RANJIT BENIPAL v. TRI-STATE PETRO, INC. (C-000060-17, MERCER COUNTY AND STATEWIDE) ( 2022 )

NOT FOR PUBLICATION WITHOUT THE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.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-2306-19
RANJIT BENIPAL, DIWAN
BENIPAL, BHAGWAN SINGH
and SUBHAN SINGH,
Plaintiffs-Appellants,
v.
TRI-STATE PETRO, INC.
and AMAR GILL,
Defendants-Respondents.
__________________________
Argued May 31, 2022 – Decided August 16, 2022
Before Judges Messano, Rose and Enright.
On appeal from the Superior Court of New Jersey,
Chancery Division, Mercer County, Docket No.
C-000060-17.
Kevin T. Kerns argued the cause for appellants (Cozen
O'Connor, attorneys; Kevin T. Kerns and John P.
Johnson, Jr., on the briefs).
Donald W. Kiel argued the cause for respondents (K&L
Gates, LLP and Martin Law LLC, attorneys; Donald W.
Kiel and Benjamin I. Rubinstein, on the brief).
PER CURIAM
This intrafamily dispute about the ownership of commercial property in
West Windsor is before us a second time. We described the factual allegations
underlying the complaint filed by plaintiffs-brothers Ranjit Benipal, Diwan
Benipal, Bhagwan Singh, and Subhan Singh, against their cousin, defendant
Amar Gill and his company Tri-State Petro, Inc. (TSP), in our prior opinion,
Benipal v. Tri-State Petro, Inc., A-0894-17 (App. Div. Jan. 4, 2019).
Plaintiffs alleged they contributed equally with Gill to fund a joint
venture, G&B Business Associates, Inc. (G&B), to purchase the property and
operate a gas station on it. Id. at 2–3. Plaintiffs claimed that "[i]nstead of titling
the property in G&B's name, however, Gill titled the property in the name of . . .
[TSP], a company Gill owned with his family." Id. at 3.
On defendants' motion, the trial judge dismissed plaintiffs' complaint
alleging fraud and seeking quiet title to the property based on the statute of
limitations. Id. at 4. In large part, the judge rejected plaintiffs' invocation of
the discovery rule, see, e.g., Lopez v. Swyer, 62 N.J. 267, 273 (1973), and
concluded plaintiffs were on constructive notice in early 1994, when the
property was purchased and the deed duly recorded that reflected TSP was the
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sole purchaser. Id. at 3–4. The judge ruled plaintiffs' 2017 complaint was,
therefore, time barred. Id. at 4.
We reversed and remanded the matter to conduct a Lopez hearing. Id. at
10. We explained our reasoning as follows:
[E]xtending to plaintiffs the benefit of all favorable
inferences set forth in their complaint, as we must, we
conclude the record is not fully developed surrounding
Gill's purchase of the property and recording of the
deed in TSP's name. Further, the present record is
incomplete as to when, and under what circumstances,
plaintiffs discovered that the property was not titled in
G&B's name. Discovery has not yet commenced in this
matter and more information is needed, for example, to
shed light on G&B's ownership structure and assets
held since 1994. Despite plaintiffs' obvious
complacency over the years, it is not clear on the record
before us that even a prudent investor would have
uncovered concealment of the property's true
ownership.
Given these and other uncertainties, we conclude
that the most appropriate course of action is to remand
the matter for an evidentiary hearing under Lopez. As
the Court noted in Lopez, such a hearing is not always
necessary, but "[g]enerally the [knowledge] issue will
not be resolved on affidavits or depositions since
demeanor may be an important factor where credibility
is significant." That rationale is even more applicable
here, where no answer has yet been filed, discovery has
not yet commenced, and we are limited in our review to
the four corners of plaintiffs' complaint. Accordingly,
we discern that credibility is an issue that is best
explored at an evidentiary hearing. For these reasons
we conclude the motion judge's failure to conduct a
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Lopez hearing was plain error, capable of producing an
unjust result, and we remand for that purpose.
[Id. at 8–9 (second and third alterations in original)
(emphasis added) (quoting Lopez, 62 N.J. at 275).]
Following limited discovery, the Law Division judge conducted the
hearing we ordered. Over several days, he heard the testimony of a number of
witnesses, including some plaintiffs and defendant Gill.1 In his oral opinion
following the hearing, the judge first recounted each witness's testimony.
