Opinion
DOCKET NO. A-5722-14T2
02-10-2017
CENTRAL JERSEY BANK, Plaintiff-Respondent, v. ACHER COHEN, AARON COHEN, ISLAND STONE, INC., and IMPERIAL MARBLE & GRANITE LLC, Defendants-Appellants.
Newman & Denburg, L.L.C., attorneys for appellants (Gary S. Newman, of counsel and on the brief). Dembo, Brown & Burns LLP, attorneys for respondent (Kyle Eingorn, of counsel and on the brief).
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION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 Hoffman and Whipple. On appeal from Superior Court of New Jersey, Law Division, Monmouth County, Docket No. L-6033-10. Newman & Denburg, L.L.C., attorneys for appellants (Gary S. Newman, of counsel and on the brief). Dembo, Brown & Burns LLP, attorneys for respondent (Kyle Eingorn, of counsel and on the brief). PER CURIAM
In a Monmouth County proceeding, the Law Division granted a default judgment in favor of plaintiff Central Jersey Bank and against defendants Acher Cohen, Aaron Cohen, Island Stone, Inc., and Imperial Marble & Granite LLC (Imperial Marble) for $593,008.05, after defendants defaulted on a mortgage note secured by a commercial property in Irvington. In a separate foreclosure action filed by plaintiff in Essex County, the Chancery Division subsequently appointed a receiver and ordered the sale of the property for $540,000 to a buyer that Imperial Marble had recommended to plaintiff. More than three years after the order authorizing the sale, defendants moved in the Law Division in Monmouth County to receive "fair market value credit for the sale," to deem "the judgment satisfied," or to vacate the default judgment. The court denied the motion, concluding it lacked authority to grant any relief from the Chancery Division order, and defendants otherwise failed to present any valid basis for granting relief from the Law Division judgment. We affirm.
I.
On November 19, 2007, Imperial Marble executed a U.S. Small Business Administration Note, agreeing to pay $600,000 plus interest to plaintiff for a $600,000 mortgage loan. On the same date, Imperial Marble executed a mortgage and security agreement, establishing the Irvington property as collateral for the loan. The mortgage and security agreement authorized plaintiff to sell the property in a foreclosure proceeding in the event of default. Acher Cohen, Aaron Cohen, and Island Stone, Inc., each executed unconditional guarantees, whereby they guaranteed payment of all amounts owed under the note.
Defendants defaulted on the loan in late 2010. In December 2010, plaintiff filed suit on the note in Monmouth County. After defendants failed to answer plaintiff's complaint, the Law Division granted plaintiff a default judgment against defendants for $593,008.05.
Later that month, plaintiff filed a foreclosure complaint in Essex County, and defendants again failed to file an answer. In July 2011, Imperial Marble forwarded to plaintiff an offer from American Boiler Company to purchase the Irvington property for $540,000. Imperial Marble signed the offer, thereby acknowledging and accepting it.
In February 2012, plaintiff moved in the Chancery Division to appoint a receiver with the ability to collect rent, profits, and income from the property. In the same application, plaintiff also requested the court to authorize the receiver to market and sell the property. Defendants filed no opposition to the relief sought, and the Chancery Division granted the motion.
Plaintiff then motioned the Chancery Division to authorize the receiver to sell the property for $540,000 to 21st Street Property, LLC. Without any objection from defendants, the court granted plaintiff's motion. In accordance with the order, the receiver sold the property for $540,000 to 21st Street Property. After settlement expenses, plaintiff received $220,953.24 from the sale.
The net proceeds were significantly reduced as the result of a large amount of unpaid real estate taxes and a large escrow for environmental remediation. --------
In May 2015, defendants motioned the Law Division to grant them "fair market value credit for the sale," to deem "the judgment satisfied," or to vacate the default judgment, under Rule 4:50-1(e). The court held a hearing on the motion, and plaintiff's counsel confirmed that plaintiff had credited the $220,953.24 towards its judgment against defendants. Defense counsel argued defendants were "entitled to explore the fair market value of the property, which was not sold at foreclosure sale."
