RONALD B. BRUDER VS. DAVID H. HILLMANÂ (C-55-13, PASSAIC COUNTY AND STATEWIDE), A-5055-15T1

Background

In 1984 Ronald B. Bruder and Brookhill Capital Resources formed Vienna Park, L.P. (VP) to own a Virginia apartment complex; plaintiffs were general partners and sophisticated real-estate investors. VP later filed bankruptcy due to mismanagement.
In 1992–1993, after a bankruptcy settlement, David Hillman bought secured notes on the property and VP emerged from bankruptcy under an amended partnership agreement that converted plaintiffs from general to limited partners and substituted Hillman-controlled entities (SMC and Southern) as general partner/manager.
In 2007 Hillman caused VP to be converted into Vienna Park, LLC (VPLLC) and executed a new operating agreement transferring management to The Gallows Corporation; conversion was undertaken to meet Freddie Mac refinancing requirements.
Plaintiffs say they did not learn of the conversion until 2012, then requested books/records which defendants denied; plaintiffs filed suit in 2013 seeking (1) to void the conversion/dissolution (Count One), (2) access to books and records (Count Two), and (3) an accounting (Count Three).
The trial court granted defendants summary judgment on Count One, finding laches (and noting notice/distributions/K-1s and electronic portal access), and denied plaintiffs’ partial summary judgment; the court did not rule on Counts Two and Three.
On appeal the Appellate Division affirmed dismissal of Count One (laches), reversed/ remanded as to Counts Two and Three for further proceedings, and affirmed denial of plaintiffs’ motion for partial summary judgment.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the 2007 conversion was an unlawful dissolution or void	Conversion was unlawful, altered plaintiffs’ rights, and was done without their informed consent	Conversion was authorized/valid; plaintiffs had notice or means to learn and did not timely object	Court held conversion challenge barred by laches and dismissed Count One
Whether laches bars the conversion challenge	Laches does not apply because plaintiffs did not learn of conversion until 2012	Plaintiffs unreasonably delayed; received K-1s, distributions, and had portal access so they had opportunity to object; delay prejudiced defendants	Court applied laches: plaintiffs’ long, unexplained delay and prejudice to defendants warranted dismissal
Effect of statute of limitations or other timing rules	Plaintiffs argued equitable relief should be available despite timing	Defendants relied primarily on equitable laches (and potential statute of limitations)	Court resolved case on laches and did not need to decide statute-of-limitations question
Entitlement to books/records and accounting (Counts Two & Three)	Plaintiffs sought access to records and a full accounting after learning of conversion	Defendants had not been adjudicated on those counts below and argued timeliness/prejudice	Court remanded Counts Two and Three for the trial court to address; appellate court did not decide these issues

Key Cases Cited

Oyola v. Liu, 431 N.J. Super. 493 (App. Div.) (summary-judgment standard on appeal)
Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366 (1995) (appellate review of legal questions receives no deference)
Fox v. Millman, 210 N.J. 401 (2012) (explaining laches as equitable defense and its relationship to statute of limitations)
County of Morris v. Fauver, 153 N.J. 80 (1998) (factors to evaluate laches: delay, reasons, changing circumstances)
Knorr v. Smeal, 178 N.J. 169 (2003) (laches: party must have had opportunity to assert right and other party acted in good faith)
Lavin v. Bd. of Educ., 90 N.J. 145 (1982) (laches not governed by fixed time limits)
Mancini v. Township of Teaneck, 179 N.J. 425 (2004) (application of laches rests within trial court discretion)