PARKE BANK VS. 2820 MT. EPHRAIM AVENUE, LLC (L-3553-14, CAMDEN COUNTY AND STATEWIDE)(CONSOLIDATED)

• Court: New Jersey Superior Court Appellate Division
• Decided: May 3, 2019
• Docket: A-5432-17T2/A-0943-18T2
• Status: Unpublished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NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court."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 NOS. A-5432-17T2 A-0943-18T2 PARKE BANK,

Plaintiff-Respondent,

v.

2820 MT. EPHRAIM AVENUE, LLC, JOHN A. CALZARETTO, and KEITH LUDWICK,

Defendants-Appellants,

and

HADDON FARMERS MARKET, LLC, LSQ BEVERAGE CO., INC., ANTHONY CALZARETTO, WILLIAM EPP, and JOHN DINASO,

Defendants. ______________________________

PARKE BANK,

2820 MT. EPHRAIM AVENUE, LLC, HADDON FARMERS MARKET, LLC, LSQ BEVERAGE CO., INC., ANTHONY CALZARETTO, WILLIAM EPP, JOHN DINASO and KEITH LUDWICK,

Defendants,

JOHN A. CALZARETTO,

Defendant-Appellant. _________________________________

Submitted April 3, 2019 – Decided May 3, 2019

Before Judges Nugent and Reisner.

On appeal from Superior Court of New Jersey, Law Division, Camden County, Docket No. L-3553-14.

Mark S. Cherry, attorney for appellants 2820 Mt. Ephraim Avenue and Keith Ludwick in A-5432-17.

John A. Calzaretto, appellant pro se in A-5432-17 and in A-0943-18.

Dembo, Brown & Burns, LLP, attorneys for respondent (Michael E. Brown, of counsel and on the briefs in A- 5432-17; Kyle F. Eingorn, of counsel and on the briefs in A-0943-18).

PER CURIAM

These two appeals, which we have consolidated for purposes of this

opinion, arise from plaintiff Parke Bank's efforts to collect on a Law Division

A-5432-17T2 2 judgment, entered after the borrower defaulted on a commercial real estate loan.

In A-5432-17, defendants 2820 Mt. Ephraim Avenue, LLC (Mt. Ephraim), John

Calzaretto, and Keith Ludwick (collectively, defendants) appeal from a June 18,

2018 order denying their motion to mark the Law Division judgment against

them as satisfied, discharged, or released. In A-0943-18, John Calzaretto

(Calzaretto) appeals from a September 17, 2018 order for payment out of

income, requiring him to pay $5,254.05 per month to Parke Bank (the bank) to

satisfy the remaining balance of the Law Division judgment. We affirm the

orders on appeal in both cases.

I. A-5432-17

As noted, in A-5432-17, defendants appeal from a June 18, 2018 order

entered by the Law Division, denying their motion to mark the judgment

satisfied.1 The tortured history of the litigation is set forth in detail in Judge

Daniel A. Bernardin's oral opinion issued June 18, 2018. A brief summary will

suffice here.

1 Defendants' brief identifies several prior orders, going back to December 19, 2014, as being involved in the appeal. However, those orders are not listed in the notice of appeal, and an appeal from those prior orders is not properly before us. See R. 2:5-1(e)(3)(i). A-5432-17T2 3 There is no dispute that the bank gave Mt. Ephraim a loan secured by a

mortgage on commercial property. Calzaretto personally guaranteed the loan.

After the borrower defaulted on the loan, the bank filed a collection action in

the Law Division and a foreclosure action in the Chancery Division. In the

foreclosure action, the Chancery Division appointed a receiver in 2014. On June

10, 2016, the Chancery Division entered an order authorizing the receiver to sell

the property, over defendants' objections. The Chancery Division subsequently

entered an amended order in 2017, permitting the receiver to sell the property

for an adjusted sale price. Defendants once again objected; the court rejected

their arguments and later denied their reconsideration motion.

Meanwhile, the Law Division entered judgment against defendants by

default on January 9, 2015. Defendants did not appeal from that final judgment.

In October 2015, they filed an order to show cause seeking to vacate the

judgment and seeking to assert a counterclaim against the bank and the receiver.

The Law Division denied that application and denied defendant's motion to

reconsider the denial. Defendants did not appeal from any of those orders.

Instead, as noted above, they filed motions in the Chancery Division, seeking to

attack the order permitting the sale. The Chancery Division denied those

applications.

A-5432-17T2 4 After filing a bankruptcy petition in June 2017, defendants also attacked

the judgment in the bankruptcy court, presenting the same arguments they

previously raised in the Law Division and Chancery Division. The bankruptcy

judge nonetheless granted plaintiff's motion to lift the automatic stay. Instead

of challenging that order in federal court, defendants dismissed the bankruptcy

petition. The Chancery-appointed receiver completed the sale of the property

on August 29, 2017.