The judge noted the purpose of the hearing was not to decide the merits
of plaintiffs' complaint but only to "decid[e] . . . whether or not the discovery
rule applies here." He noted there was no testimony from plaintiff Subhan Singh
to "sustain his burden . . . with regard to the discovery [rule]," so the judge
dismissed the complaint as to Subhan. The judge noted the "dearth of
documentary evidence" and concluded resolution of the question "depend[ed]
on the [c]ourt's assessment of the credibility of the witnesses." The judge found
"plaintiffs are independent and experienced businessmen," with "substantial
interests outside of G&B," and Gill had no "involvement in any of the other
businesses started and operated by plaintiffs." Noting plaintiffs' description of
1
We apologize for the informality of sometimes using first names, but we do
so to avoid confusion since several witnesses share the same surname.
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their relationship with Gill, who, although their cousin, was described more as
an uncle or older brother, the judge found it was expected, therefore, that Gill
would be involved in plaintiffs' other business ventures.
The judge noted plaintiffs' business acumen included "leases, deeds,
notes, and mortgages," and each testified they "understood the significance of a
deed, that it demonstrates legal ownership of the property . . . . Yet at no time
did any of them ask . . . Gill for a copy of the deed or did they attempt to check
the public record." The judge also found the deed was properly recorded, and
Gill never "attempt[ed] . . . to conceal the transaction by not recording the deed
in a timely fashion." He further noted that plaintiffs could have checked the
records in the local tax office, which reflected TSP owned the property, and
"farmland assessment applications" in TSP's name, but they never did.
The judge also found that "various notices and permits" were kept at the
gas station and showed TSP as its owner. The judge cited, as examples, "DEP
certificates . . . issued in 1994." Additionally, the judge found, "Plaintiffs were
well aware that the site was in deplorable condition in 1994 and that hundreds
of thousands of dollars were required for the improvement of the site. Plaintiffs
were aware about the work that was being performed." The judge also found
that "[p]laintiffs never asked for any documentation of their ownership interest,"
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and observed there was "no evidence other than their own uncorroborated claim
that they were lulled into this false belief by Gill that they had owned the
property." The judge found that neither Ranjit nor Bhagwan could "recall a
single conversation with Gill about the . . . property after 1994."
The judge then addressed the non-exhaustive list of "determinative
factors" the Lopez Court said should be considered in deciding whether equity
justified application of the discovery rule to toll a statute of limitations. These
included:
the nature of the alleged injury, the availability of
witnesses and written evidence, the length of time that
has elapsed since the alleged wrongdoing, whether the
delay has been to any extent deliberate or intentional,
whether the delay may be said to have peculiarly or
unusually prejudiced the defendant.
[62 N.J. at 276.]
The judge concluded that without documentary evidence, "plaintiffs' case rests
entirely on a conversation that is alleged to have occurred over [twenty-five]
years ago and . . . even Diwan . . . admitted he could not recall the particulars of
the conversation between him and Amar Gill."
The judge found that "a reasonable person exercising due diligence should
have discovered that plaintiffs were not the owners of the . . . property during
the discovery period. Plaintiffs have failed to demonstrate they're entitled to
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relief pursuant to the discovery [rule]." The judge dismissed the compl aint and
this appeal followed.
I.
Before proceeding to the specific arguments plaintiffs raise on appeal, we
set some parameters for our review. "Determining whether a cause of action is
barred by a statute of limitations is a question of law that we review de novo."
Save Camden Pub. Schs. v. Camden City Bd. of Educ., 454 N.J. Super. 478, 487
(App. Div. 2018) (citing Catena v. Raytheon Co., 447 N.J. Super. 43, 52 (App.
Div. 2016)). "The application of the discovery rule is for the court, not a jury,
to decide." Catena, 447 N.J. Super. at 52 (citing Lopez, 62 N.J. at 274–75).
"Under the rule, a claim does not accrue until the plaintiff 'discovers, or
by an exercise of reasonable diligence and intelligence should have discovered
that he [or she] may have a basis for an actionable claim.'" Id. at 52–53
(emphasis added) (quoting Lopez, 62 N.J. at 272). "The party seeking the rule's
benefit bears the burden to establish it applies." Id. at 53 (citing Lopez, 62 N.J.
at 276). Following a Lopez hearing, the "trial court's findings should be
disturbed only if they are so clearly mistaken 'that the interests of justice demand
intervention and correction.'" R.L. v. Voytac, 199 N.J. 285, 303 (2009) (quoting
State v. Elders, 192 N.J. 224, 244 (2007)).
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Without question, the two causes of action pled by plaintiffs were time
barred when the complaint was filed in 2017. Benipal, slip op. at 7. Plaintiffs
bore the burden to prove their quiet title action did not accrue until 1997 at the
earliest, i.e., within the twenty-year statute of limitations in N.J.S.A. 2A:14-7,
and their fraud claim did not accrue until 2011 at the earliest, within the six-year
statute of limitations in N.J.S.A. 2A:14-1. They needed to demonstrate that an
average investor, even with the exercise of reasonable diligence and
intelligence, would not have discovered before 2011 the basis for an actionable
claim based on Gill's alleged fraud, or would not have discovered before 1997
that the property was titled in TSP's name.
We fully concur with the hearing judge that plaintiffs failed to carry their
burden, because they essentially acknowledged not exercising the reasonable
diligence and intelligence of the average business investor. As we explain
further below, we reject plaintiffs' claim that the judge failed to use an objective
standard in conducting his analysis. Maldonado v. Leeds, 374 N.J. Super. 523,
531 (App. Div. 2005). The judge's opinion may be clearly read as finding that
it was not just that plaintiffs failed to exercise reasonable diligence and
intelligence, but rather, that a prudent sophisticated business investor would
have, through the exercise of reasonable diligence and intelligence, discovered
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facts — for example, that the property was titled in TSP's name in 1994, DEP
permits were issued to TSP in 1994, and TSP was listed on the tax records as
the property's owner — "that would alert a reasonable person to the possibility
of an actionable claim." Catena, 447 N.J. Super. at 54 (quoting Lapka v. Porter
Hayden Co., 162 N.J. 454, 555–56 (2000)). Plaintiffs never had any interest in
TSP. Any reasonable investor would objectively understand that he or she had
an actionable claim shortly after the property was purchased in 1994, and
certainly before 1997, to the quiet title action, or before 2011 as to the fraud
claim.
II.
Plaintiffs' specific challenge to the soundness of the judge's findings and
conclusions, instead, rests on two evidential rulings he made. "Because the
determination made by the trial court concerned the admissibility of evidence,
we gauge that action against the palpable abuse of discretion standard."
Brenman v. Demello, 191 N.J. 18, 31 (2007) (citing Green v. N.J. Mfrs. Ins. Co.,
160 N.J. 480, 492 (1999)). "Accordingly, 'we will reverse an evidentiary ruling
only if it "was so wide [of] the mark that a manifest denial of justice resulted."'"
Rowe v. Bell & Gossett Co., 239 N.J. 531, 551–52 (2019) (alteration in original)
(quoting Griffin v. City of E. Orange, 225 N.J. 400, 413 (2016)).
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"However, no deference is accorded when the court fails to properly
analyze the admissibility of the proffered evidence." E&H Steel Corp. v. PSEG
Fossil, LLC, 455 N.J. Super. 12, 25 (App. Div. 2018) (citing Konop v. Rosen,
425 N.J. Super. 391, 401 (App. Div. 2012)). In those situations, our review is
de novo. Konop, 425 N.J. Super. at 401.
A.
As noted above, in our prior opinion we cited the lack of information about
"G&B's ownership structure and assets held since 1994" and lack of clarity in
the record "that even a prudent investor would have uncovered concealment of
the property's true ownership." Benipal, slip op. at 8. Before any testimony at
the hearing, defendants moved in limine to exclude the tax returns and other
financial documents of non-party G&B, which, plaintiffs argued, reflected G&B
owned the property. Defendants challenged plaintiffs' interpretation of the
financial records, citing deposition testimony of the accounting firm that
prepared them, but defendants also argued that plaintiffs never asked to see the
documents between 1994 and commencement of the suit. Defendants contended
the evidence was irrelevant to the purpose of the plenary Lopez hearing.
Plaintiffs conceded they never asked to see the documents, but they argued
even if they had, the documents would have supported their belief that G&B
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owned the property. In other words, measuring plaintiffs' conduct against that
of a reasonably prudent investor, plaintiffs still would not have discovered Gill's
fraudulent acts. As plaintiffs' counsel explained, applying an objective standard,
if the judge found plaintiffs acted unreasonably by not making sufficient
inquiries, "you have to look at what they would have found" if they had asked
for the financial documents.
The judge granted defendants' motion without prejudice. He explained,
[T]he initial question with regard to these records is
whether or not the plaintiffs ever requested the records.
Plaintiffs wish to go beyond that and with the [c]ourt to
examine the records and make a decision [about] what
would have been revealed if the plaintiffs had looked at
the records, but that's a step too far. The fact of the
matter is that plaintiffs' concession that they have not
looked at these records demonstrates that these records
are not material.
. . . If at trial, based upon evidence that's
presented to the [c]ourt regarding the level of the
relationship [between the parties], plaintiffs are able to
demonstrate to the [c]ourt that somehow that level of
that relationship may have excused the failure to
request the records, then the [c]ourt will revisit the
issue.
The judge denied plaintiffs' subsequent request during the hearing essentially on
the same grounds.
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Before us, plaintiffs contend the judge failed to apply the "objective
standard" and consider that even had plaintiffs asked for the financial
information, it would not have alerted them to Gill's fraud or that TSP owned
the property. In part, plaintiffs rely upon our decision in Catena for the
proposition that even if a plaintiff exercises no due diligence before the statutory
accrual deadline, he may still satisfy the discovery rule and benefit from
equitable tolling of the statute of limitations if such efforts "would likely have
been futile."
We accept plaintiffs' contention that the financial information was
relevant. As we said in Catena, "[i]f [the plaintiff] can demonstrate that
reasonable diligence would not have revealed the fraud . . . his claims will not
be time-barred." 447 N.J. Super. at 59. However, any error in excluding the
evidence was harmless. See R. 2:10-2 ("Any error or omission shall be
disregarded by the appellate court unless it is of such a nature as to have been
clearly capable of producing an unjust result . . . .").
Viewing the facts objectively, "[g]enerally stated, in order to justify the
tolling of a statute of limitations, plaintiffs must explain why they reasonably
could not have discovered their cause of action in time to comply with the
limitation period." Phillips v. Gelpke, 190 N.J. 580, 595 (2007). Although we
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recognized in Catena the relevance of what a diligent inquiry may have or may
have not revealed, we made clear that application of the discovery rule required
the court to "determine at what point [the plaintiffs], through the exercise of
reasonable diligence, should have discovered the alleged fraud." 447 N.J. Super.
at 59 (citing Partrick v. Groves, 115 N.J. Eq. 208, 211 (E. & A. 1934)).
The judge's findings make clear his conclusion that acting as reasonably
prudent investors would, plaintiff should have discovered shortly after closing
on the property that Gill had titled it in TSP's name, and that G&B did not own
the property. Plaintiffs have consistently claimed that was contrary to their
agreement with Gill, and it was sufficient knowledge to alert plaintiffs that they
"may have [had] a basis for an actionable claim." Id. at 52–53 (quoting Lopez,
62 N.J. at 272). These findings and conclusions are unassailable on this record.
Admitting evidence that if plaintiffs had checked other documents, i.e., G&B's
financial records, they would not have discovered the alleged fraud does not
compel or even suggest a different result. Excluding evidence of G&B's
financial records was not "clearly capable of producing an unjust result." R.
2:10-2.
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B.
Plaintiffs' other evidentiary challenge is that the judge erred in relying on
N.J.R.E. 408 to exclude certain evidence. That evidence rule provides:
When a claim is disputed as to validity or amount,
evidence of statements or conduct by parties or their
attorneys in settlement negotiations . . . including offers
of compromise or any payment in settlement of a
related claim, is not admissible either to prove or
disprove the liability for, or invalidity of, or amount of
the disputed claim. Such evidence shall not be
excluded when offered for another purpose; and
evidence otherwise admissible shall not be excluded
merely because it was disclosed during settlement
negotiations.
[N.J.R.E. 408.]
We need to provide some context.
Plaintiffs claimed they first knew about Gill's alleged fraud in 2016 and
went to his home to discuss the situation. Ranjit testified that Gill admitted
making a mistake by titling the property in TSP's name and said he would fix
the mistake, although it might take some time. Gill denied such a meeting every
occurred.
Plaintiffs first tried to introduce the testimony of a third-party, Sikander
Ranu, Gill's son-in-law, regarding an April 26, 2017 meeting he arranged for all
parties to attend at a Sikh temple. The judge heard some of Ranu's testimony
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and concluded Ranu "set up the meeting in order to try to get the parties to come
to an agreement about this dispute." Citing our decision in KAS Oriental Rugs,
Inc. v. Ellman, 394 N.J. Super. 278 (App. Div. 2007), the judge concluded
evidence about alleged admissions Gill made during the meeting was
inadmissible under N.J.R.E. 408.
Ranjit further testified that at a subsequent meeting earlier in April 2017,
he confronted Gill about his earlier promise to "correct the problem," and why
was it taking so long; an argument ensued. Ranjit "asked [Gill] if he want[ed]
to split the property, I need some information." The judge sustained defense
counsel's objection, concluding the testimony was "an offer of compromise,"
inadmissible under N.J.R.E. 408.
Plaintiffs then sought to introduce an email chain, dated April 6 through
April 10, 2017. In an email to Gill's son Preet, Ranjit summarized the earlier
meeting, claiming Gill admitted mistitling the property "since we had paid for
that property in our investment. As per the meetings that property will be part
of valuation of the G&B business and get divided among the owners of G&B."
The document showed Preet forwarded the email to Gill who responded: "Preet,
[I] agree with the contents of email received from Ranjit . . . . [P]lease forward
this to your [U]ncle Ranjit. Thanks. Your Dad." Defense counsel objected to
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introduction of the document, and the judge sustained the objection and
excluded the document pursuant to N.J.R.E. 408.
Ranjit testified he had several more discussions with Gill after receiving
the email, sparking another objection from defense counsel. The judge again
sustained the objection, noting "this issue relates to something out side of 2016
going to what I've already ruled to be settlement negotiations."
Plaintiffs argue these rulings were premised on an erroneous
understanding of N.J.R.E. 408's scope and application. They argue evidence of
Gill's "admissions" to mistakenly titling the property in TSP's name was not
about a "disputed claim" within the rubric of the rule, the evidence was not
sought to be admitted to prove the "validity or amount" of plaintiffs' claim, and
had the evidence been properly admitted, the lack of any documentation
regarding the original purchase of the property would be "rendered extraneous."
We largely agree with the judge's rulings.
Initially, we note that plaintiffs were not excluded from introducing
evidence Gill admitted during a 2016 meeting that he had mistitled the property
and agreed to remedy the situation. The judge had the ability to consider the
testimony in this regard, as well as Gill's denial.
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Plaintiffs, therefore, recognize that the only issue is whether rulings
excluding Ranu's testimony about the April 2017 meeting at the temple, Ranjit's
testimony about the earlier meeting in April 2017, and the April 2017 email
chain that included Gill's admission would have otherwise tipped the balance of
the credibility scale.
Ranu acknowledged he organized the meeting at the temple specifically
to get the parties to come to some agreement. We agree with the judge that
"evidence of statements or conduct by parties" in this context is not admissible
to prove Gill defrauded plaintiffs. See N.J.R.E. 408. We also agree that Ranjit's
testimony about his follow-up meeting with Gill in April 2017 was more than
just a "demand" that Gill make good on his earlier promise to correct the deed,
which is how plaintiffs' counsel characterized it. As the judge properly found,
the testimony clearly focused on Ranjit's willingness to discuss an amicable
settlement of the parties' interests in the property after he was supplied with
additional information.
That leaves the email chain and Gill's acknowledgment to his son that he
agreed with Ranjit's summary of a prior meeting and Gill's commitment to
rectify a mistake. But, the judge correctly noted that "[w]hen in the course of a
defendant's settlement offer, he makes an admission of his liability, N.J.R.E. 408
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proscribes the evidential use of such a statement as proof of liability." Biunno,
Weissbard & Zegas, Current N.J. Rules of Evidence, cmt. 1 on N.J.R.E. 408
(2022–23). We find no error in these rulings.
Moreover, even if we are incorrect, any error was harmless. The sole
purpose of the hearing was for the judge to decide whether plaintiffs were
entitled to the discovery rule's equitable tolling of the applicable statutes of
limitations. This equitable relief was only available if plaintiffs proved their
objectively reasonable conduct would not have alerted them to the possibility of
a viable cause of action against Gill during the time period prior to the start of
the statute of limitations' clock. The exclusion of evidence about events that
occurred twenty-three years after the property was purchased and titled solely
in TSP's name did not have the clear capacity to bring about an unjust result. R.
2:10-2.
In light of our disposition, we need not consider plaintiffs' final arg ument
that it was error to dismiss Suban as a plaintiff because he failed to testify.
Affirmed.
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