Opinion
DOCKET NO. A-4954-10T4
09-25-2012
LISA PAIGE HELMKAMP HOBYAK, individually and on behalf of RYCOJA, LLC, Plaintiffs-Respondents, v. MICHAEL SCOTT HOBYAK and PENNCO INSTITUTES, INC., d/b/a PENNCO TECH, Defendants-Appellants.
Patrick T. Henigan (Eckell, Sparks, Levy, Auerbach, Monte, Sloane, Matthews & Auslander), attorney for appellants. Archer & Greiner, attorneys for respondents (Charles W. Heuisler and Kenneth J. Lackey, on the brief).
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
Before Judges Fisher, Alvarez and St. John.
On appeal from the Superior Court of New Jersey, Chancery Division, Camden County, Docket No. C-0040-10.
Patrick T. Henigan (Eckell, Sparks, Levy, Auerbach, Monte, Sloane, Matthews & Auslander), attorney for appellants.
Archer & Greiner, attorneys for respondents (Charles W. Heuisler and Kenneth J. Lackey, on the brief). PER CURIAM
In this appeal, we consider, among other things, whether this action should have been stayed pending resolution of an existing, first-filed out-of-state matrimonial action. We affirm because the Chancery judge correctly found the issues raised here concerning one of the matrimonial litigant's dominion over a limited liability company owned by both matrimonial litigants were not substantially related to the matrimonial issues and because -- with this suit's complete adjudication in the trial court -- there is no adequate remedy available to appellant.
Prior to the filing of this civil action, plaintiff Lisa Paige Helmkamp Hobyak and defendant Michael Scott Hobyak were engaged in matrimonial litigation in the Pennsylvania Court of Common Pleas. While the matrimonial action was pending unresolved -- as it may still be -- Lisa commenced this action on her own behalf, as well as on behalf of Rycoja, LLC, a New Jersey limited liability company, as to which Lisa owns 70% and Michael the remaining 30%, against Michael and Pennco Institutes, Inc. Rycoja owns real property in Blackwood that it leases to Pennco; Michael is the president of Pennco.
In this action, Lisa sought, among other things: Michael's dissociation from Rycoja, pursuant to N.J.S.A. 42:2B-24(b)(3); damages resulting from Michael's payment to himself of management fees that Lisa claimed were taken in violation of Rycoja's operating agreement; and rental payments that Lisa claims were due to Rycoja from Pennco. With regard to the last aspect of her claim, Lisa asserted that Pennco was obligated to pay Rycoja $20,000 per month in rent. She claimed Michael avoided Pennco's rent obligation to Rycoja by causing Pennco to obtain the mortgage held by Bank of America that secured Rycoja's debt of approximately $1,200,000. As the holder of a defaulted mortgage, Pennco held the right to receive the rents due the mortgagor, Rycoja; as a result, Pennco simply stopped making its monthly rent payments to Rycoja.
After the filing of Lisa's complaint, Michael and Pennco sought a stay based on comity grounds, arguing that the Pennsylvania matrimonial court had first acquired jurisdiction over Lisa, Michael, and their property, and that our courts should defer to the Pennsylvania proceedings. Chancery Judge Mary Eva Colalillo denied that motion on November 12, 2010. Michael and Pennco (defendants) did not seek leave to appeal this interlocutory order.
Lisa was thereafter unable to obtain responses to many of her discovery requests, resulting in the entry of a December 17, 2010 order, which suppressed without prejudice defendants' pleadings. When defendants' failure to provide discovery persisted over the following months, Lisa sought suppression with prejudice. On April 1, 2011, Judge Colalillo adjourned the motion to allow defendants additional time to respond. In proceedings at the end of that month, defense counsel acknowledged that the judge had "graciously granted" the adjournment and that his clients had failed to provide anything but a minimal response to Lisa's discovery requests. Finding no emergency, medical or otherwise, to excuse the failure to turnover the documents, finding that defendants had not sought a vacation of the December 17, 2010 order, and finding that an adjournment had been previously granted and that "six weeks later . . . [defense counsel] has candidly advised me that he has conferred with his client[,] [who] had the opportunity to provide the documentation that was requested, and has chosen not to," on April 29, 2011, the Chancery judge entered an order suppressing with prejudice defendants' pleadings.
At that time, defense counsel represented to the judge that his client had told him that he "was bringing 12 boxes of materials, which constitute business records of the entities in question" to his office "at 7:45 this morning" but that he did not appear as promised.
At trial on May 9, 2011, after hearing Lisa's testimony and the receipt of Lisa's other evidence, and after hearing the summations of both attorneys, Judge Colalillo rendered thorough findings of fact and entered judgment, which, among other things: dissociated Michael from Rycoja; awarded $338,000 to
The judge permitted defense counsel to cross-examine Lisa despite defendants' default status.
Lisa to be paid by Michael for "improper payments" he made to himself from Rycoja; directed Pennco to pay to Rycoja $240,000, the past due and unpaid rent; ordered Pennco to make all future monthly rent payments of $20,000 "to Rycoja c/o Lisa Paige Helmkamp Hobyak, Administrative Member"; and awarded counsel fees in an amount to be determined. Orders quantifying the awarded counsel fees, which are not contained in the record on appeal, were entered on June 9, 2011.
Defendants appeal, arguing that: (1) "principles of comity required the stay of the action"; (2) the judge "erred in suppressing pleadings with prejudice as [defendants] established the existence of exceptional circumstances"; and (3) the judge's factual findings "of liability as to Pennco w[ere] not supported by sufficient or credible evidence." We find insufficient merit in these arguments to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E). We add only that the record fully supports the Chancery judge's conclusion, with regard to the second point, that defendants willfully refused to provide discovery despite numerous opportunities and that the drastic step of suppressing defendants' pleadings with prejudice was the only appropriate remedy. And, as to the third point, the judge made comprehensive findings of fact entitled to our deference. Rova Farms Resort, Inc. v. Investors Ins. Co., 65 N.J. 474, 483-84 (1974). We add only the following additional comments with regard to the first point.
Defendants' notice of appeal suggested that defendants sought review of the suppression orders of December 17, 2010 and April 29, 2011, the final judgment of May 9, 2011, and the counsel fee orders of June 9, 2011. As to these orders, defendants' appeal brief addresses only the April 29, 2011 order and the May 9, 2011 judgment and, as to the latter, only the liability finding against Pennco. Defendants' first point, however, addresses the November 12, 2010 order, which denied defendants' motion for a stay, that was not cited in the notice of appeal as an order to be reviewed. Notwithstanding that omission, which authorizes our disregard of defendants' first point, see Fusco v. Bd. of Educ. Of Newark, 349 N.J. Super. 455, 460-62 (App. Div.), certif. denied, 174 N.J. 544 (2002), we nevertheless exercise our discretion to address the merits of the November 12, 2010 order and defendants' first point.
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Our courts adhere to "the general rule that the court which first acquires jurisdiction has precedence in the absence of special equities." Yancoskie v. Del. River Port Auth., 78 N.J. 321, 324 (1978). This first-filed rule counsels that our courts should "ordinarily . . . stay or dismiss a civil action in deference to an already pending, substantially similar lawsuit in another state, unless compelling reasons dictate that it retain jurisdiction." Sensient Colors Inc. v. Allstate Ins. Co., 193 N.J. 373, 386 (2008); see also Continental Ins. Co. v. Honeywell Int'l, Inc., 406 N.J. Super. 156, 173-75 (App. Div. 2009). "The question is not whether a state court has the power to exercise jurisdiction over a case filed within its jurisdiction, but whether the court should restrain itself and not exercise that power." Sensient Colors, supra, 193 N.J. at 386-87. As the Court explained:
If we are to have harmonious relations with our sister states, absent extenuating circumstances sufficient to qualify as special equities, comity and common sense counsel that a New Jersey court should not interfere with a similar, earlier-filed case in another jurisdiction that is "capable of affording adequate relief and doing complete justice." The litigation of substantially similar lawsuits in multiple jurisdictions with opposing parties racing to acquire the first judgment is not only wasteful of judicial resources, but anathema in a federal system that contemplates cooperation among the states.
[Id. at 387 (citations and footnote omitted)]
We are satisfied that the Chancery judge did not err in finding that these principles did not require a stay of this suit. There is no doubt that the Pennsylvania matrimonial action encompassed equitable distribution claims between Lisa and Michael and that one of their assets was Rycoja. This suit, however, focused not on the ownership interests of Lisa and Michael in Rycoja but on Michael's alleged improper conduct as Rycoja's administrative member and, further, whether he should be dissociated from that limited liability company. In addition, Lisa sought relief from Pennco, which was not a party to the matrimonial litigation. Although it is conceivable that a Pennsylvania matrimonial court might exercise subject matter jurisdiction over the disputes alleged in the complaint in this action, defendants have not provided support for such a contention. Moreover, the applicable comity principles normally presuppose what has not occurred here: a race to court and an attempt by one party to defeat another court's jurisdiction. Here, there is no suggestion that this was Lisa's intent; instead, this suit presented causes of action not normally litigated in matrimonial courts that also involved at least one party, Pennco, which may not have been subject to the jurisdiction of a Pennsylvania court, and concerned real property located in New Jersey.
However, even assuming the claims pleaded here could have been fully and effectively litigated in the Pennsylvania matrimonial court, and assuming other grounds existed for the Chancery judge to defer disposition of this case pending the Pennsylvania matrimonial court's consideration of Lisa's claims, the fact is that this case has now been fully adjudicated and fairly decided. When the Chancery judge determined that a stay was not required, defendants made no attempt to seek our intervention by way of an interlocutory appeal; instead, they allowed the matter to proceed to a final judgment before seeking review. Even were we to agree -- and we do not -- that a stay should have been entered, our ability to grant an effective remedy has been lost through defendants' failure to sooner seek our intervention; we are "confronted with an accomplished fact." Humble Oil & Refining Co. v. Woitycha, 48 N.J. 562, 566 (1967).
Affirmed.
I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION