When Oral Royalty Agreements Collide with Business Ownership: Lessons from Evereklian v. Life Force Senior Care Corp.

Background: A Family Business Transfer and Unpaid Royalties

In Viken Evereklian v. Life Force Senior Care Corporation and Jared M. Rodgers (CAM-L-1329-24, June 15, 2026), the Superior Court of New Jersey, Complex Business Litigation Program, addressed a contentious dispute arising from the sale of a family-owned business and an accompanying oral royalty agreement.

Plaintiff Viken Evereklian founded Life Force Senior Care Corporation in New Jersey in 2010 to provide non-medical in-home care for the elderly. He was its sole owner and held a federally registered trademark, which was also used in a similar Pennsylvania business he owned.

In November 2012, Evereklian agreed to transfer all his shares (100% ownership) in the New Jersey company to his son-in-law, Jared Rodgers, for a nominal $1.00, as documented by a signed Bill of Sale. Crucially, Rodgers also orally agreed to pay Evereklian 5% of the company’s monthly gross revenue in perpetuity, unless the company was sold or closed.

After two years of modest royalty payments ($7,995.89 in 2013 and $11,676.51 in 2014), Rodgers ceased all payments for nearly a decade, during which the company’s revenues soared. In November 2023, Rodgers filed for divorce from Evereklian’s daughter and, shortly thereafter, resumed royalty payments (totaling $85,847.97 for January–June 2024) before stopping again upon advice of counsel. Evereklian sued in April 2024, seeking unpaid royalties, ownership restoration, and other relief.

Legal Issues Before the Court

The court addressed the following key legal questions:

1. Was there a valid and enforceable contract requiring perpetual royalty payments?
2. Did Rodgers breach that contract by ceasing payments after March 2014?
3. Did the parties mutually modify the contract in 2014 to relieve Rodgers of the royalty obligation?
4. Does the statute of limitations bar recovery of royalties due more than six years before suit was filed?
5. Can Evereklian void the ownership transfer for lack of consideration?
6. Did Rodgers’ resumption of payments in 2024 revive or toll the statute of limitations as to earlier breaches?

Legal Standards Applied

1. Breach of Contract Elements

Citing the Model Jury Charges (Civil), 4.10A, the court outlined the elements of breach of contract:

• Existence of a contract
• Plaintiff’s performance
• Defendant’s breach
• Damages to plaintiff

The plaintiff bears the burden of proving each element by a preponderance of the evidence.

2. Modification of Contract by Conduct

A contract may be modified by explicit agreement or by the parties’ conduct, but the intention to modify must be “mutual and clear.” County of Morris v. Fauver, 153 N.J. 80, 99-100 (1998).

3. Statute of Frauds

The court clarified that the “one-year provision” of the Statute of Frauds (N.J.S.A. 25:1-5(e)) was repealed in 1995 and does not apply to this oral agreement.

4. Statute of Limitations for Breach of Contract

Per N.J.S.A. 2A:14-1 and In re Estate of Balk, 445 N.J. Super. 395, 400 (App. Div. 2016), breach of contract claims must be brought within six years from when each payment is due. For installment contracts, each missed payment is a separate breach, and a new limitations period runs from each due date.

5. Installment Contract Approach

The court applied the “installment contract approach,” finding that each royalty payment was a distinct obligation, triggering its own statute of limitations period.

The Court’s Reasoning and Findings

Existence and Breach of Contract

The court found “undisputed” evidence of a valid contract: “in exchange for Plaintiff’s 100% ownership share in the Company, Defendant Rodgers agreed to pay Plaintiff five percent (5%) of the Company’s monthly gross revenue, commencing in 2013 and continuing until the Company was either sold or ceased doing business.” Evereklian fully performed by transferring ownership, and Rodgers breached by failing to make required royalty payments after March 2014.

No Credible Modification

Rodgers claimed that an oral agreement in 2014 relieved him of future royalty obligations, supported by Evereklian’s silence and lack of demand for payment over ten years. The court rejected this, noting:

• The only documented forgiveness was for the third and fourth quarters of 2013 (as evidenced by a March 3, 2014 email).
• There was “no documentation memorializing such an agreement for any other periods.”
• Rodgers’ resumption of payments in 2024, and his own description of those payments as “royalties,” contradicted his claim that the obligation was extinguished.
• The “actions of the parties in this case were not sufficiently clear so as to establish a mutual modification” (Fauver, 153 N.J. at 99-100).

Statute of Limitations Bars Older Claims

Evereklian argued that Rodgers’ 2024 payments revived or tolled the statute of limitations for earlier unpaid royalties. The court disagreed:

• Under the installment contract approach, “a new statute of limitations begins to run against each installment as that installment falls due.”
• Only royalty payments due within six years before the complaint (i.e., after April 30, 2018) were recoverable.
• Rodgers’ 2024 payments did not constitute a written acknowledgment or new promise to pay past-due amounts, nor were they “partial payments” toward a single debt that would revive the limitations period.

No Void for Lack of Consideration

Evereklian sought to void the ownership transfer for lack of consideration, citing Sipko v. Koger, Inc., but the court found consideration was present: “the Plaintiff in this case received a commitment from Defendant Rodgers to pay him 5% of the Company’s monthly gross revenue in perpetuity.” Failure to receive all payments did not void the transaction; the remedy was to sue for unpaid amounts.

Damages Awarded

The court awarded $983,385.38 in damages for unpaid royalties from April 30, 2018 through April 29, 2026, after crediting payments made in 2024. The court also ordered Defendants to continue paying 5% of monthly gross revenue until the company is sold or closed and to account for such revenues.

Practical Implications for New Jersey Businesses

This opinion offers several critical lessons for business owners, particularly those involved in family businesses or transfers with ongoing payment obligations:

• Oral Agreements Are Enforceable—but Risky: Even where a royalty or earn-out arrangement isn’t in writing, New Jersey courts may enforce it if performance and terms are established. However, disputes over the existence or modification of such agreements are fact-intensive and hinge on credibility and documentation.
• Modification by Silence Is Not Enough: The absence of payment or demand, even for many years, will not alone suffice to prove a mutual, clear modification or waiver unless supported by explicit evidence.
• Statute of Limitations Strictly Applies: Installment obligations (like monthly royalties) are subject to a rolling six-year statute of limitations. Plaintiffs cannot recover for missed payments older than six years, and later payments do not revive time-barred claims unless there is a written acknowledgment or new promise to pay past due amounts.
• Consideration Need Not Be Paid in Full: The promise of future payments can be valid consideration for a business transfer, even if some payments are never made. The proper remedy for nonpayment is an action for damages, not rescission.
• Corporate Formalities Matter: The opinion notes that Rodgers’ use of company funds for royalty payments and lack of corporate formalities could expose both the company and individual to liability.

Actionable Takeaways for Business Owners and Practitioners

1. Put Key Terms in Writing: Especially for royalty or earn-out agreements, document all terms—including payment formula, duration, conditions for modification, and remedies for default—in a signed, written contract.
2. Document Modifications and Waivers: If parties agree to modify or forgive payment obligations, put it in writing. Relying on silence, inaction, or informal understandings is legally perilous.
3. Monitor and Enforce Rights Promptly: Track payment obligations and pursue missed payments promptly to avoid running afoul of the statute of limitations. Delays can permanently bar recovery.
4. Maintain Corporate Formalities: Avoid commingling personal and corporate assets and maintain clear records to protect against personal liability.
5. Seek Legal Advice Before Major Transactions: Whether buying, selling, or modifying a business arrangement, consult experienced counsel to ensure your interests are protected and obligations are clear.

Conclusion: Consult Qualified Counsel

This case underscores the importance of clarity and documentation in business ownership transfers and ongoing payment arrangements. If you are considering a business sale, royalty agreement, or have concerns about enforceability or modification of a contract, consult experienced New Jersey business counsel to safeguard your interests and avoid costly litigation.