The Law Division observed defendants had enclosed an appraisal of the property with their correspondence "confirming the oral argument of the [m]otion for today"; however, defendants failed to file a certification with the appraisal, which stated the property's fair market value was $610,000 on June 1, 2012. The court received only a certification of defense counsel's.
The court then recited Rule 1:6-6:
If a [m]otion is based on facts not appearing of record, or not [j]udicially noticeable the [c]ourt may hear it on [a]ffidavits made on personal knowledge, setting forth only facts
which are admissible in evidence to which the affiant is competent to testify, and which may have [annexed] thereto certified copies of all papers or parts thereof, referred to therein.The court noted defense counsel lacked personal knowledge of many of the statements contained in his certification, and his certification did not reference the appraisal.
After reviewing the deficiencies in the moving papers, the court denied defendants' motion to vacate the judgment. The court noted American Boiler Company's previous offer to buy the property from Imperial Marble for $540,000, and both parties had agreed to the sale at that price. The court further noted defendants had not averred "any kind of error in the entry of that amount."
The court then addressed defendants' argument that the Chancery Division had improperly ordered the receiver to sell the property to the buyer that Imperial Marble had presented to plaintiff. The court rejected this argument, explaining "defendants effectively are asking this [c]ourt to overturn or reverse, modify an [o]rder that was not issued by this Division of the [c]ourt. And accordingly I have no authority to do so, and that [m]otion more properly would be brought before the Chancery Division of Essex County." Finding no other valid basis to grant defendants any relief from the Law Division judgment, the court then entered an order denying defendants' motion. This appeal followed.
II.
A trial court may relieve a party or the party's legal representative from a final judgment or order when "the judgment or order has been satisfied, released or discharged, or a prior judgment or order upon which it is based has been reversed or otherwise vacated, or it is no longer equitable that the judgment or order should have prospective application." R. 4:50-1(e). "[S]uch relief can be granted only by the original trial court, by an appellate court in direct review of the judgment challenged or by an appellate court in review of a trial court's denial of a motion to vacate." Kingsley v. Wes Outdoor Advert. Co., 59 N.J. 182, 187 (1971) (citing State by Hilgendorff v. Am. Can Co., 42 N.J. 32, 42 (1964), cert. denied, 379 U.S. 826, 85 S. Ct. 53, 13 L. Ed. 2d 36 (1964); Greenberg v. Owens, 31 N.J. 402, 405 (1960); Hodgson v. Applegate, 31 N.J. 29, 37-38 (1959); Lippincott v. Godfrey, 103 N.J.L. 407, 409 (E. & A. 1926)).
"Collateral attacks generally are not to be recognized in the absence of fraud or a lack of jurisdiction or similarly cogent equitable reasons." Kingsley, supra, 59 N.J. at 188 (citing Catabene v. Wallner, 16 N.J. Super. 597, 601 (App. Div. 1951); Drachenberg v. Drachenberg, 4 N.J. Super. 510, 513 (App. Div. 1949)).
In this case, defendant's motion sought to collaterally modify the Chancery Division's order authorizing the receiver to sell the property to the buyer that defendants presented to plaintiff. Kingsley, supra, 59 N.J. at 187. The Law Division properly declined to modify the Chancery Division's order as defendants failed to provide any valid basis for a collateral attack of the Chancery Division order.
Even were we disposed to entertain defendants' contentions, it is apparent they have no validity. We acknowledge that in order to prevent a double recovery by a judgment creditor against a judgment debtor, "the judgment debtor [is] entitled to a credit for either the [mortgaged] property's fair market value, if the property was retained by the judgment creditor, or to the amount realized by the judgment creditor in a sale of the property to a third party." MMU of N.Y. v. Grieser, 415 N.J. Super. 37, 47 (App. Div. 2010) (citing Smith v. Lopez, 304 N.J. Super. 26, 30-34 (Ch. Div. 1996)). However, these precedents have no application in this case. Plaintiff never completed its foreclosure of the property nor did it realize an amount in excess of its judgment. Further, the record contains no competent evidence the property sold for less than fair market value. Defendants' claims to the contrary clearly lack substantive merit.
Affirmed.
I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION