Opinion
DOCKET NO. A-4568-13T1
03-25-2015
BIG CITY PAVING & CONSTRUCTION, INC., Plaintiff, v. OLD BRIDGE FUNERAL HOME, LLC, Defendant, and ROBERT NELMS, Defendant-Appellant.
Allison A. Krilla argued the cause for appellant (Reardon Anderson, LLC, attorneys; Erik Anderson, of counsel and on the brief; Ms. Krilla, on the brief). Lawrence H. Shapiro argued the cause for respondent Debora Johnson, as Assignee of Big City Paving and Construction, Inc. (Ansell Grimm & Aaron, P.C., attorneys; Mr. Shapiro, of counsel; Jay B. Feldman, on the brief).
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION Before Judges Sabatino and Simonelli. On appeal from the Superior Court of New Jersey, Law Division, Middlesex County, Docket No. L-3048-07. Allison A. Krilla argued the cause for appellant (Reardon Anderson, LLC, attorneys; Erik Anderson, of counsel and on the brief; Ms. Krilla, on the brief). Lawrence H. Shapiro argued the cause for respondent Debora Johnson, as Assignee of Big City Paving and Construction, Inc. (Ansell Grimm & Aaron, P.C., attorneys; Mr. Shapiro, of counsel; Jay B. Feldman, on the brief). PER CURIAM
After a plenary hearing, the trial court denied a motion by defendant Robert Nelms ("Nelms") to vacate a default judgment entered against him in September 2009. The judgment was founded upon Nelms's personal liability for sums owed to plaintiff Big City Paving & Construction, Inc. ("Big City") in connection with work Big City performed at Nelms's request in building a funeral home in Old Bridge. Upon considering the testimony of Nelms and other witnesses, the trial court concluded that Nelms agreed to be personally liable for the debt in question, both under a 2007 Promissory Note and a Stipulation of Settlement filed with the court in 2007. The court found that Nelms was not credible, and that he had demonstrated no basis under Rule 4:50-1 to set aside the judgment.
Nelms now appeals, arguing that his motion for relief was improperly denied, maintaining that he never agreed to be liable for the sums owed to Big City. He further argues that he is entitled to be indemnified for this debt under an employment agreement that he allegedly entered into in 2004 with companies that he then controlled. We find no merit to Nelms's contentions, and affirm.
We need not set forth the entirety of the lengthy factual and procedural background. The following summary suffices for purposes of our opinion.
Nelms has been in the business of owning and operating funeral homes and cemeteries in various states, including New Jersey. He has been convicted of securities fraud in Indiana, and several of his businesses have been placed in receivership.
Among his various business entities, Nelms owned a majority interest in co-defendant Old Bridge Funeral Home, L.L.C. ("Old Bridge"). Big City, a construction firm, was hired to perform construction services at Old Bridge. When Big City was not paid for work it had performed at the site, it filed a collections action in the Law Division in March 2007 against Old Bridge and Nelms, individually.
On December 21, 2007, the parties to the collections action entered into an agreement entitled a "Stipulation of Settlement" providing for payment of the amount of $210,711.98. That total amount represented the original outstanding sum of $197,600 sought by Big City, plus additional interest of $13,111.98. The Stipulation of Settlement specified that Old Bridge and Nelms would make monthly payments of $3500 to Big City, beginning on April 1, 2007, with the total balance due on September 1, 2008. The Stipulation of Settlement also permitted Big City to proceed to seek the entry of default judgment without notice, in the event of a default of any payment, upon filing of an affidavit of such default with the trial court.
The Stipulation of Settlement was filed in the Law Division on December 24, 2007. In addition, as the trial court found, Nelms signed at an unspecified date, a related Promissory Note, in which he agreed to be responsible for the $3500 monthly payments to Big City.
The trial court rejected Nelms's contentions that he did not agree to be personally liable to Big City under, respectively, the Stipulation of Settlement and the Promissory Note. The Stipulation of Settlement had two signature lines for defendants Old Bridge and Nelms. Although Nelms added the word "President" after his signed name on both signature lines, the trial court found that Nelms committed in the agreement to bind not only Old Bridge but also himself individually. Similarly, the court rejected as "dubious" Nelms's claim that he did not sign the Promissory Note, which bore his seal and which contained the handwritten word "individually" next to one of his two signatures on the note. The court found it particularly significant that in his testimony Nelms was able to decipher the illegible word "individually," as corroborating proof that Nelms had, in fact, seen the note before and had signed it.
Although some installment payments were made on the debt, eventually Big City had to resort to collection methods. On September 25, 2009, Big City obtained a default judgment against Old Bridge and Nelms in the amount of $179,161.98. In the meantime, Nelms transferred his majority interest in Old Bridge to Deborah Johnson, with whom he previously had a romantic relationship and who had participated with Nelms in several of his business ventures.
Ms. Johnson's first name is variously spelled "Deborah" and "Debora" in the record.
In July 2010, and again in May 2011, Big City levied upon real property and a bank account of Old Bridge. On June 28, 2011, the court approved a Consent Order entered into between Big City and Old Bridge, which provided for a voluntary turnover of $119,900 to Big City from Old Bridge's bank accounts. That left a balance of $61,661.98, plus prejudgment interest, which Big City assigned the right to collect that remaining sum to Johnson.
It was not until October 2013 that Nelms filed a motion to vacate the judgment that had been entered against him in September 2009. He interposed a variety of procedural and other arguments, contending that he never intended to enter into the original Stipulation of Settlement individually, that he never had notice of the entry of judgment, that it is not his signature on the Promissory Note, and that his transfer of his interest in Old Bridge meant that any personal liabilities he had accrued while being in charge of that company were now the responsibility of only Johnson. Nelms also pointed to an unwitnessed putative employment agreement containing an indemnification clause between him and Old Bridge from 2004, in which he claims the company agreed to indemnify him for any debts that he accrued while he was employed.
The trial court rejected all of Nelms's contentions, finding that none of the requirements of the subsections of Rule 4:50-1 invoked by Nelms had been proven. The court found Nelms's testimony "lacked elements of credibility" and was "questionable." The court observed that Nelms was "combative, evasive and contradictory at times." Conversely, the judge found the competing testimony of Johnson and her son David Hernandez, who had been involved in Old Bridge's business, was "persuasive and credible," that "[t]heir explanations of the documentary evidence and exhibits were rational and reflected a coherent understanding of the events[.]" The court further noted that Johnson and Hernandez "exhibited a calm demeanor throughout the hearing and provided direct responses to all questioning."
We must apply considerable deference to a trial court's rulings on a motion for post-judgment relief under Rule 4:50-1. In general, a decision on whether to vacate a default judgment "lies within the sound discretion of the trial court, guided by principles of equity." Coryell, L.L.C. v. Curry, 391 N.J. Super. 72, 79 (App. Div. 2006) (citing Housing Auth. of Town of Morristown v. Little, 135 N.J. 274, 283 (1994)). The denial or grant of such a motion "will be left undisturbed unless it represents a clear abuse of discretion." Ibid. (quoting Little, supra, 135 N.J. at 283). Moreover, we greatly defer to the credibility findings of the trial court following an evidentiary hearing. Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 484 (1974).
Applying these well-established standards of review, we affirm the trial court's denial of Nelms's application to vacate the judgment against him, substantially for the cogent reasons expressed in the written opinion of Judge Timothy P. Lydon, dated April 25, 2014.
There is substantial credible evidence in the record to support all of Judge Lydon's determinations. We defer to his well-reasoned findings that Nelms agreed in the Stipulation of Settlement and Promissory Note to be personally liable for the sums owed to Big City, and that he was given adequate notice of Big City's application for default judgment. Nelms has not credibly asserted a meritorious defense. The fact that he transferred to Johnson his ownership interests in the limited liability entity that operated Old Bridge does not in any way signify that she agreed to take on his own personal liability.
At oral argument on this appeal, Nelms's counsel requested that we specify that any affirmance of the default judgment be without prejudice to Nelms attempting to seek indemnification from Old Bridge or Johnson under the alleged 2004 employment agreement. We decline to do so. Putting aside the value of the unwitnessed employment agreement and the questionable fact that it was simultaneously executed solely by Nelms as both majority owner and employee of the enterprise, Nelms has not demonstrated that he sought to enforce the indemnity agreement within six years of his signing of the Stipulation of Settlement on August 1, 2007. See N.J.S.A. 2A:14-1 (setting forth the six-year statute of limitations relating to breaches of contract); see also First Indemn. of Am. Ins. Co. v. Kemenash, 328 N.J. Super. 64, 72 (App. Div. 2000) (noting that a cause of action for indemnification occurs at the point when the alleged indemnitee's liability for the debt is established).
Here, although the actual date of the Promissory Note (which recites "June ___, 2007") was not fixed, Nelms's August 1, 2007 signature on the Stipulation of Settlement acknowledged his personal liability to Big City and preceded by more than six years Nelms's motion to vacate, which was filed on October 11, 2013. Moreover, there is no indication in the record that Nelms requested the trial court to include such a "without prejudice" proviso in the order of disposition if his motion to vacate were denied.
Affirmed. I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION