CITY OF UNION CITY VS. 2210-2212 KERRIGAN AVE. (C-000122-12, HUDSON COUNTY AND STATEWIDE)

• Court: New Jersey Superior Court Appellate Division
• Decided: August 27, 2018
• Docket: A-4126-15T1
• Status: Unpublished

Opinion

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court."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.

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION DOCKET NO. A-4126-15T1

CITY OF UNION CITY,

Plaintiff-Appellant,

v.

2210-2212 KERRIGAN AVE., LLC, SUN NATIONAL BANK, SPF 2011 OWNER, LLC, TRIMONT REAL ESTATE ADVISORS, INC., GARRISON LOAN AGENCY SERVICES, INC. d/b/a GARRISON INVESTMENT GROUP, and BOARD OF EDUCATION CITY OF UNION CITY,

Defendants,

and

ABEL HERNANDEZ,

Defendant-Respondent.

__________________________________

Submitted October 11, 2017 – Decided August 27, 2018

Before Judges Yannotti and Leone.

On appeal from Superior Court of New Jersey, Chancery Division, Hudson County, Docket No. C-000122-12. William Z. Shulman, attorney for appellant.

Gilberto M. Garcia, attorney for respondent.

PER CURIAM

Plaintiff, the City of Union City, appeals an April 4, 2016

order which denied its motion to reconsider a February 10, 2016

order denying its request to enter judgment against defendant Abel

Hernandez. We affirm.

I.

This appeal concerns 2210-2212 Kerrigan Avenue (Property) in

Union City. In 2010, plaintiff filed a summary proceeding against

Hernandez, 2210-2212 Kerrigan Ave., LLC (the LLC), and other

defendants. The complaint alleged that the LLC was the owner of

the Property, that its ability to do business has been revoked,

and that it had defaulted on its mortgage and foreclosure had been

filed. The complaint also alleged, and Hernandez admitted, that

Hernandez was "the sole principal and shareholder of the LLC."

The complaint alleged that a notice and order of penalty had

been issued to defendants for failing to obtain a certificate of

occupancy (CO), and that the Property was being occupied without

a CO. The complaint requested an order imposing an injunction and

statutory penalties upon defendants. An amended complaint was

filed repeating those allegations.

2 A-4126-15T1 On August 13, 2014, the LLC filed a bankruptcy petition. On

August 20, 2014, an "Agreement and Release Settlement Agreement"

(Agreement) was entered into "between [plaintiff] and [the LLC],

whose corporate status is now revoked and Abel Hernandez [address

deleted] (hereafter 'Owner')." The Agreement described the LLC

as the owner of the Property, and Hernandez as "the sole member

of [the LLC]." The Agreement stated "the parties have reached an

agreement that will resolve all issues in regard to the [CO]

violation and in furtherance thereof will settle the pending

litigation." It was agreed "Property owner shall submit the

application for the issuance of the Final Certificate of

Occupancy," and "Owner shall pay the City the sum of $50,000 in

the next 30 days." Hernandez signed the Agreement under the LLC's

name and above the signature line "Abel Hernandez, Owner."

Defendants applied for the permanent CO, which was issued.

The $50,000 was not paid. The LLC's bankruptcy petition was

dismissed on April 9, 2015.

On April 22, 2015, plaintiff moved to reduce the Agreement

to judgment. On May 13, 2015, the trial court ordered that

judgment for $50,000 be entered against the LLC. The judge refused

to enter judgment against Hernandez, finding that he signed the

Agreement on behalf of the LLC and did not assume any personal

liability in the Agreement.

3 A-4126-15T1 On October 5, 2015, plaintiff moved under Rule 4:50-1(b),

(c), and (f) for an order entering judgment against Hernandez. On

February 10, 2016, the trial court denied the motion.

On February 29, 2016, plaintiff moved for reconsideration.

The trial court denied the motion on April 4, 2016.

II.

Plaintiff failed to appeal the May 13, 2015 order entering

judgment, so the validity of that order is not directly before us.

Plaintiff now concedes the Agreement only obligated the LLC to pay

the $50,000 and that Hernandez only signed as owner of the LLC.

Instead, plaintiff appeals the April 4, 2016 denial of his

motion for reconsideration. "In civil actions the notice of appeal

. . . shall designate the judgment, decision, action or rule, or

part thereof appealed from[.]" R. 2:5-1(f)(3)(A). "[I]t is clear

that it is only the judgments or orders or parts thereof designated

in the notice of appeal which are subject to the appeal process

and review." Fusco v. Bd. of Educ. of Newark, 349 N.J. Super.

455, 461-62 (App. Div. 2002) (quoting Pressler, Current N.J. Court

Rules, cmt. 6 on R. 2:5-1(f)(3)(i) (2002)). "Consequently, if the

notice designates only the order entered on a motion for

reconsideration, it is only that proceeding and not the order that

generated the reconsideration motion that may be reviewed."

4 A-4126-15T1 Pressler & Verniero, Current N.J. Court Rules, cmt. 6.1 on R. 2:5-

1 (2018); see, e.g., Fusco, 349 N.J. Super. at 462.

Nonetheless, plaintiff's case information statement (CIS)

indicates it sought to appeal not only the April 4 order but also

the February 10, 2016 order denying plaintiff's motion under Rule

4:50-1. If "a motion for reconsideration . . . implicate[s] the

substantive issues in the" order sought to be reconsidered, and

if "the basis for the motion judge's ruling on [that order] and

[the] reconsideration motion[ is] the same," then "an appeal solely

from . . . the denial of reconsideration may be sufficient for an

appellate review of the [earlier order], particularly where those

issues are raised in the CIS." Fusco, 349 N.J. Super. at 461. In

such an instance, we may "choose to exercise our discretion" to

review the earlier order. Potomac Aviation, LLC v. Port Auth. of

N.Y. & N.J., 413 N.J. Super. 212, 222 (App. Div. 2010). We choose

to exercise our discretion to review the February 10 order denying

relief under Rule 4:50-1, because "the basis for the motion judge's

ruling on [that order] and the reconsideration motion[] was the

same." Ibid. (quoting Fusco, 349 N.J. Super. at 461).

Under Rule 4:50-1, "[r]elief is granted sparingly. The

decision whether to vacate a judgment on one of the six specified

grounds is a determination left to the sound discretion of the

trial court, guided by principles of equity." F.B. v. A.L.G., 176

5 A-4126-15T1 N.J. 201, 207 (2003). "The trial court's determination under the

rule warrants substantial deference, and should not be reversed

unless it results in a clear abuse of discretion." US Bank Nat'l

Ass'n v. Guillaume, 209 N.J. 449, 467 (2012). We must hew to that

standard of review.1

Plaintiff invokes Rule 4:50-1(b), (c), and (f), which state:

[U]pon such terms as are just, the court may relieve a party or the party's legal representative from a final judgment or order for the following reasons: . . . (b) newly discovered evidence which would probably alter the judgment or order and which by due diligence could not have been discovered in time to move for a new trial under R. 4:49; (c) fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party; . . . or (f) any other reason justifying relief from the operation of the judgment or order."

A.

Under Rule 4:50-1(b), "[t]o obtain relief from a judgment

based on newly discovered evidence, the party seeking relief must

demonstrate 'that the evidence would probably have changed the

result, that it was unobtainable by the exercise of due diligence

for use at the trial, and that the evidence was not merely

1 Similarly, "a trial court's reconsideration decision will be left undisturbed unless it represents a clear abuse of discretion." Pitney Bowes Bank, Inc. v. ABC Caging Fulfillment, 440 N.J. Super. 378, 382 (App. Div. 2015) (citing Hous. Auth. of Morristown v. Little, 135 N.J. 274, 283 (1994)).

6 A-4126-15T1 cumulative.'" DEG, LLC v. Twp. of Fairfield, 198 N.J. 242, 264

(2009) (citation omitted).

Plaintiff alleged that after the May 13, 2015 order, it

requested and received discovery showing that the LLC constructed

the building on the Property under an oral agreement, maintained

no business records, checkbooks, or bank accounts, and had no

other assets than the Property. Plaintiff also learned that

Hernandez let his partner sign for him and take the lead role in

the construction and its financing, that his partner converted one

rent payment, that Hernandez paid some LLC expenses personally,

and similar information. Plaintiff argued this evidence showed

the LLC was a sham corporation, and would have enabled it to pierce

the corporate veil and obtain a judgment against Hernandez.

As the trial court found, plaintiff knew there were legal and

factual avenues to pursue a claim against defendant. Plaintiff's

complaint named him as an individual defendant. It also alleged

that "Hernandez is liable to the City" either "[t]o the extent

. . . the LLC ceases to exist," or "[t]o the extent that the LLC's

ability to do business in the State of New Jersey has been

revoked." "[P]ersons who carry on the business of a corporation

. . . after the charter has expired, or after dissolution, become

personally liable[.]'" Lancellotti v. Md. Cas. Co., 260 N.J.

7 A-4126-15T1 Super. 579, 583 (App. Div. 1992) (quoting Leventhal v. Atl. Rainbow

Painting Co., 68 N.J. Super. 406, 413 (App. Div. 1961)).

Moreover, before deciding to settle, plaintiff knew the LLC's

right to conduct business in New Jersey had been revoked, its

corporate status had been revoked, it had defaulted on its mortgage

on the Property against which foreclosure had been filed, and it

had filed for bankruptcy. Nonetheless, plaintiff entered into the

Agreement, which it concedes made only the LLC responsible to pay.

Given the information plaintiff knew before settling, plaintiff

did not show the additional information plaintiff now cites would

probably have changed the result.

The trial court also found the information plaintiff learned

in post-judgment discovery could have been learned through

discovery in the original litigation before plaintiff decided to

settle. We agree that, by the exercise of due diligence, plaintiff

could have obtained discovery to determine if the LLC was a sham

corporation and thus to support plaintiff's cause of action against

Hernandez individually. Such discovery would have relevant "to

the claim" by plaintiff against Hernandez, and to the "defense"

of Hernandez that he was protected by the LLC's corporate veil.

See R. 4:10-2(a).

Plaintiff argues it was barred from seeking discovery of

financial information under Herman v. Sunshine Chem. Specialties,

8 A-4126-15T1 133 N.J. 329 (1993). However, Herman dealt with discovery of

confidential financial information which had no relevance absent

a valid claim for punitive damages. Id. at 342-46. Much of the

evidence plaintiff now cites is not confidential financial

information. See id. at 345. Moreover, Herman recognizes that

"[j]udicial review of applications for discovery" and protective

orders can "alleviate concerns about abusive or burdensome

discovery" of confidential financial information. Id. at 344-45.

It was not a clear abuse of discretion to deny relief under

Rule 4:50-1(b) given those findings. We need not examine the

trial court's other findings on that issue.

B.

Plaintiff's motion also raised Rule 4:50-1(c). Plaintiff

asserts the trial court did not address that claim, but plaintiff's

motion brief did not address it either.2 In any event, plaintiff's

claim is meritless.

Rule 4:50-1(c) permits relief for "fraud (whether heretofore

denominated intrinsic or extrinsic), misrepresentation, or other

2 Instead, plaintiff's brief discussed Rule 4:50-1(e), which addresses 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." Plaintiff shows no basis for relief under that subsection. See DEG, 198 N.J. at 265-67.

9 A-4126-15T1 misconduct of an adverse party." Ibid. Where it is claimed that

"a settlement [wa]s obtained by fraud," "our courts require 'clear

and convincing proof' that the agreement should be vacated." Nolan

v. Lee Ho, 120 N.J. 465, 472 (1990).

Plaintiff presented no proof at all. Rather, plaintiff merely

argued in its briefs that at the time of settlement "it was

represented" that the LLC had found a purchaser for the Property

and that the LLC would be able to pay plaintiff $50,000 from the

sale proceeds. Such assertions of fact in briefs are "not

evidential and will not be considered." Albrecht v. Corr. Med.

Servs., 422 N.J. Super. 265, 267 n.1 (App. Div. 2011). "If a

motion is based on facts not appearing of record or not judicially

noticeable," a party must submit "affidavits made on personal

knowledge, setting forth only facts which are admissible in

evidence to which the affiant is competent to testify[.]" R. 1:6-

6. Plaintiff's certifications made no mention of such a

representation, let alone prove it was fraudulent.

C.

Plaintiff lastly cites Rule 4:50-1(f), "the so-called catch-

all, [which] provides relief for 'any other reason.'" DEG, 198

N.J. at 269. "[B]ecause of the importance that we attach to the

finality of judgments, relief under Rule 4:50-1(f) is available

only when 'truly exceptional circumstances are present.' . . .

10 A-4126-15T1 The rule is limited to 'situations in which, were it not applied,

a grave injustice would occur.'" Guillaume, 209 N.J. at 484

(quoting Little, 135 N.J. at 286, 289).

"This case presents no such circumstances." See ibid. Absent

proof of fraud, "[t]his case involves a reasoned decision by

municipal officials, acting in good faith, to settle a problem

case - no more and no less." See DEG, 198 N.J. at 270-71. "Rule

4:50-1 is not an opportunity for parties to a consent judgment to

change their minds; nor is it a pathway to reopen litigation

because a party either views his settlement as less advantageous

than it had previously appeared, or rethinks the effectiveness of

his original legal strategy." Id. at 261.

Affirmed.

11 A-4126-15T1