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Trohalides v. Machat

A-4500-08T2 (N.J. Super. App. Div. 2010) (Unpublished)

PARTITION; JOINT VENTURES — Joint venturers are entitled to seek a partition of their property when their joint enterprise comes to an end, irrespective of how title is formally held.

An unmarried couple fell in love and began an intimate relationship. The boyfriend was a home improvement contractor. With this in mind, the two looked for a “handyman special” in which to live. The girlfriend took sole title, using a $10,000 down payment provided by her boyfriend. She also contributed her separate funds to complete the purchase. She testified the home was in her name because “it was her home” and because she qualified for a better mortgage rate. At closing, the parties executed an agreement requiring them to contribute equally to the ongoing costs of the property and, upon the sale of the property, to divide the net proceeds equally. The boyfriend made extensive renovations and repairs to the property. He alleged that his girlfriend was to compensate him for his labor. The girlfriend moved-in two months later.

Five years later, the parties’ relationship became strained. After a dispute and brief separation, the couple signed a reconciliation agreement which stipulated that each would pay for the maintenance and purchase of the residence. Two years later, the girlfriend refinanced the property she transferred title to herself and her boyfriend, as tenants in common. As part of the refinancing, the parties received over $50,000 from the property’s equity. The girlfriend endorsed the check to her boyfriend. He deposited the funds into his personal checking account. The girlfriend stated this money was designated for the boyfriend’s newly formed business to purchase property, renovate that property, and sell it for a profit. The boyfriend asserted the money was payment for his past labor on their residence.

About two years later, the boyfriend purchased a residence in his name. He paid nearly $60,000 in cash toward the purchase price. The girlfriend claimed these cash funds represented the $50,000 from the original residence plus interest. Three witnesses related that the boyfriend had said this was an investment in the new property and had called it a joint venture.

The couple’s personal relationship deteriorated to the point where the girlfriend filed a restraining order, and filed a complaint seeking partition of both residences. The restraining order complaint was dismissed. They agreed the girlfriend would retain possession of the original property and the boyfriend would pay his share of the mortgage obligation. The lower court ruled that the original residence was owned by the couple jointly. As for the second residence, the lower court found no support for the boyfriend’s assertion he was to be paid for his labor in repairing the original residence. It regarded the couple’s relationship as if they were married, and indicated that in such a relationship there is generally no expectation that one partner might be in debt to the other. Additionally, neither the parties’ written agreements nor their oral understandings expressed any provision for such a payment. Therefore, the court held the equity withdrawal was not for payment of services, but was for investment into a joint venture. It ordered that the girlfriend retain the original property and acquire an equitable interest in the second property, and that the boyfriend retain the second residence subject to a determination of the payments made and credits received by each party.

The boyfriend appealed, arguing the second residence was not subject to partition and that the lower court erred in finding a joint venture as to that property. The Appellate Division affirmed, holding that joint venturers are entitled to seek a partition of their property when their joint enterprise comes to an end, irrespective of how title is formally held. The equitable remedy of partition provides for equal division of joint property, including assets held by tenants in common, and a court has broad discretion in shaping partition relief. The Court concluded the lower court’s finding that the second property was intended as a joint venture, and not funded by cash intended to pay the boyfriend for his earlier labor, was amply supported by substantial credible evidence in the record. Also, it did not find that the lower court had abused its discretion in fashioning its partition remedies by granting the boyfriend only a lien on the first residence (where girlfriend and her mother then lived) rather than order the property to be sold.

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