Court Opinion

ID: 4429416
Source: CourtListenerOpinion
Date Created: 2019-08-20 19:23:36.780103+00
Date Added: 2024-06-11T14:51:09.520290
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE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-1394-17T1

SCOTT FISHBONE,

           Plaintiff-Appellant,

v.

CHASE PARTNERS, LLC and
CLARK I. HAMILTON,

            Defendants-Respondents.

                    Argued November 28, 2018 – Decided February 5, 2019

                    Before Judges Koblitz, Currier, and Mayer.

                    On appeal from Superior Court of New Jersey, Law
                    Division, Essex County, Docket No. L-2283-12.

                    Jay J. Rice argued the cause for appellant (Nagel Rice,
                    LLP, attorneys; Jay J. Rice, of counsel and on the brief;
                    Randee M. Matloff, on the briefs).

                    Tod S. Chasin argued the cause for respondents (Budd
                    Larner, PC, attorneys; James B. Daniels and Tod S.
                    Chasin, on the brief).

PER CURIAM
      In this matter, before this court for a second time after a remand and bench

trial, plaintiff Scott Fishbone appeals from the May 22, 2017 final judgment

dismissing his complaint. We affirm.

      Plaintiff was an employee of Advance Residential Communities, Inc.

(ARC). In 2003, ARC entered a joint venture agreement to develop residential

properties with defendants Chase Partners, LLC and Clark Hamilton.

Thereafter, the parties executed an incentive compensation agreement (incentive

agreement). The incentive agreement entitled plaintiff to compensation for his

role in the joint venture's projects if: 1) a "capital event" occurred; or 2) ARC

and defendants terminated the joint venture agreement and the termination

resulted in a "distribution" to defendants.

      In 2010, ARC and defendants terminated their joint venture agreement.

As part of the settlement of the ensuing litigation, defendants transferred their

interest in a residential property located in Union, New Jersey to ARC . All

parties then dismissed their respective claims. Defendants received $167,600

"[i]n exchange for [Hamilton's and Chase's] execution of this Agreement and the

Transfer Agreement."

      Upon learning of the payment, plaintiff requested compensation for the

Union property under the incentive agreement, which defendants denied. As a

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result, plaintiff filed a complaint, alleging breach of the incentive agreement.

The trial court granted summary judgment to plaintiff, finding he was entitled

to incentive compensation because defendants received a "distribution" from the

2010 settlement agreement. On appeal, we reversed and remanded, finding an

issue of fact due to the ambiguity of the term "distribution" in the incentive

agreement. See Fishbone v. Chase Partners, LLC, No. A-4003-13 (App. Div.

Feb. 26, 2016).

      On remand, after conducting a bench trial, the trial judge found the

$167,600 defendants received from the 2010 settlement agreement was not a

distribution, precluding plaintiff from collecting incentive compensation. The

judge assessed the parties' intent of the term "distribution" at the time of their

contract, and found the parties "understood the term distribution in the context

of such an incentive compensation arrangement to mean not merely any payment

received by Hamilton . . . but payment representing Hamilton's share . . . of net

profits from a project." As the Union property generated no net profits a t the

time of the 2010 settlement agreement, the trial court concluded no distribution

occurred and, therefore, plaintiff was not entitled to incentive compensation.

      On appeal, plaintiff argues the trial court erred in: 1) its interpretation of

"distribution"; 2) failing to shift the burden of persuasion to defendants to show

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the $167,600 was not a distribution; and 3) not holding an ambiguous term

against the party who insisted on its inclusion, the doctrine of contra

proferentem.

      Our review of a trial court's fact-finding in a non-jury case is limited.

Seidman v. Clifton Sav. Bank, S.L.A., 205 N.J. 150, 169 (2011). "The general

rule is that findings by the trial court are binding on appeal when supported by

adequate, substantial, credible evidence. Deference is especially appropriate

when the evidence is largely testimonial and involves questions of credibility. "

Ibid. (quoting Cesare v. Cesare, 154 N.J. 394, 411-12 (1998)). This court

"should not disturb the factual findings and legal conclusions of the trial judge

unless [we are] 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." Ibid. (quoting Cesare, 154 N.J. at 412).

      The parties disputed the interpretation of "distribution." As a result, the

trial judge conducted a bench trial, assessed the parties' credibility, and issued a

comprehensive oral decision on May 9, 2017.

      The trial court reasoned that plaintiff had to demonstrate two elements to

"carry his burden of establishing entitlement to the $125,000.00 [incentive

agreement]." Plaintiff had to show "there was a 'capital event' or 'termination

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of the contractual relationship between ARC and Hamilton,'" and, "as a result of

either such event . . . or transaction, there was a 'distribution' to Hamilton from

ARC" for the Union project.

      Although the trial judge determined plaintiff satisfied the first element as

ARC and Hamilton terminated their contractual relationship with the 2010

settlement agreement, he failed to establish the second prong because the

$167,600 paid to defendants in the 2010 settlement agreement was not a

"distribution" under the incentive agreement.

      In his analysis, the trial judge found "the payment of $167,600 must be

understood in the context of a settlement in which the parties globally release

their claims," as "[t]he termination of Hamilton's interest in the Union [project]

was one component of the parties' settlement agreement." The other component

was the dismissal of the claims and counterclaims Hamilton and ARC had

lodged against each other. Therefore, the judge held,

                   Given the nature, purpose, and explicit text of the
            agreement, it is certainly not possible to conclude that
            the sole function served by the $167,600 payment was
            a payment . . . for the transfer of the membership
            interests, nor is it possible to determine if even a
            specific quantifiable portion of the payment is
            attributable solely to the membership interest in [the]
            Union [project].

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                  Although the - - the amount itself, $167,600,
            appears precise . . . [plaintiff] has not supplied any
            evidence for that precision that would support his
            claim, such as a calculated value of Hamilton's share of
            Union's profits. The [c]ourt finds the record permits no
            conclusion, other than the amount was simply a
            component of the overall settlement.

      Thus, the trial court reasoned the sum Hamilton received in the 2010

settlement "was a nominal payment given in consideration of the parties'

agreement to terminate what at the time was an unsuccessful project as to which

the parties have traded allegations of mismanagement and breach." As such, the

2010 settlement could not be a distribution because plaintiff and defendants

"understood the term distribution in the context of such an incentive

compensation arrangement to mean not merely any payment received by

Hamilton . . . but payment representing Hamilton's share . . . of net profits from

a project." Specifically, the court found,

                  Hamilton intended and Fishbone understood that
            the incentive bonus compensation . . . [was] offered to
            reward extraordinary performance above and beyond
            that required for ARC salary and bonus participation
            and to be paid upon a closing or comparable
            transactional event generating profits for the venture
            which Hamilton received as his percentage share.

                 Hamilton would pay these amounts from
            Hamilton's share of such profits. Although the terms
            on which Hamilton agreed to pay incentive
            compensation bonuses to Fishbone changed in certain

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             ways . . . the [c]ourt finds Hamilton always intended
             and Fishbone understood these payments would be
             made from Hamilton's share of profits resulting from a
             successful project.

Since the settlement was not Hamilton's net profit, "as there were no profits on

the Union project to distribute," plaintiff was not entitled to a distribution.

      The trial court also addressed plaintiff's argument regarding the doctrine

of contra proferentem, noting the doctrine is the "rule of interpretation of the

last resort." As the doctrine is only used if a court is unable to determine the

contracting parties' intent through the agreement's text or intrinsic evidence and

if there is unequal bargaining power between the parties, the judge concluded it

was inapplicable in this matter as there was "sufficient" extrinsic evidence to

determine the parties' intent when contracting, and "the parties were not of

unequal bargaining power."

      The trial court's cogent findings are supported by the evidence presented

in the bench trial. In a 2004 email exchange, Hamilton offered, and plaintiff

accepted, incentive compensation "upon [property] closings" and "on the basis

of value creation." Additionally, plaintiff expressed interest in executing an

incentive agreement to ensure defendants' "success" and wanted incentive

compensation for the "significant profits" he previously created on defendants'

behalf for other projects. As defendants did not profit from a successful Union

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project, the trial court correctly determined plaintiff was not entitled to incentive

compensation under the parties' agreement.

      Plaintiff also contends the trial court erred by not applying the doctrine of

contra proferentem.     We agree the doctrine was inapplicable under these

circumstances. If a court is unable to determine the meaning of a term in a

contract, it may utilize the doctrine and "adopt the meaning that is most

favorable to the non-drafting party." Pacifico v. Pacifico, 190 N.J. 258, 267

(2007) (citing 5 Corbin on Contracts § 24.27 (Perillo ed., rev. ed. 1998)). Here,

however, after reviewing the evidence, the trial court made findings as to the

parties' intent at the time of their contract as to the term "distribution."

Therefore, resort to the doctrine was unnecessary.

      Affirmed.

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