Defendants then filed a motion in the Law Division for an order declaring

plaintiff's money judgment satisfied. In a lengthy oral opinion, Judge Bernardin

concluded that defendants' arguments had been previously raised and rejected in

the foreclosure case and in prior Law Division motions, and the arguments were

barred by the doctrines of res judicata, collateral estoppel, and law of the case.

Judge Bernardin denied the motion by order dated June 18, 2018, and this appeal

followed.

On this appeal, defendants present the following points of argument:

I. LEGAL ARGUMENT – STANDARD OF REVIEW

II. THE LOWER COURT'S JUNE 18, 2018 DECISION FAILS TO APPLY THE DOCTRINE OF MITIGATION OF DAMAGES TO THE FACTS SURROUNDING RESPONDENT'S MARCH 2014 FAILURE AND REFUSAL TO MITIGATE ITS

A-5432-17T2 5 DAMAGES BY REJECTING PETITIONER'S OFFER TO FULLY PAY OFF RESPONDENT'S LOAN AT THE TIME OF THE INITIAL DEFAULT.

III. THE LOWER COURT'S JUNE 18, 2018 DECISION FAILS TO APPLY THE DOCTRINE OF MITIGATION OF DAMAGES TO THE FACTS SURROUNDING RESPONDENT'S APRIL 2016 FAILURE AND REFUSAL TO MITIGATE ITS DAMAGES BY REJECTING A LOAN AND JUDGMENT PURCHASE IN THE NET AMOUNT OF $3,900,000 AND INSTEAD INTENTIONALLY, WILLFULLY, AND M[A]LICIOUSLY DEFAMING PETITIONER JOHN CALZARETTO, CPA, JD AND TORTIOUSLY INTERFERING WITH THE PETITIONER BORROWER'S CONTRA[C]TUAL RELATIONSHIP WITH ITS LENDER.

IV. THE LOWER COURT'S JUNE 18, 2018 DECISION FAILS TO APPLY THE DOCTRINE OF MITIGATION OF DAMAGES TO THE FACTS SURROUNDING RESPONDENT'S APRIL 2016 FAILURE AND REFUSAL TO MITIGATE ITS DAMAGES IGNORING A $5,700,000 EXECUTED CONTRACT OF SALE GIVEN BY MOSAIC DEVELOPMENT PARTNERS LLC; FAILING AND REFUSING TO EVEN CONTACT THE CONTRACT PURCHASER.

V. THE LOWER COURT'S JUNE 18, 2018 DECISION FAILS TO APPLY THE DOCTRINE OF MITIGATION OF DAMAGES TO THE FACTS SURROUNDING RESPONDENT'S APRIL OF 2017 FAILURE AND REFUSAL TO MITIGATE ITS DAMAGES BY ONCE AGAIN FAILING AND REFUSING TO ACCEPT PAYMENT IN THE NET AMOUNT THAT REACHED $4,000,000 OFFERED

A-5432-17T2 6 BY THE PETITIONERS' RELATED PARTY BUYER, BLACK HORSE PLAZA ASSOCIATES LLC.

VI. THE LOWER COURT'S JUNE 18, 2018 DECISION FAILS TO APPLY THE DOCTRINE OF MITIGATION OF DAMAGES TO THE FACTS SURROUNDING RESPONDENT'S SUPPORT OF RECEIVER'S AND THEIR JOINT ATTORNEYS' FAILURE AND REFUSAL TO MITIGATE ITS DAMAGES BY FAILING AND REFUSING TO ACT AS A REASONABLY PRUDENT OWNER.

VII. THE COMPUTATION

As previously noted, the only issue properly before us on this appeal is

the validity of the June 18, 2018 Law Division order, as that was the only order

listed in defendants' notice of appeal. See R. 2:5-1(e)(3)(i); 1266 Apartment

Corp. v. New Horizon Deli, Inc., 368 N.J. Super. 456, 459 (App. Div. 2004).

We agree with Judge Bernardin that defendants' attacks on the underlying

judgment, and on plaintiff's right to collect it, were barred by the doctrines of

res judicata, collateral estoppel, and law of the case. As a result, the judge

properly denied defendants' application for an order declaring the judgment

satisfied. Defendants' appellate arguments are without sufficient merit to

warrant further discussion in a written opinion. R. 2:11-3(e)(1)(E). We affirm

substantially for the reasons stated in Judge Bernardin's thorough opinion.

A-5432-17T2 7 II. A-0943-18

In A-0943-18, defendant John Calzaretto appeals from a September 17,

2018 Law Division order for payments out of his income, in the monthly amount

of $5,254.05. See N.J.S.A. 2A:17-64 (authorizing the court to direct a judgment

debtor to pay the judgment in installments out of his or her income). As

previously noted, Calzaretto personally guaranteed the commercial loan

involved in the companion appeal. The issue on this appeal is whether the court

erred in enforcing the judgment against Calzaretto by including, in the monthly

payment amount, ten percent of the gross monthly income of his solely-owned

accounting firm, Calzaretto & Company, LLC (the LLC).

