Opinion
DOCKET NO. A-5841-13T4
11-02-2015
RICHARD D. ZOCHOWSKI, as fifty percent shareholder in Zachmar, Inc., Plaintiff-Respondent, v. T. ROBERT ZOCHOWSKI, as fifty percent shareholder in Zachmar, Inc. and ZACHMAR, INC., a New Jersey Corporation, Defendants-Appellants.
T. Robert Zochowski, attorney for appellants. McKenna, DuPont, Higgins & Stone, attorneys for respondent (Edward G. Washburne, of counsel and on the brief).
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION Before Judges Rothstadt and Currier. On appeal from Superior Court of New Jersey, Chancery Division, Monmouth County, Docket No. C-349-03. T. Robert Zochowski, attorney for appellants. McKenna, DuPont, Higgins & Stone, attorneys for respondent (Edward G. Washburne, of counsel and on the brief). PER CURIAM
In this lengthy dispute between two brothers regarding the sale of real estate owned by their closely held corporation, defendants T. Robert Zochowski and Zachmar, Inc. appeal from the Chancery Division's three orders dated July 11, 2014, denying various relief and directing defendants to file a new law suit. On appeal, they contend the orders' denial and requirement that they file a new action violate the "procedural due process governing practice and procedure and the conduct of proceedings in the courts of New Jersey" pursuant to Rule 1:7-4, and their entitlement "to be heard in accordance with [their] fundamental right to procedural due process of law" guaranteed by "the [F]ifth and [F]ourteenth [A]mendments of the United States [C]onstitution and . . . the New Jersey [C]onstitution." Plaintiff Richard D. Zochowski disagrees, arguing the court's action was justified, "sensible[,] and realistic" under the circumstances that were created, in part, by defendant.
We have considered the parties' arguments in light of our review of the record and the applicable principles of law. We reverse.
A recitation of portions of what we previously described as "the tortuous history of this litigation," Zochowski v. Zochowski, No. A-4375-06 (App. Div. March 27, 2008) (slip op. at 2), is necessary to understand our decision. The matter began when plaintiff filed an action in 2003 seeking to dissolve the family corporation. The company owned one parcel of commercial real estate in Hammonton and a residential property in Florida, where the mother lived until moving to an assisted living facility. The original dispute between the brothers began when they could not agree to the disposition of the Florida property upon their mother's relocation. The dispute, however, was assumed to be resolved with the entry of a consent order in 2004 that addressed the sale of the Hammonton property. Unfortunately, the consent order did not resolve the matter and the brothers continued their dispute.
Neither party has included copies of the pleadings in their appendix, so we cannot specifically identify the nature of the claims or whether a counterclaim was filed. We rely upon the general description of the action gleaned from the record.
While the litigation was pending from 2004 to 2006, two different Chancery Division judges entered orders concerning the management of the company and its attempt to sell the Hammonton property. In 2006, the corporation entered into a contract for the sale of the property and received a deposit from a prospective purchaser. However, the sale was never consummated and the deposit was forfeited to the company. Plaintiff then distributed the deposit monies to himself, his mother, and defendant. Defendants claimed the distribution was not in accordance with either a provision of the parties' 1985 agreement regarding the sale of company property or the 2004 consent order.
In addition to the dispute about the distribution of the deposit monies, the brothers became embroiled in a new dispute. The new argument concerned defendants' allegation that plaintiff was improperly using corporate funds to pay his personal attorneys. That dispute resulted in the filing of numerous motions and the entry of several court orders by the same judge we previously described as "understandabl[y] exasperat[ed] with the litigation." Id. at 6.
On March 30, 2009, the judge entered an order denying relief to defendants without prejudice, pending the results of a plenary hearing, if necessary. The order stated:
The court will conduct a plenary hearing on the counsel fee and distribution issue[s] . . . . The hearing will only be conducted if the parties are unable to resolve [the] issue[s] after the sale of [the] Hammonton property. Proceeds [are] to be held in escrow pending hearing[,] if necessary[.] Until and unless hearing is necessitated the matter will remain as set forth in the [March 16, 2007] order.Defendants filed a motion for reconsideration, which the court scheduled for resolution at the time of the hearing.
The order granted plaintiff, among other relief, the "sole authority to negotiate and execute all papers . . . in connection with the sale of the Hammonton . . . property, [and to] operate the corporation." Further, it "restrained [defendant] from conducting any business on behalf of the corporation . . . or interfering with [its] daily operation."
In 2010, defendants filed additional motions, which the court denied subject to the plenary hearing's outcome. For example, on May 18, 2010, the judge denied defendants' motion and scheduled a settlement conference for August 30, 2010, and the hearing for October 20, 2010. The matter did not settle and the hearing never occurred. Additional motions were filed, and hearing dates were scheduled for April 26, 2011, July 20, 2011, January 26, 2012, and August 2, 2012. The majority of the adjournments resulted from the parties' health issues, and occasionally were caused by the court's calendar.
In 2007 and 2008, we reviewed certain orders of the court, including the March 16, 2007 order. We remanded the matter for a hearing on a single issue, unrelated to the present appeal, which occurred on September 8, 2008. See Zochowski v Zochowski, A-5930-05 (App. Div. August 1, 2007) and A-4375-06 (App. Div. March 27, 2008).
In 2013, the judge retired. Prior to his retirement, the matter was inadvertently administratively closed by the court, without notice to the parties. The retired judge's replacement, the current judge, decided to resolve the outstanding issues without conducting the previously ordered plenary hearing and absent knowledge of the matter's closing by the court.
On July 14, 2014, the judge considered the parties' oral arguments. At that hearing, the judge identified the pending motions, provided counsel with a chronology of the case's procedural history that the court constructed, and informed the parties the case had been closed and the physical files archived. According to the judge, the archived files only contained entered orders without supporting motion papers. The judge advised counsel that she did not believe she could reconstruct the file, and that one of the motions, an application for reconsideration, was too stale and lacked supporting documents necessary to render a decision. In response, defendants' counsel withdrew the motion and explained the two distinct inquiries to be addressed at a plenary hearing: the distribution of the forfeited deposit and plaintiff's purported misuse of corporate funds to pay legal fees. The judge, however, decided that she was "not going to start it in in the middle of doing something" and directed defendants to file a new action. Defense counsel responded to the court, "[i]f your preference . . . is for us to commence a complaint, even though we were the defendant[s] in [this] case, that's fine. I'm happy to do it." (emphasis added). The judge stated:
I'm going to deny the motion. You can file the motions or whatever is left. You can file a new complaint. We'll start in with discovery. Because how do we come here and
have a plenary hearing or whatever it is, without discovery on who complied and who didn't comply. I think that's the only way I can do it.
The court entered the aforementioned three orders and this appeal followed.
We begin our review by acknowledging "New Jersey courts follow the 'time-honored rule that the procedural conduct of a trial rests in the sound discretion of the trial judge and that no reversal will follow except for an abuse of that discretion.'" Homann v. Torchinsky, 296 N.J. Super. 326, 340 (App. Div.) (quoting Moksvold v. Meyers, 130 N.J. Super. 481, 484 (App. Div. 1974)), certif. denied, 149 N.J. 141 (1997). We also recognize the dilemma confronting the judge, who essentially inherited a near ancient matter that exasperated her predecessor and presumably the judge before him as well. Complicating the matter was the inadvertent closing of the action and the transfer of the court's files to storage in Trenton. Our sympathy for the judge cannot be understated.
However, we cannot agree that the appropriate remedy under these circumstances was to direct the parties to dismiss the action and start anew. Rather, the court should have required the parties to submit copies of all missing documents to the court and schedule the hearing as soon as possible to bring closure to the matter, instead of "starting from scratch." The parties have already had the full opportunity to which they are entitled for pre-trial discovery and motions. Dismissing the action on the court's own motion so that they could start all over — after more than ten years of waiting to be heard in court — was an abuse of the court's discretion. See Myska v. N.J. Mfrs. Ins. Co., 440 N.J. Super. 458, 483 (App. Div. 2015) (recognizing "courts must guard against sua sponte action or 'resort[ing] to a 'shortcut' for the purposes of 'good administration' and circumvent[ing] the basic requirements of notice and an opportunity to be heard'" (alterations in original) (quoting Klier v. Sordoni Skanska Constr. Co., 337 N.J. Super. 76, 84-85 (App. Div. 2001))).
Based on counsel's statement on the record, we have no issue with the court dismissing defendants' withdrawn motion for reconsideration. --------
Reversed and remanded for scheduling of a hearing within thirty days. 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