the entries on the
QuickBooks accounts. In particular, he had difficulty explaining the amount of
loans he made to 147 Broad. For example, at one point Scott claimed he had
$870,000 in his loan account. Thereafter, Scott claimed that he had contributed
$602,114.23 to 147 Broad. Scott could not support either of those alleged
amounts with any documentary evidence other than his own entries to the
QuickBooks account.
Following the close of evidence, the parties submitted proposed findings
of facts. On June 30, 2024, the trial court entered a final judgment. The court
supplemented the final judgment with a written statement of reasons setting
forth its findings of facts and conclusions of law.
A-3523-23 11 The trial court began its factual findings by assessing the credibility of
Warren and Scott. The court found neither of them to be credible. In that regard,
the court stated:
Plaintiff and [d]efendant testified. The dysfunctional relationship between the parties was the underlying tone of both parties' testimony. While they each professed their love for each other, it was clear to the [c]ourt that they disliked each other and would go out of their way to prevent the other from profiting on the property. The [c]ourt did not find either of the Diamonds to have credibly testified, each choosing to reveal as little as possible to the [c]ourt to advance their own interests.
The court then considered Warren's derivative claims asserted on behalf
of 147 Broad. The court found that Warren was not a member of 147 Broad and,
therefore, he had no standing to seek relief on behalf of the limited liability
corporation. Accordingly, the court dismissed counts one through five of
Warren's complaint with prejudice. No party, including Warren, has appealed
from that portion of the judgment.
Addressing counts six and seven, the court found that Scott had converted
monies belonging to Warren and had unjustly enriched himself by
misappropriating monies at the expense of Warren and 147 Broad. In that
regard, the court found:
A-3523-23 12 (1) Scott has engaged in a decade-long continuous and unexplainable misappropriation of funds [] which served his own benefit and [were at] the expense of Warren and his investment-backed expectations associated with 147 Broad;
(2) [Scott] utilized interest accrued upon the loans taken from Warren and other miscellaneous company loans to fund expenses that ultimately end[ed] up benefiting [Scott], including the payment of rent;
(3) Scott converted one-half of Warren's $280,000 January 16, 2014, investment and allocated it to himself as a loan in the amount of $140,000. Thereafter, Scott would take [ten percent] annual interest on that loan amount which yields the figure of $14,000 per year. Multiplied over the course of the ten years [during] which Scott resided []in the second-floor apartment provides for $140,000 in interest which was utilized to pay rent owed through his book account deduction and foregoing any money actually being paid to 147 Broad;
(4) Through this process Scott was able to convert Warren's $280,000 January 16, 2014, loan into a benefit of $280,000 for himself and a loss of $140,000 for Warren;
(5) [T]he evidence presented demonstrates an intentional and deliberate undervaluing of rent carried out by Scott in order to obtain a benefit on behalf of himself and at the expense of Warren;
(6) Scott, by way of manipulation of books and loan accounts, has converted funds provided by Warren and has utilized them in a manner which directly impedes the possibility of financial gain by Warren.
A-3523-23 13 The court also found Warren and Scott had a joint venture in the Property.
In making that determination, the court found the joint venture was based on
Warren having identified the Property, contracted for its purchase, made the
initial deposit, and arranged the acquisition loan. The trial court relied on the
June 2014 Agreement as reflecting the joint venture arrangement between
Warren and Scott. Based on a plain reading of the June 2014 Agreement, the
court found the "loans made by Warren to [147 Broad] were rendered in
consideration for a future 49% interest should Scott no longer reside in the
apartment."
The court also relied on Warren's agreement to pay any "shortfall in the
rent amount" owed to Amboy Bank. The court also noted that Warren had paid
a delinquent mortgage payment on the property in February 2014. Moreover,
the court found Warren "continued to be involved [with] and invest his own
money [in] 147 Broad," despite not being a member of 147 Broad.
Additionally, the trial court made findings concerning the loan accounts
Warren and Scott had with 147 Broad. Regarding Warren's loan account, the
court determined that it had a value of $189,269.69. In making that finding, the
court noted that Warren had only received one distribution in the amount of
$50,000.
A-3523-23 14 As to Scott's account, the court found that the loan account had a value of
$226,769.69. In making that finding, the trial court expressly rejected Scott's
claims his loan account was either $872,000 or just over $602,000. Instead, the
trial court expressly found: "While Scott asserts a much higher loan account
balance, the [c]ourt does not find that to be true."
After making all those findings, the trial court addressed the remedy for
Scott's conversions, misappropriations, and unjust enrichment. The court
reasoned that because Scott has misappropriated funds and manipulated the
books and records of 147 Broad, the appropriate remedy would be to compel the
sale of the Property. Specifically, the court found that "Scott has engaged in
ten-years' worth of abuse of power as a 99% interest-holder [of 147 Broad] and
sole manager of the Property." Consequently, the court determined that it was
equitable to compel the sale of the Property and distributions of the proceeds to
Scott, Warren, and Melissa. The court directed that Scott's and Warren's loan
accounts would first be paid and then the net sale proceeds would be divided,
with forty-nine percent to Warren, fifty percent to Scott, and one percent to
Melissa.
The court memorialized its rulings in the final judgment entered on June
30, 2024. That same day, the court also entered an order, supported by a
A-3523-23 15 statement of reasons, requiring Scott to pay Warren $9,353.50 in attorneys' fees
and costs as a sanction for failing to timely produce the QuickBooks accounts.
Two weeks after the final judgment was entered, Scott filed a notice of
appeal. The following week, on July 24, 2024, 147 Broad moved to intervene
for the purpose of filing an appeal and to stay the sale of the Property pending
the appeal. The trial court granted the intervention motion and stayed the action.
Accordingly, we have appeals from Scott and 147 Broad.2
II.
In his appeal, Scott makes four main arguments. He contends the trial
court erred by (1) rewriting the June 2014 Agreement to give Warren the right
to his forty-nine percent interest while Scott was still living in the apartment;
(2) making factual findings that were not supported by the evidence; (3) granting
Warren relief based on his claims of conversion and unjust enrichment; and (4)
2 147 Broad should have moved before us for the right to file an appeal. To preserve judicial economy, we will hear the appeal and treat the matter as if 147 had moved before us and we had granted leave to file an appeal. See Caggiano v. Fontoura, 354 N.J. Super. 111, 124 (App. Div. 2002) (noting this court may grant leave "in the public interest . . . where the appellant filed a notice of appeal rather than a required motion for leave"); see also N.J. Dep't of Env't. Prot. v. Exxon Mobil Corp., 453 N.J. Super. 272, 296 (App. Div. 2018) (explaining that non-parties may intervene in an appeal from a judgment adverse to their interests). A-3523-23 16 compelling the sale of the Property without hearing from 147 Broad, which
denied the LLC its due process.
On its appeal, 147 Broad focuses on the trial court's remedy, which
compelled the sale of the Property. It contends that it owns the Property , and
because it was not a party to the action, its, as well as Melissa's, due process
rights were violated when the trial court compelled the sale of the Property
without providing notice and having an opportunity to be heard. In connection
with that argument, 147 Broad asserts RULLCA prohibits compelling the sale
of the Property to satisfy Warren's judgment against Scott. Additionally, 147
Broad contends that Warren never requested the sale of the Property and ,
therefore, the trial court erred by compelling the sale.
III.
We begin by reviewing the trial court's factual findings and legal
conclusions. An appellate court's review of the factual findings made by the
trial court after a bench trial is limited and deferential. Seidman v. Clifton Sav.
Bank, S.L.A., 205 N.J. 150, 169 (2011). We will not interfere with factual
findings unless those findings are not supported by substantial credible evidence
in the record. Motorworld, Inc. v. Benkendorf, 228 N.J. 311, 329 (2017). In
contrast, we review de novo a trial court's legal conclusion and its application
A-3523-23 17 of established facts to the law. Sipko v. Koger, Inc., 251 N.J. 162, 179-80
(2022).
The trial court made three legal conclusions based on its factual findings.
First, it concluded Scott had converted monies Warren had lent to 147 Broad.
Second, it determined Scott had unjustly enriched himself by misappropriating
funds and operating 147 Broad in a way that benefited himself to the detriment
of Warren and 147 Broad. Third, the court held Warren and Scott had a joint
venture in the Property.
A. Conversion.
Conversion is the intentional exercise of control over property that
interferes with the right of another to control that property and thereby damages
the other person or entity. See Meisels v. Fox Rothchild LLP, 240 N.J. 286, 304
(2020) (quoting Chi. Title Ins. Co. v. Ellis, 409 N.J. Super. 444, 454 (App. Div.
2009)) (stating that "[c]onversion is an intentional exercise of dominion or
control over a chattel which so seriously interferes with the right of another to
control it that the actor may justly be required to pay the other the full value of
the chattel"). To prove a conversion, a claimant must show that (a) he or she
owns property or an interest in property, and (b) the defendant has wrongfully
taken that property or interfered with the claimant's interest in the property. See
A-3523-23 18 First Nat'l Bank of Bloomingdale v. N. Jersey Tr. Co., 18 N.J. Misc. 449, 452
(1940).
In finding that Scott had converted monies belonging to Warren, the trial
court made a series of factual findings. Specifically, the trial court found that
Scott took unauthorized control over Warren's investments in 147 Broad. For
example, the trial court found Scott took control over half of Warren's $280,000
investment and without proper authorization gave himself ten percent annual
interest, which over ten years converted $140,000 to Scott that properly
belonged to Warren. Those factual findings are amply supported by the
evidence in the record.
Moreover, those factual findings support the legal conclusion that Scott
engaged in conversion. Scott took control of and misused Warren's money "in
a way that would deprive [] [Warren] of its benefit." Bondi v. Citigroup, Inc.,
423 N.J. Super. 377, 431 (App. Div. 2011) (quoting Cargill Glob. Trading v.
Applied Dev. Co., 706 F. Supp. 2d 563, 578 (D.N.J. 2010)).
Consequently, we affirm the trial court's findings that Scott engaged in
conversion and that the conversion caused damage to Warren.
A-3523-23 19 B. Unjust Enrichment.
To prove an unjust enrichment claim, plaintiff must demonstrate that
defendant "received a benefit and that retention of that benefit without payment
would be unjust." Thieme v. Aucoin-Thieme, 227 N.J. 269, 288 (2016) (quoting
Iliadis v. Wal-Mart Stores, Inc., 191 N.J. 88, 110 (2007)). "That quasi-contract
doctrine also 'requires that plaintiff show that it expected remuneration from the
defendant at the time it performed or conferred a benefit on defendant and that
the failure of the remuneration enriched defendant beyond [his or her]
contractual rights.'" Ibid. (quoting VRG Corp. v. GKN Realty Corp., 135 N.J.
539, 554 (1994)).
In finding Scott had unjustly enriched himself, the trial court determined
that Scott had substantially underpaid his rent and inappropriately paid himself
management fees. The court found Scott should have been paying rent at the
rate of $3,200 per month. Instead, Scott accounted for rent payments of $2,500
per month but never made those payments. Rather, the payments were made
from interest Scott gave to himself on his loan account.
Additionally, the trial court found Warren had a reasonable expectation
that he would receive forty-nine percent of the distributions from 147 Broad, but
Scott's misappropriations prevented all but one distribution from being made.
A-3523-23 20 Therefore, Warren never received distributions except for one distribution of
$50,000. All those factual findings are supported by substantial credible
evidence.
Scott takes issue with the trial court's findings regarding the rent
payments. He contends there was an understanding that he would pay $2,500
per month. The court expressly rejected that argument, finding there was no
written lease supporting Scott's position. Moreover, the court found that the
only written lease in the record called for Scott to make payments of $3,200 per
month. The court's rejection of Scott's position is supported by credible
evidence and is also based on the court's determination that Scott lacked
credibility.
Like its finding of conversion, the trial court's finding of unjust
enrichment is also supported by the law. See Thieme, 227 N.J. at 290 (finding
unjust enrichment where plaintiff relied on the expectation of proceeds from the
sale of a company).
C. The Joint Venture.
"[A] joint venture is an undertaking usually in a single instance to engage
in a transaction of profit where the parties agree to share profits and losses."
Ernest Bock & Sons-Dobco Pennsauken Joint Venture v. Township of
A-3523-23 21 Pennsauken, 477 N.J. Super. 254, 266 (App. Div. 2023) (alteration in original)
(quoting Wittner v. Metzger, 72 N.J. Super. 438, 444 (App. Div. 1962)). "A
joint venture is simply a single-purpose partnership, [where] an entity [is]
formed for a limited duration." Ibid. (quoting Fliegel v. Sheeran, 272 N.J. Super.
519, 524 (App. Div. 1994)). A joint venture need not be created by law; rather,
it can be expressly or impliedly assumed by the parties. Wittner, 72 N.J. Super.
at 443.
Generally,
[a] joint venture includes 'some or all' of [the following] elements: (1) a contribution by the parties of money, property, effort, knowledge, skill, or other assets to a common undertaking; (2) a joint property interest in the subject matter of the venture; (3) a right of mutual control or management of the enterprise; (4) an expectation of profit; (5) the right to participate in profits; and (6) limitation of the objective to a single undertaking.
[Ernest Bock, 477 N.J. Super at 266 (quoting Wittner, 72 N.J. Super. at 444).]
In determining that Warren and Scott had entered a joint venture to
purchase and operate the Property, the court made a series of factual findings.
Those findings included that (1) Warren discovered the Property; (2) Warren
negotiated the agreement to purchase the Property and paid the initial deposit;
(3) Warren arranged the loan and mortgage to acquire the Property and
A-3523-23 22 guaranteed the loan and mortgage; (4) Warren contributed monies to the
Property, including at least $440,000; (5) Warren devoted time and effort to the
development of the Property; and (6) Warren had a reasonable expectation he
would receive profits from the Property, including ultimately a forty-nine
percent interest in the Property.
Those findings are all supported by substantial credible evidence in the
record. Those findings also support the legal conclusion that Warren had a joint
venture with Scott in the Property.
Scott takes issue with the trial court's determination that Warren was
entitled to his forty-nine percent interest in the Property at this time. Scott
contends that under the June 2014 Agreement, Warren's forty-nine percent
interest was contingent on Scott moving out of the apartment. So, Scott asserts
that because he had not moved out, the court had no right to rewrite the contract.
We reject Scott's argument. Having found that Scott converted Warren's
monies and having found that Scott misappropriated monies and mismanaged
the operations of 147 Broad to benefit himself at the expense of Warren, the
court properly concluded that Warren had a right to his forty-nine percent
interest in the Property as a remedy for those breaches. In other words, the trial
court found Scott first breached the June 2014 Agreement by improperly
A-3523-23 23 operating the Property and, therefore, the appropriate remedy was to award
Warren his forty-nine percent interest in the Property.
D. The Remedy Ordered.
Having found Scott liable under three different legal claims, the trial court
determined that the appropriate remedy was to compel the sale of the Property.
In that regard, the court directed that the Property be sold, Scott and Warren be
repaid their loans, and the net sale proceeds be distributed with fifty percen t to
Scott, forty-nine percent to Warren, and one percent to Melissa.
147 Broad contends the trial court erred by granting that relief without
hearing from it. It specifically asserts that it has a due process right to be given
notice and an opportunity for a hearing before its property is sold.
Initially, we note this argument is based on the legal fiction of a
corporation's "personhood." See Citizens United v. Fed. Election Comm'n, 558
U.S. 310, 465 (2010) (Stevens, J., concurring in part, dissenting in part)
(explaining that corporate "'personhood' often serves as a useful legal fiction.
But [corporations] are not themselves members of 'We the People' by whom and
for whom our Constitution was established"). Scott controlled 147 Broad. He
was clearly on notice of Warren's action and defended it vigorously since 2018.
Thus, Scott always had the ability to have 147 Broad intervene in the action.
A-3523-23 24 Warren believed that 147 Broad was part of the action because he had filed
claims derivatively on behalf of 147 Broad. It was only when the trial court
made its rulings in 2024, that Warren learned he could not assert an action on
behalf of 147 Broad.
Nevertheless, we vacate the remedy that compelled the sale of the
Property and remand for a limited proceeding. 147 Broad has a right to be heard
on the remedy. In that regard, we note Warren did not expressly request the
Property be sold. He did make a broad claim for equitable relief and, therefore,
we do not find that the court acted improperly in considering the sale of the
Property. Instead, we remand for the limited purpose of allowing 147 Broad and
Melissa to be heard. Melissa should be invited to intervene in the action and if
she fails to or elects not to intervene then she will be bound by any determination
made on remand.
IV.
We next address the appropriate and available remedies for Scott's
conversion, unjust enrichment, and the violation of the joint venture. Those
remedies can include a money judgment or the compelled sale of the Property.
So, on remand, with all parties present and after making appropriate findings,
A-3523-23 25 the court can enter either a money judgment, a judgment compelling the sale of
the Property, or a judgment providing other appropriate relief.
"The general rule with regard to the measure of damages in conversion is
to award the fair and reasonable market value of the property at the time of
conversion." Chem. Bank v. Miller Yacht Sales, 173 N.J. Super. 90, 102 (App.
Div. 1980). In other words, "the measure of damages . . . for conversion . . . is
the value of the property converted." Arnold v. Hamilton Inv. Co., 132 N.J.L.10,
12 (1944).
Recovery in unjust enrichment cases "rests on the equitable principle that
a person shall not be allowed to enrich himself unjustly at the expense of
another." EnviroFinance Grp., LLC v. Env't Barrier Co., LLC, 440 N.J. Super.
325, 349 (App. Div. 2015). Accordingly, a recovery can also include "the
amount the defendant has benefitted" from plaintiff's investments. Wanaque
Borough Sewerage Auth. v. Township of W. Milford, 114 N.J. 564, 576 (1996);
see also Restatement (Third) of Restitution and Unjust Enrichment, § 51
(explaining "the unjust enrichment of a conscious wrongdoer, or a defaulting
fiduciary . . . is the net profit attributable to the underlying wrong") .
A-3523-23 26 Therefore, damages for conversion and unjust enrichment can include a
money judgment. See Miller Yacht Sales, 173 N.J. Super. at 102; County of
Essex v. First Union Nat. Bank, 186 N.J. 46, 61 (2006).
The remedy for a violation of a joint venture can include compelling the
sale of property. In that regard, when a court has found a joint venture exists,
and one party has violated the venture, the court can compel the sale of property.
See Mitchell v. Oksienik, 380 N.J. Super. 119, 130-31 (App. Div. 2005)
(explaining that once a joint venture has been found, the court may, pursuant to
its "general equity power" resolve all issues between parties, including property
disputes so long as there was actual notice of the specific relief sought). "Among
the remedies available on partition—where other modes of relief are not
practicable—is for sale of the property and division of the net proceeds between
the parties." Id. at 127-28.
Moreover, courts have the authority to order the sale of property as a
matter of judicial economy to resolve all issues between the parties. See Olson
v. Stevens, 322 N.J. Super. 119, 123 (App. Div. 1999) (explaining that although
the trial court's partition order was "premature," generally a compelled sale of
property "advance[s] the objective[s] of judicial economy" to resolve all
disputes relating to property in a single action). See also N.J.S.A. 42:3-19
A-3523-23 27 (explaining that upon dissolution of an association, such as a joint venture, the
court may proceed in a "summary manner").
Additionally, courts have broad discretion to award equitable remedies
for breaches of a joint venture. See, e.g., Rutgers Cas. Ins. Co. v. LaCroix, 194
N.J. 515, 529 (2008) (alteration in original) (quoting Mitchell, 380 N.J. Super.
at 130-31 (stating that "[i]n doing equity, [a] court has the power to adapt
equitable remedies to the particular circumstances of each particular case");
Coney v. Coney, 207 N.J. Super. 63, 75-76 (Ch. Div. 1985) (explaining when
there is no legal remedy at law, "the court will impose equitable remedies to
avoid" an unjust result). In considering whether the sale of property is
appropriate, a court should make explicit findings on the record for why the sale
is required to reach an equitable result. Swartz v. Becker, 246 N.J. Super. 406,
412-413 (App. Div. 1991) (citing N.J.S.A. 2A:56-2) (explaining that prior to the
court ordering a sale "a finding . . . [the] sale will [] promote the interests of the
parties" is "usually required").
Furthermore, a court may appoint a receiver for the sale of the property in
accordance with the Uniform Partnership Law, N.J.S.A. 42:3-19 to -22. Under
that statute "[a]ny creditor … of any limited partnership association . . . after
such expiration or dissolution in an action may apply to the Superior Court for
A-3523-23 28 the appointment of a receiver"). N.J.S.A. 42:3-19. See also N.J.S.A. 42:3-22
(explaining receivers "shall have power to sell . . . property [or] rights and
interests of the association"); see generally Fliegel, 272 N.J. Super. at 524
(explaining that joint ventures are a type of partnership and subject to the
Uniform Partnership Law) (citing N.J.S.A. 42:1-1 to -43). The receiver may
also take actions reasonably necessary to facilitate the sale, including
establishing the fair market value of the property. See N.J.S.A. 42:3-21 (listing
receivers' general powers, including "all other acts which might be done by the
association . . . and that may be necessary for the final settlement of the . . .
association").
Alternatively, if the court finds the sale is inappropriate, the court may
issue a money judgment, with liens on the Property that can be enforced through
an independent action by Warren. See EnviroFinance Grp., 440 N.J. Super. at
350 (explaining "[a]n equitable lien may lie when unjust enrichment or an
express agreement to grant a lien against a specific property is shown").
We reject 147 Broad's and Scott's arguments that compelling a sale of the
Property would violate RULLCA. In support of its argument against the
compelled sale, 147 Broad cites to N.J.S.A. 42:2C-43, which provides:
On application by a judgment creditor of a member, a court may charge the transferable interest of the
A-3523-23 29 member with payment of the unsatisfied amount of the judgment with interest. To the extent so charged, the judgment creditor has only the rights of an assignee of the limited liability company interest. An action by a court pursuant to this section does not deprive any member of the benefit of any exemption laws applicable to his transferable interest. A court order charging the transferable interest of a member pursuant to this section shall be the sole remedy of a judgment creditor, who shall have no right under [RULLCA] or any other State law to interfere with the management or force dissolution of a limited liability company or to seek an order of the court requiring a foreclosure sale of the transferable interest. Nothing in this section shall be construed to affect in any way the rights of a judgment creditor of a member under federal bankruptcy or reorganization laws.
[N.J.S.A. 42:2C-43.]
147 Broad argues that in ordering a sale of the Property, the trial court exceeded
the relief authorized under N.J.S.A. 42:2C-43 for a judgment creditor. In that
regard, 147 Broad argues forcing a sale of the Property would lead to the forced
dissolution of 147 Broad under its Operating Agreement and, therefore, would
contravene N.J.S.A. 42:2C-43, which states a judgement creditor may not
"interfere with the management or force dissolution of a[n LLC]."
This argument fails for three reasons. First, N.J.S.A. 42:2C-43 only
prohibits creditors from applying to the court to "interfere with the management
or force dissolution" of an LLC. Warren did not make an application to dissolve
A-3523-23 30 147 Broad. Instead, he sought to have his interest in 147 Broad recognized. So,
he was not acting as a judgment creditor of Scott.
Second, it is 147 Broad's Operating Agreement, not Warren's application
or a court order, that will cause dissolution of 147 Broad upon a forced sale.
Indeed, the trial court never ordered 147 Broad be dissolved. The Operating
Agreement provides dissolution upon "the sale of the Property and all or
substantially all of the assets of the Company and the collection and distribution
of the proceeds of such sale." 147 Broad's members were free to draft their
operating agreement in a manner that did not force dissolution upon the sale of
the Property. They chose not to do so. More to the point, Scott, who drafted
the Operating Agreement, elected to have the LLC dissolved if the Property was
sold.
Third, as already discussed, courts have broad discretion to grant equitable
relief for joint venturers whose enterprise comes to an end. See Mitchell, 380
N.J. at 127-30. This includes partition or sale of property that was acquired as
part of the joint enterprise. Ibid. Accordingly, N.J.S.A. 42:2C-43 does not
prevent the trial court from exercising its equitable discretion in granting relief
that compels the sale of the Property acquired as part of Warren and Scott's joint
venture. See N.J. Realty Concepts, LLC v. Mavroudis, 435 N.J. Super. 118, 130
A-3523-23 31 (App. Div. 2014) (quoting Cameron v. Ewing, 424 N.J. Super. 396, 406 (App.
Div. 2012)) (explaining that "the general policy of the law [is] to lend the
creditor all reasonable assistance for the enforcement of his [or her] claim,
especially against a debtor who, though possessed of the means to pay, seeks to
evade [the] obligations"); Leonard v. Leonard, 428 N.J. Super. 272, 275-76 (Ch.
Div. 2012) (examining N.J.S.A. 42:2C-43 and holding that a court may order
financial distributions from the sale of an LLC's property to a judgment
creditor).
In summary, we affirm the trial court's findings that Scott engaged in
conversions, unjustly enriched himself, and violated a joint venture he had with
Warren regarding the ownership and operation of the Property. We also affirm
all the factual findings made by the trial court. We remand for a limited hearing
on the appropriate remedy or remedies to be awarded to Warren.
On remand, the trial court can use its discretion on whether to hold a
further evidentiary hearing. We clarify, however, that the remand is limited to
considering the appropriate remedies for Warren's damages. Neither Scott nor
147 Broad can dispute the court's findings that Warren has been damaged by
Scott's conversion and unjust enrichment. We also iterate the trial court
A-3523-23 32 correctly found that there was a joint venture, Scott violated the venture, and
Warren is therefore entitled to a forty-nine percent interest in the Property.
Therefore, on remand those issues, as well as the factual findings that support
them, cannot be challenged by Scott or 147 Broad.
Affirmed in part, reversed in part, and remanded. We do not retain
jurisdiction.
A-3523-23 33