SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-4651-18T4

GIORDANO DECANDIA, a/k/a

JORDAN DECANIDIA,

Plaintiff-Appellant,

v.

ANTHONY T. RINALDI, LLC

d/b/a THE RINALDI GROUP, a

New Jersey Limited Liability 

Company, and ANTHONY 

RINALDI (as an individual and

member),

Defendants/Third-Party

Plaintiffs-Respondents,

v.

ELAINE DECANDIA,

Third-Party Defendant.

_____________________________

Submitted September 14, 2020 – Decided

Before Judges Hoffman and Suter.

NOT FOR PUBLICATION WITHOUT THE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.

October 5, 2020
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On appeal from the Superior Court of New Jersey, 

Chancery Division, Union County, Docket No. C000124-17.

Spinella Law Group, attorneys for appellant (Jack T.

Spinella and Jessica M. Wilde, on the briefs).

Baron Samson LLP, attorneys for respondents (Andrew 

Samson, of counsel and on the brief).

PER CURIAM

Plaintiff appeals from the May 14, 2019 Chancery Division order entered 

in favor of defendants, Anthony T. Rinaldi, LLC (the LLC), and its owner, 

Anthony Rinaldi. In 2017, plaintiff sued defendants, alleging they wrongfully 

deprived him of his ownership interest in the LLC, without compensation. 

Following a bench trial, the trial judge denied plaintiff's claims for relief and 

granted defendants' request for judgement on two counterclaims. Having 

considered the parties' contentions in light of the record and the applicable 

principles of law, we affirm in part, and vacate in part. Specifically, we vacate 

only the trial judge's determination that plaintiff's conduct constituted a breach

of the statutory duty of loyalty set forth in N.J.S.A. 42:2C-39.

 I

We derive the following facts from the trial record. The LLC engages in 

construction management and general contracting services, primarily in New 
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Jersey and New York. Rinaldi formed the LLC in 2003. Plaintiff began working

for the LLC in 2011, signing a limited liability operating agreement on February 

14, 2011 (the 2011 Agreement). This document amended the prior operating 

agreement, which had designated Rinaldi "the sole Member and Chief Executive 

Manager of the [LLC]." The 2011 Agreement provided that Rinaldi "has elected 

to admit one additional Member, [p]laintiff," but also stated that Rinaldi "shall 

continue to serve[] as the [LLC]'s only Manager and Chief Executive Manager

. . . ." Addressing management of the LLC, the 2011 Agreement provided: 

Members that are not Managers shall take no part 

whatsoever in the control, management, direction, or 

operation of the [LLC]'s affairs and shall have no power 

to bind the [LLC]. The Managers may from time to time 

seek advice from the Members, but they need not accept 

such advice, and at all times the Managers shall have 

the exclusive right to control and manage the [LLC].

The 2011 Agreement included, as Exhibit C, a schedule labeled "Capital 

Contributions," which allocated ninety percent ownership to Rinaldi and ten 

percent ownership to plaintiff. The schedule included a note clarifying that 

plaintiff's "ownership interest is performance based rather than through capital 

contributions, and . . . shall be increased to, as incentive, [twenty percent] of the 

net profits made on the business procured by him for the [LLC]." Plaintiff also 
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received a corresponding certificate denoting his ten percent membership

interest. 

Rinaldi testified that when he hired plaintiff, the parties agreed plaintiff 

would receive compensation in the form of a salary and "[ten] percent profit 

sharing." According to Rinaldi, profit-sharing is a prevalent and customary 

compensation mechanism within the commercial construction industry. The 

LLC's comptroller likewise testified at trial that the parties advised her of

plaintiff's non-equity profit-sharing arrangement in 2011. The comptroller also 

testified that she herself had a twenty percent profit-sharing arrangement with 

the LLC and that plaintiff received the same deal, just with a lesser share. 

On September 25, 2013, the parties signed an amended operating 

agreement (the 2013 Agreement), adding two other members and allocating to 

them similar percentage interests in the LLC. The Capital Contributions 

schedule to the 2013 Agreement changed plaintiff's percentage in the LLC from 

ten percent to twenty percent and noted plaintiff's "ownership interest is 

performance based rather than through capital contribution, based upon his 

abilities to procure and bring in business to the [LLC]." Plaintiff also received 

a corresponding certificate denoting his twenty percent membership interest, and 

the LLC voided the previously-issued certificate.
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In 2015, plaintiff and Rinaldi began negotiating a buy-sell agreement that 

would enable either Rinaldi or plaintiff to buy out the other's wife, in the event 

one of them died. Rinaldi testified that the purpose of the buy-sell agreement 

was to make plaintiff a twenty percent equity partner in the LLC. The parties

met to discuss the proposed agreement in July 2015. The initial draft stated

plaintiff would own twenty percent of the common stock of the LLC upon 

signing the agreement. Plaintiff rejected these terms, believing he already 

owned twenty percent of the LLC and thus the agreement granted him no 

additional equity. 

On October 19, 2015, the parties met to review a revised draft of the buysell agreement. Rinaldi and two other employees who attended the meeting all 

testified that the purpose of the meeting was to discuss making plaintiff an equity 

partner. The LLC's accountant, who was present at the meeting, testified that 

the parties discussed the tax implications and financial liability associated with 

becoming an equity partner. According to the accountant, plaintiff expressed 

interest in "profits, not taxes" and wanted to avoid any personal liability on the 

LLC's bonds.

The discussions at this meeting then turned to other liabilities associated 

with ownership. Rinaldi disclosed to plaintiff that the LLC was currently under 
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criminal investigation by the Manhattan District Attorney's office, after the New 

York Department of Buildings concluded that numerous safety violations caused 

a death at a LLC construction site. Rinaldi and the LLC's comptroller, both 

present at this meeting, testified that upon hearing of the safety violations and 

criminal investigation, plaintiff grew concerned that his certificate might expose 

him to criminal liability for the construction site death. In response, Rinaldi told 

plaintiff that if the potential liability worried him, he should resign and return 

his certificate to the LLC's lawyer. Plaintiff told Rinaldi that he did not have 

the certificate with him at that time, but he would return it to the LLC's lawyer.

Shortly after this meeting, plaintiff provided his membership certificate to 

the LLC's attorney; however, at trial, plaintiff insisted that he did so because he 

believed turning over the certificate was necessary to execute the buy-sell 

agreement. Plaintiff claimed he believed the parties would resolve their 

differences over the agreement's terms and dropped off the certificate so it could 

be properly notated and attached to the agreement. Plaintiff did not sign the 

certificate or provide an explanatory writing. The parties never finalized the 

buy-sell agreement, and plaintiff never reclaimed his certificate. Following the

surrender of his certificate, plaintiff received bonuses instead of the profitsharing compensation he received in the past. 
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Plaintiff and Rinaldi's relationship soured in March 2017, leading Rinaldi 

to terminate plaintiff's employment with the LLC. According to plaintiff, on 

March 21, 2017, his last day working at the LLC, Rinaldi and another employee 

met with plaintiff and assured him they would "work out a buyout of [plaintiff']'s 

membership interest in the [LLC]." Rinaldi denied making such a statement to 

plaintiff. 

In 2016, the year before he left the LLC, plaintiff began discussions with 

McGowan Builders (McGowan), a direct competitor of the LLC. McGowan 

eventually offered plaintiff a job, and he signed an employment agreement with 

the firm on April 28, 2017. Notably, in the employment agreement, plaintiff 

confirmed he was not a "partner, stockholder, director, manager [or] member" 

in "any business that competes with the business of" McGowan. Even before

signing this agreement, on his last day of employment with the LLC, plaintiff 

forwarded to his wife a proposed budget prepared by the LLC as part of a bid to 

provide construction management services to a firm called Silverback Properties

(Silverback). Plaintiff's wife then sent this budget to McGowan, which later 

submitted its own competing bid to Silverback. Plaintiff thereafter met with 

Silverback, unsuccessfully attempting to persuade the firm to accept McGowan's 

bid. 
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On September 15, 2017, plaintiff filed a complaint against the LLC and 

Rinaldi, seeking various forms of relief, including a declaration that plaintiff 

had a twenty-percent ownership interest in the LLC, the appointment of a 

custodian to protect plaintiff's ownership interest, an order requiring defendants 

to purchase plaintiff's ownership interest, and an award of damages and

attorneys' fees. Plaintiff based his claims for relief on the following legal 

theories: 1) minority member oppression, under N.J.S.A. 42:2C-48; 2) breach of 

fiduciary duties; and 3) piercing the corporate veil. Defendants filed an answer, 

which included affirmative defenses and counterclaims, as well as a third-party 

complaint against plaintiff's wife. The counterclaims alleged 1) breach of the 

common law duty of employee loyalty; 2) breach of duty of loyalty, pursuant to 

N.J.S.A. 42:2C-39; and 3) defamation. The claims against plaintiff's wife were 

dismissed before trial. 

The trial judge held a bench trial over various dates in February and March 

2019. On May 14, 2019, the judge issued a twenty-one-page written opinion 

accompanied by an order denying all of plaintiff's requests for relief. 

Additionally, the order granted two of defendants' counterclaims, finding 

plaintiff breached both the common law duty of employee loyalty as well as the 
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statutory duty of loyalty set forth in N.J.S.A. 42:2C-39; however, the order 

denied defendants' defamation counterclaim.

In the accompanying written decision, after discussing at length the 

evidence and testimony presented at trial, the judge concluded that plaintiff did 

not have an ownership stake in the LLC. Rather, the judge determined that 

plaintiff was merely an employee who received additional compensation 

through a profit-sharing arrangement. The judge found that plaintiff’s act of

turning over his certificates to the LLC's attorney "demonstrated his express will 

to withdraw as a member," thus effecting his disassociation from the LLC under 

N.J.S.A. 42:2C-46. 

Next, the trial judge invoked the doctrine of "unclean hands," as the basis 

for rejecting plaintiff's claims of minority member oppression, breach of 

fiduciary loyalty, and shareholder liability. The judge found that plaintiff 

sending the LLC's confidential information to his new employer placed him 

"before the court with unclean hands," and therefore he could not recover in 

equity. The judge also noted that she has the discretion to invoke the unclean 

hands doctrine sua sponte. 

Finally, addressing defendants' counterclaims, the trial judge explained 

that plaintiff transmitting the LLC's proposed budget for the Silverback bid to 
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McGowan constituted a breach of the common law duty of employee loyalty as 

well as the statutory duty of loyalty owed by LLC members, under N.J.S.A.

42:2C-39; however, the judge found insufficient proof to award damages to 

defendants on their counterclaims; as a result, she awarded "nominal damages 

of $1.00." The judge also rejected defendants' counterclaim for defamation, 

citing the absence of any "direct testimony of defamation."

This appeal followed.

 II

"Final determinations made by the trial court sitting in a non-jury case are 

subject to a limited and well-established scope of review." D'Agostino v. 

Maldonado, 216 N.J. 168, 182 (2013) (quoting Seidman v. Clifton Sav. Bank, 

S.L.A., 205 N.J. 150, 169 (2011)). "Findings by the trial judge are considered 

binding on appeal when supported by adequate, substantial and credible 

evidence." Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 

484 (1974). Moreover, we only disturb the credibility determinations of the trial 

judge if "convinced that they are so manifestly unsupported by or inconsistent 

with the competent, relevant and reasonably credible evidence as to offend the 

interests of justice." Metuchen Sav. Bank v. Pierini, 377 N.J. Super. 154, 161

(App. Div. 2005)(citation and internal quotation marks omitted). Moreover, we 
11 A-4651-18T4

defer to the trial court's credibility determinations because it "'hears the case, 

sees and observes the witnesses, and hears them testify,' affording it 'a better 

perspective than a reviewing court in evaluating the veracity of a witness.'" 

Gnall v. Gnall, 222 N.J. 414, 428 (2015)(quoting Cesare v. Cesare, 154 N.J. 394, 

412 (1998)).

Plaintiff first argues the trial judge committed legal error in finding that 

he "disassociated himself" from the LLC by turning over his shares to the LLC's 

attorney. Plaintiff argues that, pursuant to N.J.S.A. 12A:8-304(c), the mere 

delivery of his certificate to the LLC's attorney, without plaintiff indorsing the 

certificate, cannot constitute legally competent evidence of his intent to transfer 

his shares back to the LLC. 

Initially, we note it is not clear that N.J.S.A. 12A:8-304, which concerns 

security certificates, is applicable to plaintiff's return of his profit-sharing 

documents. Regardless, plaintiff's argument ignores section (d) of the statute, which

states, "against a transferor, a transfer is complete upon delivery." N.J.S.A. 12A:8-

304(d). Thus, plaintiff's delivery of the certificate to the LLC's attorney completed 

the transfer of his profit-sharing interest, notwithstanding the lack of indorsement. 

Pursuant to section (d), the absence of a necessary indorsement simply prevents a 

transferee from becoming a "protected purchaser." N.J.S.A. 12A:8-303. 
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While plaintiff's unendorsed surrender of his certificate prevented the LLC

from attaining protected purchaser status and allows plaintiff to challenge the 

validity of the transfer, it did not render the transfer invalid. The trial judge, after 

assessing the credibility of witnesses and weighing the evidence presented, found 

that plaintiff's surrender of his certificate "demonstrated his express will to withdraw 

as a member." Under N.J.S.A. 42:2C-46(a), a person becomes dissociated as a 

member from a limited liability company when "[t]he company has notice of the 

person's express will to withdraw as a member." N.J.S.A. 42:2C-46(a). Therefore, 

plaintiff's surrender of his shares disassociated him from the LLC and validly 

transferred his profit-sharing interest back to the LLC. 

The trial judge's decision turned on two key findings. First, the judge 

found that plaintiff did not have an ownership interest in the LLC. While the 

operating agreement and certificate denoted plaintiff owned a twenty-percent 

membership interest, the judge found this referred to plaintiff's arrangement to 

receive a twenty percent share of the business he brought in. The judge 

acknowledged there was evidence supporting both positions, but ultimately, the 

judge's assessment of witness testimony and credibility revealed that plaintiff 

relinquished whatever ownership interest he may have held in the LLC. 

Specifically, the judge relied on the testimony of other employees, who stated 
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plaintiff wanted profits instead of the increased tax burden and potential 

criminal and financial liability associated with ownership. The judge also relied 

on the fact that plaintiff did not indicate he had an ownership interest when filing 

his taxes and balked at the idea of personally guaranteeing the LLC's credit and

bonds. Further, the operating agreement precluded plaintiff's participation in 

management of the LLC and in fact, plaintiff was not involved in the 

management. The judge also found plausible Rinaldi's explanation that he 

referred to plaintiff as a partner to third parties only to enhance the LLC's stature. 

We defer to the judge's finding here as it was supported by substantial evidence 

and based on her assessment of the credibility of the evidence presented. 

The trial judge's second critical finding was that plaintiff's act of turning 

over his certificates to the LLC's attorney "demonstrated his express will to 

withdraw as a member." Under N.J.S.A. 42:2C-46(a), such an act constitutes an 

event causing a person to be "dissociated as a member from a limited liability 

company." Thus, the judge's conclusion that plaintiff dissociated from the LLC

turned on this factual finding. In her decision, the judge explained how her 

assessment of the evidence and witness credibility led her to make this finding: 

Shortly after the October meeting [plaintiff] dropped 

off his shares at the office of the corporate attorney. He 

says this was to enable the shares to be notated and 

attached to the proposed agreement. At this point in 
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time there was no agreement. Rinaldi believes he did it 

due to concerns regarding the criminal investigation. 

While his actions could be consistent with either point 

of view, the court finds the fact that [plaintiff] left no 

instructions and did not again inquire about the shares 

strongly supports the point of view that he was turning 

his shares in. He also represented to McGowan that he 

had no ownership in Rinaldi. He received a bonus, not 

a distribution in December 2015. The court finds 

[plaintiff] disassociated himself from the [LLC] as of 

the date he dropped the shares off. This demonstrated 

his express will to withdraw as a member.

Again, we defer to the credibility determinations of the trial judge in 

assessing the evidence and testimony presented. There was substantial evidence 

supporting the finding that plaintiff expressed his intent to dissociate as a 

member of the LLC, including testimony showing plaintiff sought to avoid 

criminal liability, testimony that plaintiff turned in his membership certificate

after Rinaldi suggested he do so to effect his resignation, and evidence showing 

plaintiff did not receive profit sharing compensation after he surrendered his 

certificates. We discern no basis to disturb the judge's finding. We conclude 

the trial judge's determination that plaintiff was not a part-owner of the LLC was 

supported by substantial, credible evidence. 

Plaintiff next argues that, even if he did dissociate from the LLC when he 

turned in his membership certificate, he did not lose his "economic rights" and 

thus remains entitled to receive compensation for the fair value of his ownership 
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interest. As previously noted, the trial judge properly found that plaintiff did 

not have an ownership interest in the LLC. Because plaintiff retained no 

compensable ownership interest upon his dissociation from the LLC, his 

argument fails. 

Plaintiff further argues the trial judge misapplied the unclean hands 

doctrine, which precluded the consideration of his equitable claims. We 

disagree.

In order to recover in equity, a party "must be with clean hands." Heuer 

v. Heuer, 152 N.J. 226, 238 (1998). The unclean hands doctrine provides, "a 

court should not grant relief to one who is a wrongdoer with respect to the 

subject matter in suit." Faustin v. Lewis, 85 N.J. 507, 511 (1981). However, there 

are limits to the doctrine's application. Heuer, 152 N.J. at 238. For example, 

the unclean hands doctrine "should not be used as punishment but to further the 

advancement of right and justice." Pellitteri v. Pellitteri, 266 N.J. Super. 56, 65 

(App. Div. 1993)(citing Heritage Bank, N.A. v. Ruh, 191 N.J. Super. 53, 71-72 

(Ch. Div. 1983)). The doctrine: 

[D]oes not repel all sinners from courts of equity, nor does

it apply to every unconscientious act or inequitable 

conduct on the part of the complainants. The inequity 

which deprives a suitor of a right to justice in a court of 

equity is not general iniquitous conduct unconnected with 

the act of the defendant which the complaining party states 
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as his ground or cause of action; but it must be evil practice 

or wrong conduct in the particular matter or transaction in 

respect to which judicial protection or redress is sought.

[Heuer, 152 N.J. at 238 (quoting Neubeck v. Neubeck,

94 N.J. Eq. 167, 170 (E. & A. 1922)).] 

"'It is the effect of the inequitable conduct on the total transaction which is 

determinative whether the maxim shall or shall not be applied.'" Heuer, 152 N.J. at 

238 (quoting Untermann v. Untermann, 19 N.J. 507, 518 (1955)).

Applying the doctrine of unclean hands is within the court's discretion. 

Borough of Princeton v. Bd. of Chosen Freeholders, 169 N.J. 135, 158 (2001). Trial 

courts are permitted to invoke the doctrine sua sponte in order to further the interests 

of justice and public policy. Trautwein v. Bozzo, 39 N.J. Super. 267, 268 (App. Div. 

1956). 

Plaintiff asserts the court's application of the unclean hands doctrine was 

inappropriate because there was no correlation between his wrongful conduct and 

the underlying controversy, and because defendants suffered no injury. 

Here, the plaintiff's wrongful conduct was towards defendants, in that he

misappropriated the LLC's confidential information and provided it to a direct 

competitor. This was not wrongful conduct towards an unrelated third party. 

Instead, plaintiff's conduct derived directly from his employment relationship 

with defendants and from their underlying employment dispute. Plaintiff also 
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contends defendants suffered no injury since McGowan failed to win the 

contract despite having access to the LLC's confidential information while 

preparing its competing bid. This argument lacks merit. The act of plaintiff

misappropriating the LLC's confidential information constituted a breach of 

loyalty and an injury, notwithstanding the absence of provable damages. The 

trial court recognized this in its award of nominal damages to defendants. We 

are satisfied the trial judge properly applied the unclean hands doctrine in this 

case. 

Finally, plaintiff challenges the trial court's determination that plaintiff 

breached the statutory duty of loyalty, contrary to N.J.S.A. 42:2C-39, in granting 

defendants' second counterclaim. Specifically, plaintiff asserts the statute only 

imposes a duty of loyalty upon members of member-managed LLCs and on 

managers of manager-managed LLCs. Plaintiff argues that he was a member of a 

manager-managed LLC and therefore, the statute did not apply to him. We agree, 

as a plain reading of the statute indicates that it applies to members of "membermanaged" limited liability companies. N.J.S.A. 42:2C-39(a).

The limited liability operating agreement governing plaintiff’s 

employment with the LLC clearly stated it was a manager-managed LLC and 

explicitly provided that Rinaldi was "the [LLC]'s only Manager and Chief 
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Executive Manager." The agreement further stated, "Members that are not 

Managers shall take no part whatsoever in the control, management, direction, 

or operation of the [LLC]'s affairs and shall have no power to bind the LLC." 

The trial record clearly established that plaintiff was not involved in the day-today management of the LLC. The facts clearly showed the LLC was a managermanaged LLC and plaintiff was only a member. Therefore, N.J.S.A. 42:2C-39

imposed no duty upon plaintiff; as a result, we vacate the judge's determination

that plaintiff breached this statutory duty. While we vacate that portion of the 

judge's order, we note that she did not award defendants any damages for the 

statutory violation; in all other respects, we affirm the order under review.

Affirmed in part and vacated in part.