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Zochowski v. Zochowski

A-6481-03T1 (N.J. Super. App. Div. 2005) (Unpublished)

CORPORATIONS; SHAREHOLDERS —A court does not violate a shareholder’s constitutional due process rights by ordering him or her to abide by a settlement agreement that has been previously entered into by the shareholder.

Two brothers were each fifty percent shareholders in a real estate corporation. The brothers’ mother transferred title to two properties to the corporation. At the time, the mother lived in a home on one of the properties. The brothers agreed that they would sell the property in the event the mother moved. Soon thereafter, the mother moved to an assisted living facility. After the move, the mother requested that the corporation sell the property so she could collect her share of the proceeds. One of the brothers agreed to sell the property, but the other brother refused to consent. As a result, the consenting brother filed an action to compel the sale of the property. The lower court entered a settlement order which required the non-consenting brother to list the property for a short term rental. It also ordered that the corporation distribute the rent proceeds to the mother. It further ordered that the property be offered for sale if the mother was still in the assisted living facility after a certain date. As part of the settlement, the non-consenting brother agreed to use his personal funds to contribute to his mother’s living expenses that were not covered by the rent proceeds. After the settlement order was entered, the non-consenting brother refused to list the property for rent or to contribute to his mother’s expenses as required. His brother then filed a motion to enforce the settlement order and for reimbursement of attorneys’ fees incurred in filing the application. The lower court directed that the property be sold immediately and that the proceeds be distributed to the mother. It also granted the brother’s request for attorney’s fees. The non-consenting brother appealed the lower court’s ruling, asserting, among other things, that the court violated his constitutional due process rights by ordering the sale of the property before his mother moved out of the assisted living facility.

The Appellate Division affirmed the lower court’s ruling. It held that the lower court did not violate the brother due process rights because the brother had previously agreed to sell the property if his mother had not moved out of assisted living by a certain date. It found that the lower court had ordered the sale of the property because of the brother’s failure to comply with the settlement order and to lease the property as directed. It further found that he failed to provide any evidence that he complied with the settlement. It also held that the lower court was well within its discretion in awarding attorneys’ fees to the consenting brother for fees incurred in filing the enforcement application.

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