We previously remanded this case for a statement of reasons, because the

original motion judge (not Judge Bernardin) did not make sufficient findings of

fact to support his decision as to the amount of the monthly payment. Parke

Bank v. 2820 Mt. Ephraim Avenue, LLC, No. A-4164-15 (App. Div. Oct. 12,

2017). On remand, the matter was reassigned to Judge Bernardin, who directed

plaintiff to refile its motion. The parties agreed he could decide the amount of

the monthly payment without a plenary hearing, based solely on financial

documents and other materials they had submitted.

A-5432-17T2 8 Based on the evidence, including an unfiled version of defendant's 2014

tax return 2, Judge Bernardin found that the firm's gross income was almost half

a million dollars a year. But Calzaretto argued that the judge should base the

monthly payment amount on the firm's "net profits," which he claimed were

zero. In his September 17, 2018 oral opinion, Judge Bernardin rejected that

argument. The judge found that defendant admitted intentionally structuring his

finances so as to render himself judgment-proof, putting all of his assets in his

wife's name and causing his various LLCs to pay the wife "a monthly

management fee." The judge further found evidence that defendant had abused

the corporate form. The judge concluded that the calculation should be based

on the LLCs gross income, not its alleged net income. However, the judge

limited the monthly payments to ten percent of Calzaretto's total gross income,

pursuant to the wage execution statute, N.J.S.A. 2A:17-56. See Zavodnick v.

Leven, 340 N.J. Super. 94 (App. Div. 2001).

Noting that defendant was still liable for the $1.6 million judgment, the

judge rejected defendant's argument that our remand somehow entitled him to a

refund of amounts he had previously paid.

2 At his deposition, defendant admitted that he prepared the document for purposes of this litigation and had not filed it with the Internal Revenue Service. A-5432-17T2 9 On this appeal, defendant presents the following points of argument:

I. LEGAL ARGUMENT – STANDARD OF REVIEW.

II. THE TRIAL COURT'S SEPTEMBER 17, 2018 ORDER IGNORES, DENIES AND VIOLATED THE DEFENDANT/PETITION[ER]'S RIGHTS UNDER NEW JERSEY STATE LAW AT N.J.S.A. 42:2C-1 ET SEQ., ZAVODNICK V. LEVEN, 340 N.J. SUPER. 94, 773 A.2D 1170 AS APPLIED TO N.J.S.A. 2A:17-56 AND, AS MAY BE APPLICABLE, FEDERAL LAW AT 15 U.S.C.A. Sec. 1573.

III. DUE TO THE APPE[LLA]TE COURT[']S OCTOBER 12, 2017 REVERSAL OF THE LOWER COURT[']S APRIL 15, 2016 ORDER PAYMENTS MADE BY DEFEN[D]ANT MUST BE RETURNED TO THE DEFENDANT.

We affirm substantially for the reasons stated in Judge Bernardin's

opinion. Defendant's arguments are without sufficient merit to warrant

discussion here, beyond the following brief comments. R. 2:11-3(e)(1)(E).

Judge Bernardin calculated defendant's total personal income, based on

defendant's reported income from other sources plus the gross income of the

LLC, which the judge deemed to be defendant's income. The judge used the

total figure to calculate the ten-percent of income on which N.J.S.A. 2A:17-56

permits a judgment creditor to execute. On this record, we find no error in that

calculation.

A-5432-17T2 10 Defendant, who exercised sole control of the LLC, which was his

accounting firm, argued that his income should have been based on the firm's

net profit, which he claimed was zero, although he admitted that its gross income

was almost half a million dollars. The judge rejected that argument. The judge

did not accept defendant's claim that the LLC made no profit, in light of evidence

that defendant disregarded the corporate form, charged his personal expenses to

the LLC, and admittedly structured his finances so as to appear judgment-proof.

Defendant's appellate brief-in-chief does not deny, or even address, any of those

factors, and his reply brief makes factual assertions without citations to the

record. Contrary to defendant's argument, the judge did not permit plaintiff to

interfere with the LLC's management in violation of N.J.S.A. 42:2C-43. Rather,

the judge ordered defendant to pay the judgment out of his income.

Defendant's reliance on Zavodnick v. Leven, 340 N.J. Super. 94 (App.

Div. 2001), is misplaced. Zavodnick does not address the treatment of income

from a solely-owed LLC, nor does it address whether a wage execution is limited

to the debtor's share of an LLC's net profits as opposed to gross profits.

Zavodnick addressed a collection action directed at the defendant-attorney's

share of net profits from a multi-attorney partnership. Analogizing an attorney's

profit distribution to employee wages, the court held that absent a statutory

A-5432-17T2 11 exception, a creditor could only collect ten percent of the attorney's profit

distribution, pursuant to N.J.S.A. 2A:17-56. Unlike this case, there was also no

dispute in Zavodnick about the amounts the defendant was receiving from the

partnership.

Affirmed.

A-5432-17T2 12