Delaney v. Dykstra

• Decision Date: 12 August 2019
• Docket Number: DOCKET NO. A-3246-16T2,DOCKET NO. A-5523-17T1,DOCKET NO. A-1115-16T2
• Parties: BRIAN DELANEY, individually and derivatively on behalf of CC HOLDINGS, LLC, and derivatively on behalf of CCSV, LLC, Plaintiff-Appellant, v. OWEN DYKSTRA, DOUGLAS DYKSTRA, and DIMITRIOS PRASSAS, Defendants-Respondents, and CC HOLDINGS, LLC, and CCSV, LLC, Nominal Defendants. DIMITRIOS PRASSAS, individually and derivatively, and CC HOLDINGS, LLC, Plaintiff-Respondents, v. BRIAN DELANEY, Defendant-Appellant, and OWEN DYKSTRA, P.E., and DOUGLAS DYKSTRA, Defendants-Respondents. OWEN DYKSTRA and CC HOLDINGS, LLC, Plaintiffs-Respondents, v. BRIAN DELANEY, Defendant-Appellant.
• Court: New Jersey Superior Court — Appellate Division

BRIAN DELANEY, individually and derivatively on behalf ofCC HOLDINGS, LLC, and derivatively on behalf of CCSV, LLC, Plaintiff-Appellant, v. OWEN DYKSTRA, DOUGLAS DYKSTRA,and DIMITRIOS PRASSAS, Defendants-Respondents,andCC HOLDINGS, LLC, and CCSV, LLC, Nominal Defendants.

DIMITRIOS PRASSAS, individually and derivatively,and CC HOLDINGS, LLC, Plaintiff-Respondents, v. BRIAN DELANEY, Defendant-Appellant,andOWEN DYKSTRA, P.E., and DOUGLAS DYKSTRA, Defendants-Respondents.

OWEN DYKSTRA and CC HOLDINGS, LLC, Plaintiffs-Respondents, v. BRIAN DELANEY, Defendant-Appellant.

DOCKET NO. A-1115-16T2

DOCKET NO. A-3246-16T2

DOCKET NO. A-5523-17T1

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION

Argued April 1, 2019

August 12, 2019

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.

Before Judges Haas, Sumners and Mitterhoff.

On appeal from the Superior Court of New Jersey, Chancery Division, Morris County, Docket No. C-000163-14.

Peter R. Bray argued the cause for appellant (Bray & Bray, LLC, attorneys; Peter R. Bray, on the briefs).

Haralampo Kasolas and Jay R. McDaniel argued the cause for respondents (Brach Eichler, LLC, attorneys for respondent Dimitrios Prassas; and Weiner Law Group, LLP, attorneys for respondents Owen Dykstra, P.E., Douglas Dykstra, and CC Holdings, LLC; Haralampo Kasolas, of counsel and on the joint brief in A-1115-16 and A-3246-16, and of counsel and on the brief in A-5523-17; Jay R. McDaniel, of counsel and on the joint brief in A-1115-16 and A-3246-16, and on the brief in A-5523-17.

PER CURIAM

We issue this single opinion for these three appeals, which were consolidated for the purposes of oral argument only. The appeals arise from a dispute between four members of CC Holdings, LLC (CCH), which owned and developed a mixed-use development project in Sparta. Three of the members, Owen Dykstra, Douglas Dykstra, and Dimitrios Prassas (collectively respondents), removed member Brian Delaney because of his alleged hostile and combative behavior towards them and his company's default on a loan from CCH. This led to three separate lawsuits, which were consolidated.

Prior to trial, the parties reached a settlement agreement, which was placed on the record, detailing CCH's purchase of Delaney's interest. Subsequently, an issue arose over the proper timing for payment to Delaney based upon approvals of access permits by the New Jersey Department of Transportation (DOT). Over Delaney's objection, the trial judge granted respondents' motion to enforce thesettlement and determined a reasonable security for Delaney's buyout. Litigation continued thereafter regarding the parties' respective efforts to rescind or enforce the settlement.

In A-1115-16, Delaney appeals an order denying his motion to vacate the settlement agreement. In A-3246-16 and A-5523-17, Delaney appeals orders denying his requests to rescind the settlement and granting respondents' requests to enforce the settlement, and awarding attorneys' fees to respondents. For the reasons that follow, we affirm.

I

CCH is the owner and developer of a mixed-use development project (the Project) located on Route 15 in Sparta. The Project consists of residential units, a hotel, and a commercial shopping center anchored by a Shop Rite, owned and operated by Ronetco, Inc. CCH's membership interest was divided as follows: Delaney (33.33%), Prassas (33.33%), Douglas¹ (16.67%), and Owen (16.67%). CCH initially planned to manage the Project by purchasing the foreclosure judgment held by Sovereign Bank on the property they intended to develop. Instead, a new entity, CCSV, LLC (CCSV), which included all of CCH'smembers except Delaney, was formed to purchase the foreclosure judgment and manage the operations.

A dispute developed among the members of CCH over the failure of Windsor Lake Construction LLC, (Windsor Lake) a company controlled by Delaney, to repay a $1.1 million loan to CCH by the April 2014 deadline. Delaney struck a deal with the members to repay the loan so that the proceeds from the loan repayment could be used for the Project. Windsor Lake, however, defaulted; increasing the discord within the CCH membership and leading to discussions regarding the dissolution of CCH or buying out Delaney's interest.

On October 21, respondents executed a written consent to remove Delaney from CCH's management. A few days later, they notified CCH's corporate counsel advising of Delaney's removal as a CCH manager and directing counsel to cease any further communication with Delaney about CCH unless authorized by the remaining members. The following reasons served as their basis for Delaney's removal:

[i] Delaney's combative, hostile and reckless behavior towards the other members, the company's lender and prospective tenant; (ii) repeated material breaches of various agreements between himself and [the other members] regarding Dykstra Associates' engineering invoices and CCH's accounting and capital accounts; (iii) Delaney's relentless disagreement with the direction of the company and insistence on exercising aminority veto; and (iv) his affiliate company [Windsor Lake's] default on the $1,100,000 loan CCH made to Windsor, coupled with Delaney's intentional failure to use "best efforts" to refinance that loan so CCH could use the funds.

Following Delaney's removal, litigation between him and respondents ensued.

Initially, Delaney filed a complaint against respondents CCH and CCSV, seeking relief for oppression and related claims. Prassas then filed a separate complaint against Delaney, Owen, Douglas, and CCH seeking temporary restraints against Delaney, individually and derivatively. CCH and Owen filed the third complaint seeking similar relief. The three complaints were consolidated.

One week before trial, the parties reached a settlement that was placed on the record. On April 27, 2016, all the parties, with their attorneys present, were sworn and questioned by the Chancery judge as to their understanding of the terms and conditions of the agreement. The settlement terms were as follows:

[] Delaney will be selling his interest [in] [CCH]. Its principals or it's designee as [CCH] may determine for the amount of $2,800,000 subject to the following terms and conditions.

There is an initial payment of $400,000 that will be made within ten days of signing the definitive agreement. There is a payment due of $1,600,000 which will be paid within sixty days of what the lease with the . . . key tenant describes as the go hard date.

The go hard date is the date on which the tenant advises that it's not going to exercise any of its outs of the lease. That . . . is defined in the lease agreement and it will be incorporated into the definitive documents between us.

[CCH] is going to exercise its best efforts to have [Delaney] removed as a guarantor of the existing loan facility with First Hope Bank. But in no event will [] Delaney retain any personal liability for any debt of the company after the closing of any subsequent round of financing. The balance of $800,000 will be payable in three installments . . . , the first of which is due on or before the one-year anniversary of the date on which the go hard notice was given. And the subsequent payments will be due on each anniversary thereafter.

The payments are $250,000 in the first year, $250,000 in the second year, $300,000 in the third year. The balance of that $800,000 that's subject to the installment payments will bear interest at the rate of five percent per [annual] calculated from the date of the go hard notice. The sellers are going to provide the purchasers with a reasonable security that's agreeable to both to secure the installment portion of the payments.

If payment of the full $2.8 million is made on or sixty days of the go hard date, then the purchaser is to receive a discount of $50,000 for the early payment. . . . [I]n that circumstance the total settlement would be $2,750,000. . . . [T]here will be no penalties in the agreement for early payment, which can be obviously done without penalty.

Each side will bear its own cost in attorney's fees. We are going to exchange release except for there is a matter that is pending between [] Dykstra individuallyand [] Delaney individually in Sussex County on an unrelated matter that will not be included in this.

Now, with regard to CCSV there . . . were some claims made [in] a case that were dismissed on [s]ummary [j]udgment. We are agreeing that we are releasing all of the claims that were in the case or which could have been brought in the case. This agreement does not govern or in any way restrict rights or remedies as to the relationships of the parties within CCSV going forward. So, that's just going to basically be the status quo.

The settlement terms were later memorialized in writing by the respective counsel.

Shortly after the settlement was reached, an issue arose regarding the "go hard" date for the execution of the Shop Rite lease because the DOT issued a letter on May 3, listing a number of conditions that would have to be satisfied before it issued the access permits. And when the access permits were not obtained, CCH's landlord approvals of May 31, 2016 - the "go hard" date - could not be met and an extension followed.

On July 27, Prassas filed a motion in aid of litigants' rights under Rule 1:10-3 against Delaney to compel enforcement of the settlement agreement, and to determine the "reasonable security" for Delaney's buyout under the settlement.

On October 14, the judge granted the motion to enforce the settlement and required respondents to offer "security to Delaney in the form of personal guaranties, a promissory note" for his 33.33% interest, and attorneys' fees for Prassas. Two weeks later, Prassas filed a motion to secure the appointment of...