Opinion
DOCKET NO. A-0383-14T4
02-18-2016
EXTERIOR WALL SYSTEMS, LLC, Plaintiff-Appellant/Cross-Respondent, v. 3D CONTRACTING OF CENTRAL JERSEY, INC., Defendant, and JSN DELI CORP., d/b/a DOUBLE D DELI, Garnishee, Defendant-Respondent/Cross-Appellant.
Kreiser & Associates, P.C., attorneys for appellant (Travis L. Kreiser, on the briefs). Heilbrunn Pape, LLC, attorneys for respondent JSN Deli Corp. (Steven Kropf, on the brief).
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION Before Judges St. John and Vernoia. On appeal from Superior Court of New Jersey, Law Division, Mercer County, Docket No. L-0506-12. Kreiser & Associates, P.C., attorneys for appellant (Travis L. Kreiser, on the briefs). Heilbrunn Pape, LLC, attorneys for respondent JSN Deli Corp. (Steven Kropf, on the brief). PER CURIAM
Plaintiff, Exterior Wall Systems, LLC (EW), appeals from an order of the Law Division denying its motion to compel garnishee, JSN Deli Corp. d/b/a Double D Deli (JSN), to turn over certain funds. JSN cross-appeals from the order of the same date denying its motion requesting that EW pay its legal fees pursuant to N.J.S.A. 2A:15-59.1 and Rule 1:4-8. Following our review of the arguments advanced on appeal, in light of the record and applicable law, we affirm both orders.
I.
The record reflects the following facts and procedural history. With the exception of one critical contention, the facts are not in material dispute. EW was a subcontractor to defendant 3D Contracting of Central Jersey, Inc. (3D) on a project to be constructed for garnishee, JSN. EW asserted that 3D failed to pay its obligations to EW in full. Importantly, EW did not file a lien, pursuant to the provisions of the Construction Lien Law, N.J.S.A. 2A:44-1 to -38, for its work done.
EW brought suit against 3D and a default judgment was entered in favor of EW in the amount of $48,000. EW obtained a Writ of Execution directing the Sheriff of Middlesex County to execute on the personal property of the judgment debtor, 3D, and, if insufficient, on its real property located in the county. Thereafter, EW requested that the sheriff execute on the judgment by levying on the assets of JSN. In its letter to the sheriff, EW contended, "the owner of [JSN] admitted that it has retained (and not paid) certain funds otherwise due [3D] under its contract with [3D] for construction of the Double D Deli." EW requested that the sheriff serve a Writ of Execution on JSN for the purpose of executing on any rights and credits due 3D under the construction contract between JSN and 3D.
EW's sole support for the assertion of a debt owed to 3D by JSN is a letter from JSN's counsel to 3D's counsel setting forth issues in controversy, including counsel's understanding of the contested amounts, and the dispute resolution procedure in the parties' contract. EW asserts that JSN's counsel's statement in the letter that JSN "contends that the amount of indebtedness to [3D] is $87,000.00," less an aggregate of $50,123.35 to two subcontractors is an admission by JSN of a debt to 3D. The letter did not reference EW by name. JSN's counsel further stated in the letter, "I expect that if you and I and our clients give this matter some effort we should be able to resolve the controversy without the need for binding arbitration."
On April 24, 2013, in a separate matter, another judge granted JSN's motion to dismiss, with prejudice, 3D's complaint against it based on the running of the statute of limitations. 3D did not appeal that decision. Further, EW did not seek to intervene in that matter.
EW filed a turnover motion against JSN. JSN filed opposition to the turnover motion and cross-moved for an award of fees and costs pursuant to Rule 1:4-8. By two orders dated August 7, 2014, the motion judge denied both motions. EW appeals the denial of its turnover motion and JSN cross-appeals the denial of its motion for attorneys' fees and costs.
As this appeal presents an issue of law, our review is de novo. Manalapan Realty, L.P. v. Manalapan Twp. Comm., 14 0 N.J. 366, 378 (1995) ("A trial court's interpretation of the law and the legal consequences that flow from established facts are not entitled to any special deference.").
Concerning the appeal by EW, the issue presented is whether a "debt" exists from JSN to 3D which is subject to execution and garnishment. A judgment creditor is entitled to obtain execution against a debtor's "debts" as well as earned income, trust fund income, and profits.
When a judgment has been recovered in the Superior Court, and where any wages, debts, earnings, salary, income from trust funds, or profits are due and owing to the judgment debtor, or thereafter become due and owing to him, to the amount of $48.00 or more a week, the judgment creditor may, on notice to the judgment debtor unless the court
otherwise orders, apply to the court in which the judgment was recovered, or to the court having jurisdiction of the same, and upon satisfactory proofs, by affidavit or otherwise, of such facts, the court shall grant an order directing that an execution issue against the wages, debts, earnings, salary, income from trust funds, or profits of the judgment debtor.See also R. 4:59-1(d) (regarding "issuance of an execution against wages, debts, earnings, salary, income from trust funds or profits") (emphasis added).
[N.J.S.A. 2A:17-50 (emphasis added).]
The creditor is entitled to a garnishment order.
After a levy upon a debt due or accruing to the judgment debtor from a third person, herein called the garnishee, the court may upon notice to the garnishee and the judgment debtor, and if the garnishee admits the debt, direct the debt, to an amount not exceeding the sum sufficient to satisfy the execution, to be paid to the officer holding the execution or to the receiver appointed by the court, either in [one] payment or in installments as the court may deem just.
[N.J.S.A. 2A:17-63 (emphasis added).]
We recently examined the meaning of "debt" and concluded:
Construing the term "debt" in the execution statute, our former Supreme Court held that "debt" should be accorded not only its ordinary legal meaning as "an obligation for the payment of money founded upon a contract, express or implied," but more broadly as "that which one person is bound to pay to another under any form of obligation." Passaic Nat'l Bank & Trust Co. v. Eelman, 116 N.J.L. 279, 281 (Sup. Ct.
1936). "Whatever the law enjoins one to pay takes the legal classification of a debt." Id. at 282.
[Cameron v. Ewing, 424 N.J. Super. 396, 404 (App. Div. 2012).]
In Cameron, we examined whether payments due to a judgment debtor under a reverse mortgage were "debts" as defined in the statute. Id. at 405. We concluded they were, noting, "'[i]t was patently not the intention to limit the operation of the statute strictly to contractual obligations to pay for the judgment debtor's labor or personal service.'" Id. at 404-05 (quoting Passaic Nat'l Bank & Trust, supra, 116 N.J.L. at 283).
The significant difference between the periodic payment due the debtor in Cameron and the obligation in this matter due 3D under the JSN-3D agreement is the contingent nature of the latter. "'A debt which is uncertain and contingent, in the sense that it may never become payable, is not subject to levy and sale.'" Id. at 406 (quoting Cohen v. Cohen, 126 N.J.L. 605, 610 (Sup. Ct. 1941)). "[D]ebts may be subject to execution 'if liquidated and certain in their existence[.]'" Ibid. (quoting Canger v. Froysland, 283 N.J. Super. 615, 621 (Ch. Div. 1994) (citing Passaic Nat'l Bank & Trust, supra, 116 N.J.L. at 282 (stating that a debt must be "for a sum certain, or a sum readily reducible to a certainty," that may be payable in a single amount, or in installments)).
This agreement was not included in the record before us. EW provided an incomplete copy which did not contain any pricing information or sums due 3D. --------
The motion judge concluded the letter from JSN's counsel to 3D's counsel, which EW contends evinces the "debt," is not "in any way an admission that there is 'X' amount owed or any amount owed." We agree. First, the letter clearly reflected that the parties contested the amount due. More importantly, the motion judge recognized the issues of settlement negotiations between the parties and the lack of authority of counsel to bind JSN.
EW maintains the invitation of settlement negotiations proffered by JSN's counsel to 3D's counsel evinces the "debt" and may support a garnishment. We disagree. We take note of N.J.R.E. 408, which provides as follows:
When a claim is disputed as to validity or amount, evidence of statements or conduct by parties or their attorneys in settlement negotiations . . . including offers of compromise . . . shall not be admissible to prove liability for, or invalidity of, or amount of the disputed claim. Such evidence shall not be excluded when offered for another purpose; and evidence otherwise admissible shall not be excluded merely because it was disclosed during settlement negotiations.
The letter expressed JSN's willingness to engage in settlement negotiations. Accordingly, we agree that the statement in the letter from JSN's counsel to 3D's counsel that JSN "contends that the amount of indebtedness to [3D] is $87,000.00" cannot properly be used as evidence of a "debt" for a sum certain, or a sum readily reducible to a certainty.
Therefore, we agree with the motion judge that EW did not establish a "debt" of JSN to 3D "that JSN is holding, and that's essentially what is missing." We conclude the denial of EW's turnover motion was proper.
We have considered the remaining subsidiary arguments expressed in EW's brief, and they lack sufficient merit to require further discussion. See R. 2:11-3(e)(1)(E).
The motion judge also found no basis to award JSN attorney's fees under the New Jersey Frivolous Litigation Statute (FLS), N.J.S.A. 2A:15-59.1. The judge concluded that EW's arguments were novel, stating, "[i]t's not enough legally for me to grant the turnover motion, but it's also enough to say that this was not completely frivolous. This was not made in bad faith." It is from that decision that JSN cross-appeals.
The FLS permits an award of reasonable counsel fees and litigation costs to a prevailing party in a civil action if it is determined that the complaint, counterclaim, cross-claim, or defense is frivolous. N.J.S.A. 2A:15-59.1. There are two bases on which a claim or defense can be considered frivolous:
(1) The complaint, counterclaim, cross-claim or defense was commenced, used or continued
in bad faith, solely for the purpose of harassment, delay or malicious injury; or
(2) The nonprevailing party knew, or should have known, that the complaint, counterclaim, cross-claim or defense was without any reasonable basis in law or equity and could not be supported by a good faith argument for an extension, modification or reversal of existing law.
[N.J.S.A. 2A:15-59.1(b).]
A claim or defense is considered frivolous when: "no rational argument can be advanced in its support"; "it is not supported by any credible evidence"; "a reasonable person could not have expected its success"; or "it is completely untenable." Belfer v. Merling, 322 N.J. Super. 124, 144 (App. Div.), certif. denied, 162 N.J. 196 (1999). "[F]alse allegations of fact [will] not justify [an] award . . . unless they are made in bad faith, 'for the purpose of harassment, delay or malicious injury.'" McKeown-Brand v. Trump Castle Hotel & Casino, 132 N.J. 546, 561 (1993) (quoting N.J.S.A. 2A:15-59.1(b)(1)). An honest attempt to pursue a perceived, though ill-founded, claim or defense is not considered to be frivolous. Id. at 563. The burden of proving bad faith is on the party who seeks the fees and costs. Id. at 559.
Guided by these standards, we perceive no error in the motion judge's determination not to award fees to JSN under the FLS.
Affirmed. I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION