GALE GARGIULO VS. LOUIS GARGIULO(FM-07-230-10, ESSEX COUNTY AND STATEWIDE)

• Court: New Jersey Superior Court Appellate Division
• Decided: August 7, 2017
• Docket: A-1989-15T4
• Status: Unpublished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NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court."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-1989-15T4

GALE GARGIULO,

Plaintiff-Respondent,

v.

LOUIS GARGIULO,

Defendant-Appellant,

and

199-201 SUMMIT AVENUE, LLC and LOUPET REALTY, LLC,

Defendants/Intervenors- Appellants. ____________________________________

Submitted March 21, 2017 – Decided August 7, 2017

Before Judges Koblitz and Sumners.

On appeal from Superior Court of New Jersey, Chancery Division, Family Part, Essex County, Docket No. FM-07-230-10.

Genova Burns LLC, attorneys for appellants (Kathleen Barnett Einhorn, of counsel and on the brief; Charles J. Messina and Michael C. McQueeny, on the brief).

Gale Gargiulo, respondent pro se. PER CURIAM

In this post-judgment divorce matter, defendant Louis

Gargiulo appeals the trial court's order finding him in contempt

for not paying IRS tax liens against real estate owned by

intervenor 199-201 Summit Avenue L.L.C. (Summit). In addition,

defendant and Summit appeal the court's order allowing plaintiff

Gale Garguilo to obtain discovery from Summit and intervenor Loupet

Realty, LLC (Loupet Realty) to determine if the entities made

distributions to defendant for his membership shares therein. For

the reasons that follow, we reverse the order of contempt, and

reverse and remand the discovery order to allow for oral argument.

The final judgment of divorce (FJOD) along with a written

decision was entered on December 12, 2013, detailing the equitable

distribution of the parties' marital assets, and the

responsibility for marital debts and counsel fees. Relevant to

this appeal, the FJOD provided that IRS liens totaling $257,094.22

on marital property were defendant's sole responsibility subject

to final disposition of his liability by the United States Tax

Court. The Tax Court granted plaintiff's application for innocent

spouse status seeking non-responsibility for the IRS liens but

defendant's appeal of that determination was pending at the time

the FJOD was entered.

2 A-1989-15T4 The FJOD also provided that defendant retain his fifty percent

share of properties and businesses he owns with his brother,

including Summit and Loupet Realty. His interest in Summit,

however, could not be transferred, encumbered, or altered in any

way without the permission of plaintiff or the court. This

restriction was set in place because plaintiff's equitable share

of the marital estate was secured through a recorded lien of three

separate judgments against defendant's share of Summit.

On December 4, 2015, the same trial court that issued the

FJOD, entered an order granting plaintiff's motion to hold

defendant in contempt due to his failure to satisfy the IRS liens.

The court did not render a written or oral decision. The order

merely stated: "Defendant is in contempt for his failure to pay

the IRS liens. Defendant shall immediately begin paying the IRS

debt or a bench warrant will be issued for his arrest." The order

made no mention of defendant's contention that his Tax Court appeal

remained pending and that he did not have an ability to pay the

IRS liens.

The same order also granted plaintiff's request for

comprehensive discovery from non-parties Summit and Loupet, "and

any other company that [defendant] owns." Subject to a consent

protective order of confidentiality to be submitted by the parties,

the order allowed plaintiff to subpoena records and documents

3 A-1989-15T4 covering the last two years' distributions made to defendant,

QuickBooks records, leases agreements, ledgers, bank accounts,

money transfers, rent rolls, and tax returns. The order stated

that plaintiff was entitled to discovery "as a judgment creditor

and due to the defendant's lack of veracity observed by this court

during pre-trial and trial proceedings in this case." There was

no recitation of facts supporting that finding. The order stated

that the court "addressed future discovery attempts" at oral

argument on the parties' earlier motions on January 16, 2015.

Lastly, the order denied plaintiff's request for appointment of a

receiver over Summit and Loupet in accordance with Crowe v. DeGoia1

and Rule 4:53-1.

In a separate order of the same date, the court denied

intervenors' cross-motion for a protective order pursuant to Rule

4:10-3, with the exception of a consent protective order of

confidentiality as set forth in the order granting plaintiff's

discovery motion. Defendant's and intervenors' request for oral

argument on the motion, and cross-motion was not granted and no

explanation was given by the court.

Before us , defendant contends that the court's order finding

him in contempt was contrary to the FJOD, which provided that the

1 90 N.J. 126 (1982).

4 A-1989-15T4 liability for the IRS liens will depend on defendant's Tax Court

appeal, which is still pending. Defendant also argues that prior

litigation in state and federal court absolved him of the

responsibility of satisfying the liens at this time.

Here, "a proceeding to enforce litigants' rights under Rule

1:10-3 'is essentially a civil proceeding to coerce the defendant

into compliance with the court's order for the benefit of the

private litigant[.]'" Pasqua v. Council, 186 N.J. 127, 140 (2006)

(quoting Essex Cty. Welfare Bd. v. Perkins, 133 N.J. Super. 189,

195 (App. Div.), certif. denied, 68 N.J. 161 (1975)).

Accordingly, "[r]elief under [Rule] 1:10-3, whether it be the

imposition of incarceration or a sanction, is not for the purpose

of punishment, but as a coercive measure to facilitate the

enforcement of the court order." Ridley v. Dennison, 298 N.J.

Super. 373, 381 (App. Div. 1997).

We review a trial court's imposition of sanctions against a

litigant pursuant to Rule 1:10-3 under the abuse of discretion

standard. Barr v. Barr, 418 N.J. Super. 18, 46 (App. Div. 2011).

"An abuse of discretion 'arises when a decision is made without a

rational explanation, inexplicably departed from established

policies, or rested on an impermissible basis.'" Ibid. (quoting

Flagg v. Essex Cty. Prosecutor, 171 N.J. 561, 571 (2002)).

5 A-1989-15T4 Applying these principles, we are constrained to conclude

that the trial court mistakenly applied its discretion, and reverse

the order finding defendant in contempt. The clear terms of the

FJOD provided that final resolution of defendant's liability for

the IRS liens was contingent upon his Tax Court appeal of the

grant of plaintiff's innocent spouse status, which exempted her

from liability for the liens. Because the Tax Court matter

remained pending, there was no factual basis for the court to find

defendant in contempt for not paying the liens. In reaching this

conclusion, we need not address defendant's argument - which

essentially seeks to apply the law of the case doctrine - that the

issue has already been decided by state and federal courts. See

Lombardi v. Masso, 207 N.J. 517, 538 (2011) (quoting Lanzet v.

Greenberg, 126 N.J. 168, 192 (1991) ("[A] legal decision made in

a particular matter 'should be respected by all other lower or

equal courts during the pendency of that case.")

Turning to the court's discovery order, defendant and

intervenors contend that plaintiff, as a judgment creditor of

defendant, is not entitled to discovery from intervenors under the

Revised Uniform Limited Liability Company Act (LLC Act), N.J.S.A.

42:2C-1 to -94), because intervenors have provided affidavits that

distributions have not been made to defendant. We are mindful

that we "generally defer to a trial court's disposition of

6 A-1989-15T4 discovery matters[,]" and we will reverse only when "the court has

abused its discretion or its determination is based on a mistaken

understanding of the applicable law." Rivers v. LSC P'ship, 378

N.J. Super. 68, 80 (App. Div.) (citing Payton v. N.J. Tpk. Auth.,

148 N.J. 524, 559 (1997), certif. denied, 185 N.J. 296 (2005)).

However, based upon the record, we cannot discern whether the

court's order was proper.

Our court's ability to resolve an appeal is largely dependent

upon the trial court's compliance with its obligation to state

findings of fact and conclusions of law as required by Rule 1:7-

4. To comply, the court must articulate factual findings and

correlate them with the principles of law. Curtis v. Finneran,

83 N.J. 563, 570 (1980). When that is not done, this court's

review is impeded and a remand is necessary. Elrom v. Elrom, 439

N.J. Super. 424, 443 (App. Div. 2015).

Here, the trial court did not render a decision explaining

its order, which includes only a conclusory determination that

plaintiff is a judgment creditor and discovery was discussed at

argument for a previous motion in January 2015. However, our

review of the transcript of that proceeding reveals no factual or

legal findings relevant to the December 4 discovery order being

appealed, because there was no discovery sought from defendant and

intervenors in January 2015. Thus, we reverse the trial court's

7 A-1989-15T4 discovery order and remand to the court for specific factual

findings and conclusions of law as required by Rule 1:7-4. We

take no position as to whether the court should grant plaintiff's

request for discovery.

We further observe that the court's lack of findings may in

part be the product of its failure to grant defendant's and

intervenors' requests for oral argument. Requests for oral

argument in family actions are governed by Rule 1:6-2(d), except

as otherwise provided in Rule 5:5-4. Rule 1:6-2(d) provides in

pertinent part that "no motion shall be listed for oral argument

unless a party requests oral argument in the moving papers or in

timely-filed answering or reply papers, or unless the court

directs." Rule 5:5-4(a) states:

[I]n exercising its discretion as to the mode and scheduling of disposition of motions, the court shall ordinarily grant requests for oral argument on substantive and non-routine discovery motions and ordinarily deny requests for oral argument on calendar and routine discovery motions.

"This provision has generally been interpreted to require oral

argument 'when significant substantive issues are raised and

argument is requested.'" Palombi v. Palombi, 414 N.J. Super. 274,

285 (App. Div. 2010) (quoting Mackowski v. Mackowski, 317 N.J.

Super. 8, 14 (App. Div. 1998)). "The denial of oral argument when

a motion has properly presented a substantive issue to the court

8 A-1989-15T4 for decision 'deprives litigants of an opportunity to present

their case fully to a court.'" Ibid. (quoting Mackowski, supra,

317 N.J. Super. at 14). The court, however, retains discretion

to dispense with oral argument on substantive issues where the

record provides all that is necessary to make a decision on the

issue presented. Ibid.; see also, Raspantini v. Arocho, 364 N.J.

Super. 528, 531-32 (App. Div. 2003) (under Rule 1:6-2, requests

for argument may be denied where the court sets forth appropriate

reasons on the record).

Guided by these principles, we conclude that in light of the

substantive issues raised by defendant and intervenors concerning

a judgment creditor obtaining discovery from non-party entities

created under the LLC Act, the court mistakenly applied its

discretion in not granting oral argument. On remand, the trial

court must allow oral argument.

Reversed as to the order of contempt against defendant.

Reversed as to the order of discovery imposed on defendant and

intervenors. Remanded for further proceedings consistent with

this opinion. We do not retain jurisdiction.

9 A-1989-15T4