Opinion
DOCKET NO. A-3333-13T3
04-16-2015
WILLIAM CAMPBELL, Plaintiff-Appellant, v. RAFF & MASONE, P.A. and MICHAEL MASONE, in his capacity as escrow agent, and BCB BANCORP, INC., Defendant-Respondent. BCB COMMUNITY BANK, IMPROPERLY PLED AS BCB BANCORP, INC., Third-Party Plaintiff-Respondent, v. BRIAN M. CAMPBELL, Third-Party Defendant-Respondent, v. BCB COMMUNITY BANK, Third-Party Defendant-Respondent.
Laurence R. Maddock argued the cause for appellant (Waters, McPherson, McNeill, P.C., attorneys; Mr. Maddock, of counsel and on the briefs; James M. Spanarkel, on the briefs). Steven L. Menaker argued the cause for respondent BCB Community Bank (Chasan Leyner & Lamparello, P.C., attorneys; Mr. Menaker, of counsel and on the brief; Kirstin Bohn, on the brief). Dan A. Druz argued the cause for respondent Brian M. Campbell.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION Before Judges Koblitz and Higbee. On appeal from Superior Court of New Jersey, Chancery Division, Hudson County, Docket No. C-163-11. Laurence R. Maddock argued the cause for appellant (Waters, McPherson, McNeill, P.C., attorneys; Mr. Maddock, of counsel and on the briefs; James M. Spanarkel, on the briefs). Steven L. Menaker argued the cause for respondent BCB Community Bank (Chasan Leyner & Lamparello, P.C., attorneys; Mr. Menaker, of counsel and on the brief; Kirstin Bohn, on the brief). Dan A. Druz argued the cause for respondent Brian M. Campbell. PER CURIAM
Plaintiff William Campbell appeals from a Chancery judge's February 18, 2014 order after trial declaring that the $300,000 deposited in Raff & Masone, P.A.'s escrow account for plaintiff's son, Brian M. Campbell, was an unconditional gift. We reverse and remand to the judge to reevaluate the evidence using the appropriate standard of proof.
We refer to the Campbells by their first names for clarity, intending no disrespect.
The trial testimony revealed the following facts. Plaintiff was president and chief executive officer of Pamrapo Savings Bank (Pamrapo) from 1970 until his resignation in 2009. He was also a member of Pamrapo's Board of Directors in 2008 and early 2009.
Due to a 2009 merger, BCB Community Bank (BCB), improperly pled as BCB Bancorp, Inc., is the successor to Pamrapo.
Pamrapo Service Corporation was a subsidiary of Pamrapo. Brian ran Pamrapo Service Corporation, which assisted people in making investments in addition to selling various financial products. Prime Capital Services, Inc. (Prime Capital), a registered broker-dealer, was the broker for financial products sold by Pamrapo Service Corporation. Brian's compensation from Pamrapo Service Corporation was in the form of commission payments made to Pamrapo, which then deducted expenses and forwarded a portion of the remainder to Brian. In 2007, Brian began to receive one hundred percent of his commissions directly from Prime Capital.
This change in commission structure raised concerns among employees of Pamrapo. A July 25, 2007 letter, approving a change in the commission structure between Prime Capital and Brian, was signed by plaintiff as president of Pamrapo Service Corporation as well as by a representative of Prime Capital. Plaintiff could not remember signing the letter, and stated that he did not authorize the change in Brian's commission structure and would not have approved the change had he seen the letter.
In 2008, Pamrapo decided to sell Pamrapo Service Corporation's brokerage accounts because of new federal regulations. Brian agreed to purchase Pamrapo Service Corporation's brokerage accounts for $300,000. The initial "Sale and Purchase Agreement" provided that the $300,000 be paid over monthly payments throughout a seven-year period. Subsequently, the Board of Directors of Pamrapo changed the terms of the agreement by requiring a lump sum payment of $300,000 at the time of the closing. Plaintiff contends he decided to loan Brian $300,000 because Brian could not pay the lump sum now required to purchase the brokerage accounts. Plaintiff further recalls telling Brian he would lend him the money and Brian agreeing to repay plaintiff. Plaintiff did not discuss with Brian specific terms of the loan.
Plaintiff withdrew $300,000 from his bank account at Pamrapo on February 5, 2009. He gave the money to his brother, Donald Campbell, Esq. to deposit in Raff & Masone, P.A.'s escrow account until the deal closed. Donald placed the funds in Raff & Masone, P.A.'s escrow account. No documents memorializing the $300,000 payment to Brian were ever drafted nor was Donald instructed to prepare a promissory note, although plaintiff testified that he had expected Donald to prepare a promissory note before delivering the money into the escrow account. The deal was rescinded because Brian was indicted by a federal grand jury on charges relating to his diversion of commissions. Plaintiff testified that, had the deal been completed, he would have had a formal loan document prepared. Thereafter, plaintiff learned BCB objected to the return of the escrowed money to plaintiff.
Donald was counsel to Pamrapo.
Raff & Masone, P.A., was the law firm representing Pamrapo in the sale of Pamrapo Service Corporation's brokerage accounts to Brian.
