Gateway 2001, LLC v. Weiss, DOCKET NO. A-4306-15T4
| Decision Date | 22 July 2019 |
| Docket Number | DOCKET NO. A-4306-15T4 |
| Parties | GATEWAY 2001, LLC, GATEWAY I, LLC, GATEWAY SPECIAL, INC., MARSHALL HARRISON STREET APARTMENTS, LLC, and RENE ABREU, Plaintiffs-Appellants/Cross-Respondents, v. SANFORD WEISS, MANHATTAN BUILDING COMPANY and WHITE DIAMOND PROPERTIES, LLC, Defendants-Respondents/Cross-Appellants, and SYLVAN SKY GARAGE, LLC, and LEONARD WEISS, Defendants. |
| Court | New Jersey Superior Court — Appellate Division |
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION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 Simonelli, O'Connor and Whipple.
On appeal from the Superior Court of New Jersey, Chancery Division, Hudson County, Docket No. C-000044-12.
Dennis J. Drasco argued the cause for appellants/cross-respondents Gateway 2001, LLC, Gateway I, LLC, Gateway Special, Inc. and Marshall Harrison Street Apartments, LLC (Lum, Drasco & Positan LLC, attorneys; Dennis J. Drasco, Gerald Krovatin, Paul A. Sandars III and Bernadette H. Condon, of counsel and on the joint briefs).
Gerald Krovatin argued the cause for appellant/cross-respondent Rene Abreu (Krovatin Klingeman LLC, attorneys; Gerald Krovatin, Dennis J. Drasco, Paul A. Sandars III and Bernadette H. Condon, of counsel and on the joint briefs).
Paul H. Schafhauser argued the cause for respondents/ cross-appellants (Chiesa Shahinian & Giantomasi PC, attorneys; Paul H. Schafhauser and James M. Van Splinter, on the briefs).
Plaintiffs Gateway 2001, LLC, Gateway I, LLC, Gateway Special, Inc., Marshall Harrison Street Apartments, LLC and Rene Abreu appeal from judgments and orders of the Chancery Division entered on March 1 and 17, 2016 and April 25 and 26, 2016, after a bench trial regarding a residential development construction project in Hoboken. Defendants Sanford Weiss,Manhattan Building Company and White Diamond Properties, LLC cross appeal. Having reviewed the record, we affirm.
Notwithstanding the complex factual and procedural record, this appeal is primarily about three issues: (1) whether plaintiffs' dismissed claims are barred by the statute of limitations; (2) whether plaintiffs proved the elements of fraud; and (3) whether the judge erred calculating fees, costs and damages under various agreements. Judge Hector R. Velazquez issued comprehensive written opinions in support of the March 1 and 17, 2016 and April 25 and 26, 2016 judgments and orders that explain the relationships of the parties, entities and agreements in detail. We discern the facts essential to this appeal from the record and need not repeat all of Judge Velazquez's findings.
In 2001, plaintiff Rene Abreu and his partners in Gateway I, LLC (Gateway I), Manuel Marin, Ted Worthington and LNA Holding Co. (LNA), entered into an agreement with defendant Weiss, a developer, to build a residential and commercial rental complex called Sky Club in Hoboken. They planned to construct two towers with 326 rental units, a parking garage with 425 spaces, a gymnasium on top of the garage, and commercial space. Abreu and Weiss agreed Weiss would secure the necessary financing and manage the project through construction, after which Abreu would manage the property andcollect a portion of the rental proceeds. Abreu entered into the agreement because Weiss could secure financing through Fidelity Investments (Fidelity), a mezzanine lender. Abreu and Weiss agreed that Gateway I would have a sixty percent interest in the project and Weiss would have a forty percent interest.
After obtaining the financing, Abreu and Weiss restructured their existing companies and formed new entities to develop and manage Sky Club. Gateway I was restructured with new owners, including: Gateway Special, Inc. (Gateway Special); Gateway 2001, LLC (Gateway 2001); and 100 Marshall Associates, LLC (100 Marshall). Marshall Harrison Street Apartments, LLC (Marshall Harrison), wholly owned by Gateway I, was formed to own the land and act as the project's sponsor. Weiss's construction company, Manhattan Building Company (MBC), was the construction manager.
Gateway 2001 consisted of Abreu, Marin, Worthington and LNA. Each owned a twenty-five percent interest. Gateway 2001 held a 59.5 percent interest in Gateway I.
100 Marshall was wholly owned by Weiss and had a 39.5 percent interest in Gateway I. 100 Marshall was "to operate, manage, improve, repair, rent, lease, own, acquire, sell, assign, mortgage, hypothecate, and otherwise deal inreal property and its appurtenance and fixtures located at 101-119 Marshall Street and 120-126 Harrison Street."
Abreu and Weiss each owned fifty percent of Gateway Special. Gateway Special held a one percent interest in Gateway I and was its managing member. Gateway Special's by-laws provided:
Gateway Special's by-laws further provided "[i]n case of the absence of any officer of the corporation, the directors may delegate the power and duties of such officer . . . to any other officer or to any director[.]" Abreu and Weiss were both required to sign any check payable to MBC or Abreu Property Management, L.L.C. (Abreu Property Management), which was Abreu's property management company. Abreu agreed with these provisions, explaining he wanted Weiss "to build the project and get out" so he could "take over."
On October 29, 2001, Gateway I and MBC entered into a construction management agreement. MBC would receive seven percent of the construction costs, plus a $350,000 bonus if it completed the project on time within budget. After the issuance of certificates of occupancy, Abreu would manage the property through Abreu Property Management.
In December 2001, Marshall Harrison and KeyBank National Association (KeyBank) entered into a construction loan agreement. KeyBank agreed to loan up to $58,650,000.
Abreu and his Gateway 2001 partners began to complain Weiss was shutting them out of the project. On May 7, 2002, Abreu was indicted on federal charges unrelated to this case. During the pendency of his criminal case, Abreu still pursued advancement of the project with Weiss. On March 18, 2003, Abreu's accountant wrote to Weiss seeking various books and records. Weiss did not respond to the requests.
At Weiss's suggestion, in December 2003, the parties agreed to convert the project from rentals to condominiums and expected to make a profit on the conversion. Abreu initially opposed the conversion because it would deprive him of management fees. He consented after Weiss agreed to pay him $1 million in compensation.
Marshall Harrison and Gateway I entered into the Amended and Restated Limited Liability Company Agreement of Marshall/Harrison Street Apartments, LLC (December 2003 Marshall Harrison agreement). 100 Marshall was appointed as the "initial [m]anager" of Marshall Harrison and was to keep accurate books and records, and Marshall Harrison was prohibited from taking certain actions without the consent of Gateway I. The December 2003 Marshall Harrison agreement provided that "[t]he [m]anager shall at all times retain a property manager for the [p]roperty, subject to the right of the [m]ember to approve any such property management agreement." Weiss signed the December 2003 Marshall Harrison agreement as president of Gateway I and as managing member of 100 Marshall. Shortly after, Gateway 2001, Gateway Special and 100 Marshall entered into the Second Amendment to Amended and Restated Limited Liability Company Agreement of Gateway I, LLC (December 2003 Gateway I agreement), which appointed Abreu Property Management as property manager of the condominiums. Read together, these provisions intended that once construction was completed, Abreu and Weiss would co-manage the project, and Abreu would oversee the day-to-day operations through his property management company.
On March 2, 2004, Sylvan Sky Garage and Marshall Harrison negotiated an agreement, later amended on April 21, 2004, to manage the parking garage. Three days later, Weiss purchased a liquor license in his name for $125,000. He used Marshall Harrison funds to buy the liquor license but later...
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