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Millville Industrial Development Company v. Brody

A-3509-03T3 (N.J. Super. App. Div. 2005) (Unpublished)

PARTNERSHIPS; DISSOLUTION; DAMAGES—A claim based on intentional infliction of emotional distress against a partner must be based on intentional or reckless outrageous conduct going beyond all bounds of decency.

Two partners, each themselves partnerships, battled for approximately twenty-five years over various aspects of certain of their real estate partnerships, including the unsuccessful sale of two properties. Prior litigation had ended with a settlement and mutual release agreement. The two partners then sued a former general partner in both partnerships, alleging breach of fiduciary duty. The former general partner responded by bringing a counterclaim against the two partners, alleging nonpayment of certain compensation due him under the prior settlement agreement regarding the non-sale of the properties and intentional infliction of emotional distress.

As to an intentional infliction of emotional distress claim made by the general partner, the lower court held that to sustain such a claim, there must be evidence that the two partners acted intentionally or recklessly; and, reckless conduct means acting in deliberate disregard of a high degree of probability that emotional distress will follow. The conduct must be extreme and outrageous, going beyond all possible bounds of decency, and that the distress suffered must be so severe that no reasonable person could be expected to endure. The lower court concluded that these elements of the claim were not satisfied.

On the general partner’s claim for compensation, the lower court looked at the prior settlement agreement, which it called a fully integrated document. It concluded that nothing in the agreement entitled the general partner to compensation. The lower court found that in the failed transactions in question, there was a prerequisite to the general partner’s right to a commission, i.e., the properties in those transactions had to be sold. The lower court found that nothing in the agreement actually required that the properties be sold, and that there was no evidence that there was any intentional delay on the part of the two partners in their attempts to sell the properties. Therefore, because the sales never occurred, the general partner was owed nothing.

The lower court then dismissed the partnerships’ claims as being barred by the prior settlement agreement, concluding that the parties were astute businesspeople, each represented by counsel. Specifically, it found that the broad release language of the settlement agreement barred the claims.

The Appellate Division affirmed the lower court’s decision, holding that the contentions raised by all three parties were without merit and did not warrant discussion.

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