Brian was indicted for many counts of mail fraud. In his brief filed in federal court, Brian claimed that the $300,000 in escrow belonged to him. On March 21, 2011, a jury convicted Brian of all thirty-three counts of mail fraud alleged in the indictment. Brian was sentenced to six months imprisonment. He was ordered to pay $300,758.35 in restitution to BCB, and "to forfeit to the Unites States the sum of $571,104.86[.]"
"The general rule is that [factual] findings by the trial court are binding on appeal when supported by adequate, substantial, credible evidence." Cesare v. Cesare, 154 N.J. 394, 411-12 (1998) (citing Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 484 (1974)). We do not substitute our own assessment of the evidence for that of the trial judge. State v. Minitee, 210 N.J. 307, 317 (2012) (citation omitted). An appellate court is not, however, bound by the legal conclusions of a trial court. State v. Gandhi, 201 N.J. 161, 176 (2010) (citations omitted). "[C]onclusions of law are reviewed de novo." Zaman v. Felton, 219 N.J. 199, 216 (2014).
Plaintiff's principal argument is that the $300,000 deposited in Raff & Masone, P.A.'s escrow account constituted a conditional gift with the implied condition that Brian could only use the funds to purchase Pamrapo Service Corporation's brokerage accounts. Because the purchase was not completed, plaintiff asserts that the funds should be returned to him.
In the Sipko case, our Supreme Court stated that:
[t]o demonstrate a valid and irrevocable gift, a donee must establish four elements:
First, the donor must perform some act constituting the actual or symbolic delivery of the subject matter of the gift. Second, the donor must possess the intent to give. Third, the donee must accept the gift. Our cases also recognize an additional element, the relinquishment by the donor of ownership and dominion over the subject matter of the gift.
[Sipko v. Koger, Inc., 214 N.J. 364, 376 (2013) (citations and internal quotation marks omitted).]
The Sipko Court explained the definition of a conditional gift, stating: "When the evidence establishes that the gift was premised upon the fulfillment of a condition by the donee, the gift is conditional; if the donee performs the condition, the gift becomes his or her property, but if the donee fails to perform the condition, the gift must be returned." Ibid. (citations omitted). The element of intent and the underlying circumstances are the appropriate focus of inquiry. Id. at 376-77.
Furthermore, when a gift "is absolute and made voluntarily with a full understanding of its effect[, it] cannot be revoked by the donor, either by his act alone or with the aid of a judicial tribunal." Hill v. Warner, Berman & Spitz, P.A., 197 N.J. Super. 152, 164 (App. Div. 1984) (citation omitted).
"The burden of proving an inter vivos gift is on the party who asserts the claim." Bhagat v. Bhagat, 217 N.J. 22, 41 (2014) (citing Sadofski v. Williams, 60 N.J. 385, 395 n.3 (1972)). In the Bhagat case, the Court stated:
Generally, the recipient must show by "clear, cogent and persuasive" evidence that the donor intended to make a gift. When, however, the transfer is from a parent to a child, the initial burden of proof on the party claiming a gift is slight. In such cases a presumption arises that the transfer is a gift. . . . The rationale for the presumption is that a child is considered a natural object of the bounty of the donor.
[Id. at 41-42 (internal citations omitted).]
Once a child proves by this "slight" burden that a gift was made, the donor has a heavy burden, that of clear and convincing evidence, to prove that the gift was conditional. Plaintiff argues persuasively that the trial court erred by imposing on plaintiff an incorrect, and even heavier burden of proof, that of beyond a reasonable doubt. In the Bhagat case, our Supreme Court explained that the "beyond a reasonable doubt" standard does not apply in any civil setting in the State of New Jersey, including this one. Id. at 46. The Court stated,
The other issue plaintiff raises on appeal, that his motion for summary judgment prior to trial should have been granted, is without sufficient merit to require discussion in a written opinion. R. 2:11-3(e)(1)(E).
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Rather, our examination of the cases suggests that the standard has been understood as, and should be, clear and convincing. We view the other language used in the cases as simply an attempt to describe the quality of evidence, e.g., clear, cogent, certain, and definite, that will satisfy the clear and convincing standard of proof.Clear and convincing means "a firm belief or conviction that the allegations sought to be proved by the evidence are true." Ibid. (citation and internal quotation marks omitted). An incorrect application of the burden of proof is reversible error. See, e.g., CPC Int'l, Inc. v. Hartford Accident & Indem. Co., 316 N.J. Super. 351, 374-75 (App. Div. 1998), certif. denied, 158 N.J. 73 (1999).
[Ibid.]
A review of the trial court's opinion demonstrates that it incorrectly used the "beyond a reasonable doubt" burden of proof. The opinion states:
to justify the declaration of a conditional gift by implication, I must be convinced beyond any reasonable or intelligent doubt that William's $300,000 gift was conditioned upon the sale of Pamrapo Service Corp. to Brian Campbell and that in the event that the sale did not take place, the money was to be returned to William.
The opinion asserts at another point that the fact the money was placed in an escrow account "certainly does not prove or establish beyond any reasonable or intelligent doubt that the gift was conditional[.]" We are therefore constrained to remand to the trial court to review the evidence again, holding plaintiff to the appropriate standard of proof: to demonstrate by clear and convincing evidence that the $300,000 plaintiff transferred to an escrow account was a conditional, rather than unconditional, gift to his son Brian.
Reversed and remanded to the trial court for further proceedings consistent with this opinion. We do not retain jurisdiction. I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION