Opinion
DOCKET NO. A-1488-13T4
05-13-2015
PATEL GROUP, INC., Plaintiff-Appellant, v. KVB ENTERPRISES, LLC and PROGRESSIVE MANAGEMENT, Defendants.
Thomas D. Williamson, attorney for appellant. Marilyn K. Barbosa, attorney for respondent John Brito.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION Before Judges Espinosa and Rothstadt. On appeal from Superior Court of New Jersey, Law Division, Union County, Docket No. L-00088-11. Thomas D. Williamson, attorney for appellant. Marilyn K. Barbosa, attorney for respondent John Brito. PER CURIAM
Plaintiff, Patel Group, Inc. (PGI), appeals from the Law Division's denial of its motion to enter judgment against John Brito, who was never named as a party to this action, but who served as the managing member of defendant KVB Enterprises, L.L.C. (KVB). On appeal, although not set forth in a specific point heading, see R. 2:6-2(a)(1), ("the brief of the appellant shall contain . . . the point headings to be argued) and (5) ("the legal argument . . . shall be divided under appropriate point headings"), PGI argues the motion judge erred by not holding Brito personally liable for a judgment it previously obtained against KVB because Brito did not properly dissolve KVB and allegedly distributed its assets to KVB's members without satisfying PGI's judgment. In opposition, Brito argues he cannot be held liable for the judgment as he was never made a party to this action and, even if he had been, PGI's claim is time-barred. After considering these arguments in light of our review of the limited record and applicable legal principles, we affirm, finding no merit to PGI's arguments.
The salient facts, which we glean from the motion record, establish that PGI filed a complaint against KVB and defendant Progressive Management, Inc. (PMI) in December 2010. The complaint alleged PGI sold real property to KVB in 2002 and, in connection with the sale, received a mortgage to secure payment of the purchase price. In 2003, KVB defaulted under the terms of the mortgage by failing to make required payments, among other breaches involving the environmental remediation of the property purchased. On December 9, 2011, Assignment Judge Karen M. Cassidy entered a default judgment against KVB in the amount of $63,024.04.
The court entered an order on April 26, 2013, to compel Brito to respond to an information subpoena, evidently previously served in accordance with Rule 4:59-1(f). In September 2013, PGI sought the entry of an order to show cause against Brito as to "why a Judgment for [$63,024.14] plus interest from December 9, 2011, should not be entered against him." Judge Cassidy would not, however, consider the application through an order to show cause and converted it to a motion.
In support of the application, PGI filed the certification of its attorney. In his certification, counsel described the information he derived from documents he obtained relative to KVB's finances from Brito's attorney. Counsel concluded his certification by stating, "In that an outstanding debt was admitted, that there was no compliance with the requirements of N.J.S.A. 42:2B-51.b, and distribution to [Brito] of KVB assets would appear to be in excess of the Judgment against KVB, the amount of the KVB judgment should be entered against [Brito] personally."
Evidently, the information was supplied as part of Brito's counsel's motion to vacate the order for discovery. However, we have not been provided with copies of that motion, the supporting or opposing certifications.
The citation refers to a section of the New Jersey Limited Liability Act, N.J.S.A. 42B-1 to -70, which was repealed in 2012 by L. 2012, c. 50, § 95, effective March 1, 2014, and replaced by N.J.S.A. 42:2C-1 to -94, the Revised Uniform Limited Liability Company Act.
In her letter opposing PGI's application, Brito's counsel explained to the court that KVB ceased to exist prior to the institution of PGI's lawsuit, and it was "essentially devoid of any assets as of 2009." She also noted that Brito "was not named by [PGI] in its lawsuit against KVB," nor did Brito ever "serve as a personal guarant[or of] any alleged debt between the parties."
The documents supplied by Brito's counsel indicate "KVB ceased to exist on December 31, 2010" prior to the filing of PGI's lawsuit.
After considering the parties' submissions, Judge Cassidy placed her decision and reasons on the record on October 11, 2013. In her statement of reasons, the judge noted the history of the judgment, and the fact PGI never named Brito as a defendant, and discussed the applicable law governing a determination as to whether a court should "pierce a corporate veil" to impose liability for a judgment on a corporate officer or shareholder. The judge concluded by stating:
KVB's insolvency alone is not enough to support piercing the corporate veil or entering judgment against a defendant who was never formally entered as a party into this lawsuit. The [c]ourt finds that in
addition to the standard by which the corporate veil could not be pierced, it is also fatal to the claim in this matter that Mr. Brito was never named as a defendant in this case. . . . So, therefore, the request to enter judgment against Joseph Brito is denied.
Judge Cassidy entered the order denying relief and this appeal followed.
We find PGI's arguments challenging Judge Cassidy's order to be without sufficient merit to warrant extensive discussion in a written opinion. R. 2:11-3(e)(1)(E). Ignoring the fact that it would be improper for the motion judge to have entered a judgment based only on the allegations raised in PGI's counsel's certification, which was not based on personal knowledge, R. 1:6-6, there is simply no procedure for entry of a previously entered judgment against a person who has not been named as a party in any complaint. A basic tenet of jurisprudence mandates every court, prior to entering a judgment, must assure due process was satisfied through the service of a complaint setting forth the claim supporting entry of that judgment. R. 4:5-1; R. 4:5-2 (requiring that any "pleading . . . shall contain a statement of the facts on which the claim is based"); see also Spring Motors Distribs., Inc. v. Ford Motor Co., 191 N.J. Super. 22, 29 (App. Div. 1983) (holding that "[t]o be adequate, a [complaint] must contain a statement of facts on which a claim is based, showing that the pleader is entitled to relief"), rev'd on other grounds, 98 N.J. 555 (1985). For that reason, subject to certain exceptions that do not apply here, "'[j]udgments or orders normally do not bind non-parties.'" N. Haledon Fire Co. No. 1 v. Borough of N. Haledon, 425 N.J. Super. 615, 628 (App. Div. 2012) (quoting In Re Mallon, 232 N.J. Super. 249, 254 n.2 (App.Div.), certif. denied, 117 N.J. 166 (1989). None of those exceptions applied to PGI's claim against Brito..
In N. Haledon Fire Co. No. 1, we explained the exceptions:
A judgment may, however, be binding upon non-parties in other matters if their interests have been represented by a party. Such matters include traditional class actions, suits in which a public officer or agency is authorized by law to represent the public, and actions brought by a taxpayer on behalf of residents, citizens and other taxpayers. . . .
We note that, in other contexts, a non-party may be bound by a judgment when the non-party is so far represented by others that his interest received actual and efficient protection.
[N. Haledon Fire Co. No. 1, supra, 425 N.J. Super. at 628-29 (citations and internal quotation marks omitted).]
Affirmed. I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION