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N.J.S.A. 2A:17-74 and -75, seeking to hold defendants Dennis Leftwick and Rosemary "> Original Wordprocessor

Version This case can also be found at *CITE_PENDING*. (NOTE: The status of this decision is unpublished.)
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION DOCKET NO. A-4282-05T14282-05T1 JAMES PAUL SABO, Plaintiff-Appellant, v. DENNIS LEFTWICK, ROSEMARY MACMILLAN, Defendant-Respondents. _____________________________

Submitted January 10, 2007 - Decided February 6, 2007 Before Judges Lefelt and Parrillo. On appeal from the Superior Court of New Jersey, Law Division, Somerset County, Docket No. L-1100-05. James Paul Sabo, appellant pro se. Dennis Leftwick and Rosemary MacMillan, respondents pro se. PER CURIAM Plaintiff James Paul Sabo appeals from a summary judgment dismissing his complaint under N.J.S.A. 2A:17-74 and 75, seeking to hold defendants Dennis Leftwick and Rosemary MacMillan, officers and owners of since dissolved Romac General Contracting, Inc. (Romac), personally liable for corporate indebtedness to him. For reasons that follow, we now reverse. The background facts have already been recounted in our decision on an earlier appeal: Barbara Sabo (Barbara) entered into a contract in 1993 with Romac for Romac to construct a single family home for her in Bernardsville. A dispute arose over the work associated with the construction and Romac filed, pursuant to the terms of the contract, for arbitration with the AAA for moneys allegedly owed for work completed. Barbara filed a counterclaim seeking an order compelling Romac to deliver a new homeowner's warranty covering what she alleged were construction deficiencies.
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An award was entered in October 1995 in favor of Romac, in the amount of $51,557, against Barbara and her counterclaim was dismissed. The arbitration award was confirmed by the Law Division on March 1, 1996, by way of default judgment against Barbara. Barbara's motion to vacate default judgment was denied on June 6, 1997. Contemporaneously, summary judgment was entered in favor of Romac on the arbitration award. At about the same time, Romac filed a separate action against plaintiff in the Law Division, under Docket No. L-693-96, seeking to enforce its rights against plaintiff as the guarantor on the contract between Barbara and Romac. Judgment was entered in the matter in favor of Romac in the amount of $58,340.69. Romac, thereafter, levied on a bank account that plaintiff had at Fleet Bank, and obtained a turnover order under which Romac received $7,005.56 from plaintiff. Both Barbara and plaintiff appealed. This court issued an opinion in the consolidated appeals under Docket No. A-6353-96T1 and A-6354-96T1 that vacated the judgment confirming the arbitration award, and also reversed the summary judgment in favor of Romac against plaintiff. The opinion directed that the construction contract dispute between Barbara and Romac be resubmitted to arbitration for further proceedings. On June 15, 1999, because of the decision entered in the consolidated appeal, this court issued a second opinion that held that plaintiff was entitled to the return of the $7,005.78 obtained by Romac under the turnover order, and directed Romac to repay the same to plaintiff within thirty days. The AAA, after remand, issued an interim order dated August 4, 2000, which awarded Romac "nothing" with respect to the claims identified in its initial demand for arbitration, claims for previously incurred legal fees, or claims which otherwise arose out of the May 9, 1994 contract. The AAA interim order left open plaintiff's counterclaims, including the issuance of a homeowner's warranty. The arbitrators considered their ruling on Romac's claims to be "final." In late 1999, plaintiff, as successor, to Barbara as owner of the property, filed a motion in the Law Division under Docket No. L-693-96, seeking to recover $11,357.50 against Romac for Romac's failure to comply with provisions of the contract prohibiting subcontractors from placing liens against the property. Since it was unopposed, an order (not a judgment) was entered on December 15, 1999, granting the relief requested. Plaintiff also filed a motion to enforce the repayment directive of this court, because Romac never returned the $7,005.78. An order was thereafter entered under Docket No. L-693-96 on February 9, 2000, directing payment of the $7,005.78. However, no judgment has been entered. [Sabo v. Romac General Contracting, Inc., et al, A-6207-04T1 (App. Div. June 23, 2006) at 2-3.] Significant for present purposes, the order requiring Romac to pay plaintiff $11,357.50 was entered upon the Civil Judgment and Order Docket as J-306441-99 in December 1999, and the order requiring Romac to pay plaintiff $7,005.78 was entered upon the Civil Judgment and Order Docket as J-046952-00 on March 16, 2000. According to plaintiff, he sent copies of these orders to defendants as officers of Romac, and also sent information subpoenas in connection with both orders, which were not returned. Thereafter, plaintiff, under Docket No. L-693-96, moved to enforce these two orders, as a result of which an order enforcing litigants rights and arrest warrants for defendants subsequently issued. Seeking to collect in Romac's state of incorporation, plaintiff filed these orders in New York in September 2000, and on December 26, 2000, a New York State court recognized plaintiff's foreign judgment against Romac in the amount of $20,143.58. According to plaintiff, in 2002, defendants failed to appear in New York State court in response to a subpoena. Plaintiff also alleges that defendants evaded collection attempts in New York by emptying the corporate bank account and informing a sheriff's officer that corporate office equipment was their personal equipment. Unsuccessful in New York, on August 22, 2003, plaintiff renewed collection efforts in New Jersey by filing a complaint (Docket No. L-1165-03) against Romac and defendants, as owners of Romac. Although defendants filed an answer, default

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judgment was entered against them and Romac. When plaintiff then moved to enforce litigant's rights against all three defendants, because defendants had actually filed an answer and participated in discovery, an order was entered on October 29, 2004, vacating the default judgments and denying plaintiff's motion to enforce litigant's rights. Plaintiff then moved to compel all defendants to answer interrogatories under Docket No. L-1165-03. Defendants moved for summary judgment on the basis that plaintiff stands in the shoes of Barbara, and any and all claims should have been asserted in the AAA proceedings after the remand from this court. Plaintiff also moved to enforce litigant's rights under Docket No. L-693-96, with respect to the two orders directing payment. On March 23, 2005, the motion judge determined that all claims of plaintiff should have been asserted before the AAA. He therefore granted summary judgment dismissing Docket No. L-1165-03, and directed that the parties proceed to arbitration with the AAA. As to the proceedings under Docket No. L-693-96, the judge denied the motion to enforce litigant's rights against the two individual defendants because they were not party defendants to the original action. He concluded that the orders directing payment (incorrectly assumed to be judgments) were entered only against the corporate defendants, not the individual defendants. Plaintiff appealed the orders of March 23, 2005 dismissing his complaint under Docket No. L-1165-03, sending the matter to arbitration, and denying his motion to compel discovery and, under L-693-96, vacating the arrest warrants, quashing the information subpoenas, and denying his motion for reconsideration. On June 23, 2006, we affirmed, save for the order directing the parties to submit to arbitration, excising from the March 23, 2005 order the February 9, 2000 order entered under Docket No. L-693-78 in the amount of $7,005.78, which order was entered in conformance with our opinion of June 25, 1999, in which we directed Romac to return the $7,005.78 within thirty days. Meanwhile, in response to the lower court's ruling, on August 2, 2005, plaintiff filed a new action (Docket No. L-1100-05) against the two individual defendants, asserting that since they are the sole shareholders of Romac, they are personally responsible for its debts under N.J.S.A. 2A:17-74 and -75. Defendants moved to dismiss, but originally the judge denied the motion on the basis that where an agent of a corporation neglects or refuses to comply with discovery requests or orders to pay over funds, they themselves may become liable to the creditor, citing N.J.S.A. 2A:17-75. On March 31, 2006, the judge granted the motion on the papers, vacated his prior order, and dismissed plaintiff's complaint with prejudice, finding that . . . it appears the court was in error in that neither of the prior matters involving these parties referred to earlier was a judgment, a final ultimate judgment against the corporation and, therefore, this litigation merely appears to be duplicative of prior litigation between the parties and the motion should have been granted on the basis of res judicata. On appeal, plaintiff contends the motion judge erred in dismissing his complaint on the basis that the orders he is seeking to enforce have not been reduced to final judgments. We agree that dismissal was improper. As a threshold matter, we review a grant of summary judgment de novo, applying the same standard as the trial court. Squeo v.

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Borough of Carlstadt, 296 N.J. Super. 505, 509 (App. Div. 1997). Summary judgment must be granted if "the pleadings, depositions, answers to interrogatories and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact challenged and that the moving party is entitled to a judgment or order as a matter of law." R. 4:462(c). In other words, we must determine whether there was a genuine issue of material fact, and if not, whether the lower court's ruling on the law was correct. Prudential Prop. & Cas. Ins. v. Boylan, 307 N.J. Super. 162, 167 (App. Div.), certif. denied, 154 N.J. 608 (1998). "A trial court's interpretation of the law and the legal consequences that flow from established facts are not entitled to any special deference." Manalapan Realty v. Manalapan Tp. Comm., 140 N.J. 366, 378 (1995). On this score, N.J.S.A. 2A:17-74 provides that [e]very agent or person having charge or control of any property of a corporation shall, upon request therefor by any officer having for service a writ of execution against it, furnish to such officer the names of the directors and officers of the corporation, and a schedule of all its property, including debts due or to become due to it so far as he has knowledge thereof. Any such agent or person who shall neglect or refuse to comply with the provisions of this section shall himself be liable to pay to the execution creditor the amount due on the execution, with costs. [ N.J.S.A. 2A:17-74 (emphasis added).] Furthermore, N.J.S.A. 2A:17-75 provides that [i]f any officer, holding an execution against a corporation, shall be unable to find other property belonging to the corporation liable to execution, either he or the judgment creditor may elect to satisfy such execution, in whole or in part, by any debts due to the corporation, in which case the agent or person having custody of any evidences of such debts shall deliver the same to the officer holding the execution, for the use of the creditor. Such a delivery, with a transfer in writing to the officer, for the use of the creditor, and notice to the debtor, shall be a valid assignment thereof. Any such agent or person who neglects or refuses to comply with the provisions of this section shall himself be liable to pay to the execution creditor the amount due upon the execution with costs. [ N.J.S.A. 2A:17-75 (emphasis added).] The combined effect of these statutes is to create a cause of action in favor of either "judgment" or "execution" creditors - terms used interchangeably therein - against non-compliant owners, officers or agents of a defaulting corporation for corporate indebtedness. Here, as to the question of non-compliance, as the motion judge earlier found in his original denial of summary judgment, "[s]ufficient factual issues appear to exist . . . ." And further, as a matter of law, we are satisfied that the judge was mistaken as to the effect of docketed orders and accordingly erred when he found plaintiff did not qualify as a "judgment" creditor under N.J.S.A. 2A:17-74 and -75. As background, we briefly review some relevant law. The party in whose favor a judgment or order is issued may enter it upon the Civil Judgment and Order Docket by filing it with the Clerk of Superior Court in Trenton, who then stamps the order or judgment with a "J" docket number. See Brescher v. Gern, Dunetz, Davidson and Weinstein P.C., 245 N.J. Super. 365, 368n1 (App. Div. 1991) ("The 'J' designation is reserved for judgments."). Rule 4:101-1 provides, in relevant part, (a) Entry on Civil Judgment and Order Docket. Upon payment by the proponent of the order or judgment of the fee prescribed by N.J.S.A. 22A:2-7, the Clerk of the Superior Court . . . shall enter in the Civil Judgment and Order Docket an abstract of each judgment or order for the

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payment of money entered in the Superior Court; . . . [Pressler, Current New Jersey Court Rules, R. 4:101-1(a) (2006) (emphasis added)]. See also R. 4:101-2, R. 4:101-3, R. 4:101-4 (similarly referring to docketed orders and judgments interchangeably). The entering of orders and judgments upon the Civil Judgment and Order Docket creates a state-wide lien on all real property held by the defendant. Jones v. Parker, 107 N.J. Super. 235, 240 (App. Div. 1969); see also Tobar Constr. Co. v. R.C.P. Assocs., 293 N.J. Super. 409, 414 (App. Div. 1996). A person who holds such a lien is a "judgment creditor." Jones, supra, 107 N.J. Super. at 240. Any lien that attaches to the real property of a judgment debtor does so solely by virtue of statute. Brescher, supra, 245 N.J. Super. at 365. N.J.S.A. 2A:16-1 establishes the time from which a docketed judgment binds real property: No judgment of the superior court shall affect or bind any real estate, but from the time of the actual entry of such judgment on the minutes or records of the court. Its legislative history provides that [t]his act shall . . . apply only to judgments or orders for the payment of money entered by notation thereof upon the civil judgment and order docket subsequent to the effective date of this act. [L. 1981, c. 388, § 5, approved Jan. 6, 1982, amended by L. 1982, c. 65, § 3 (emphasis added)]. See also Joseph Harris & Sons, Inc. v. Van Loan, 23 N.J. 466 (1957) (referring to judgments and orders interchangeably in matrimonial matters where the court fixes a sum certain); Jones, supra, 107 N.J. Super. at 240 (referring to both judgments and orders as creating a lien on real property once entered upon the docket).] It thus appears from a reading of the applicable court rules, statutes and legislative history that docketed orders for the payment of money have essentially the same effect of finality as docketed judgments. Indeed, defendants have proffered no contrary authority to suggest that a court order for the payment of money and a money judgment differ in any material or meaningful effect once entered upon the Civil Order and Judgment Docket. Both create a lien on real property. As such, we conclude that one who dockets orders entered in his or her favor becomes a "judgment creditor" who has standing to bring an action under N.J.S.A. 2A:17-74 and N.J.S.A. 2A:17-74 and N.J.S.A. 2A:17-75, plaintiff, as judgment creditor, now seeks to hold defendants personally liable for the sums Romac was ordered to pay. Such a claim is not precluded under either the "entire controversy doctrine" or res judicata doctrines because the issue of defendants' personal liability for liens against Romac has never been litigated. For reasons stated, the summary dismissal of this cause of action was in error, and plaintiff is entitled to have his claim resolved. Reversed and remanded for proceedings consistent with this opinion.

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February 6, 2007

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