CADLES OF GRASSY MEADOWS, II,Plaintiff–Appellant, v. GINA RAY and WAYMOUTH JOHNSON, Defendants–Respondents.
NC TWO, L.P., Plaintiff, v. GINA RAY, Defendant/Third–Party
Plaintiff–Respondent, v. HEADS UP STAFFING, Third–Party Defendant.
The question posed in this appeal – whether the motion judge properly dismissed the complaint in the midst of a dispute about execution on a judgment – is the product of the alleged multiple transfers of ownership of the judgments entered years ago in these cases. So temporal has been ownership of the judgments in question that the current appellant – Cadles of Grassy Meadows, II, LLC – never appeared in the trial court and did not file the initial notice of appeal.3 Because the alleged transfers of these judgments lie at the heart of the issues presented, we carefully describe what the record on appeal reveals in that regard.
On January 16, 2001, plaintiff Fleet National Bank filed the complaint in the first action against defendants Gina Ray and Waymouth Johnson, alleging defendants were the guarantors of a 1999 loan made by Fleet to Heads Up Group, Inc., which, according to the complaint, filed for bankruptcy in November 2000 – presumably the event that triggered a default. The complaint alleged that $34,300 was due on the loan.
Neither defendant filed a timely answer to the complaint. Default was entered against Johnson on March 26, 2001; default judgment was entered against Johnson on April 12, 2001, in the amount of $47,856.55. Apparently, the clerk dismissed the action as it pertained to defendant Ray for lack of prosecution, pursuant to Rule 1:13–7. The record on appeal reveals that the dismissal order was vacated on October 19, 2001. The next chronological event suggested by the record on appeal was an order entered on August 9, 2002, that restored the case against Ray to the active court calendar. A few days later, on August 13, 2002, final judgment by default was entered in favor of Fleet and against Ray in the amount of $47,856.55.
The record next suggests that, on May 28, 2004, the trial court granted Ray's motion for relief from the default judgment. When Ray did not respond to the complaint, Fleet requested the entry of default on August 27, 2004. It is not clear what became of that request, but the record on appeal contains an October 5, 2004 order, which vacated a default judgment entered against Ray and which provided her with twenty days to file an answer. Cadles asserts in the procedural history in its appeal brief that Fleet's action against Ray was dismissed for lack of prosecution.
On May 31, 2005, NC Two, L.P., filed a complaint in the second action against defendant Ray only. NC Two alleged, among other things: Fleet's loan to Heads Up Group; Ray's guarantee of repayment; Ray's default; and Fleet's assignment of “its right, title and interest in the Note to” NC Two. Ray's default was entered on July 22, 2005, but default was vacated by consent on October 17, 2005. Ray filed an answer and, later, a third-party complaint against Heads Up.
The parties to this second action negotiated a settlement, which was memorialized in a January 24, 2007 agreement signed by all the parties, or their representatives, including Johnson who was not a party to the second action. The agreement stipulated to the release of all claims and the dismissal of all actions – including those relating to Johnson – on the condition that Ray and Heads Up pay $16,500 to NC Two within sixty days. The agreement also stated that in the event payment was not timely made, NC Two could apply for entry of a final judgment on notice to the parties.
On October 15, 2007, NC Two moved for entry of judgment based on a breach of the settlement agreement. Default judgment was entered in favor of NC Two and against Ray and Heads Up, in the amount of $17,158.53, on November 29, 2007.
Apparently, NC Two later attempted to execute against Johnson on the April 12, 2001 judgment entered in the first action and against Ray on the judgment entered in the second action. What precisely occurred thereafter is not clear. The record on appeal, however, contains the following which provide some illumination: (1) an order entered in the second action on October 31, 2008, by which NC Two was required to appear on November 21, 2008, and show cause why levied funds of $1097.15 in Johnson's bank account should not be released to her, and why the judgments in both the first and second actions “should not be merged”; (2) a November 21, 2008 order entered in the second action that released the levied $1097.15 to Johnson and “merged” the judgments in both actions; (3) a December 19, 2008 order denying NC Two's motion in the second action seeking relief from Ray in aid of litigant's rights; (4) a May 15, 2009 order denying the motion of “defendant” for vacation of the default judgment of November 19, 2002,4 and for dismissal of the complaint in the first action; and (5) an October 1, 2010 order in the second action that granted Brown Bark's motion to compel Ray to respond to an information subpoena.
As convoluted as the record was then, the circumstances were further confounded when Brown Bark – in the context of the first action – obtained, on January 24, 2011, a writ of execution, which asserted that “on 04/12/2001, judgment was recovered by the Plaintiff, in an action ․ against GINA RAY and WAYMOUTH JOHNSON for $47,856.55.” The document was accurate insofar as it represented that a judgment was entered against Johnson in the stated amount on April 12, 2001, but it was inaccurate in asserting that final judgment had been entered against Ray in that amount or in that first action. The reference to “plaintiff” in the writ also suggested that Brown Bark was the owner or assignee of the judgment because Brown Bark's name for some reason was inserted in the caption in place of Fleet.
The record on appeal further suggests that in or about August 2012, both defendants moved in the first action for an order vacating judgment.5 A judge not previously involved in any of the earlier proceedings heard argument regarding this motion on December 7, 2012. The judge recognized the confusing nature of the matter as it was presented to her. Because the parties to this appeal have failed to provide us with all relevant pleadings as required by the letter and spirit of Rule 2:6–1, we share the motion judge's consternation. In any event, the judge dissolved the writ of execution, questioned Brown Bark's standing to be heard, and dismissed the complaint “without prejudice” by order entered on December 10, 2012.
Brown Bark moved for reconsideration, explaining through an asset manager's certification a brief history of how Brown Bark gained an interest in this matter. The certification contains an allegation that NC Two was the assignee of Fleet Bank and that, on May 1, 2009, NC Two “assigned the November 29, 2007 judgment to Brown Bark effective December 31, 2007.” 6 The motion judge did not hear argument and denied reconsideration, expressing her decision in a handwritten note in her January 25, 2013 order that the motion was denied “based on lack of substantiation of new information now provided.”
Brown Bark appealed. And, as noted earlier, Cadles has been substituted in Brown Bark's place. Cadles argues:
I. THE LAW DIVISION ERRED BY VACATING THE JUDGMENT AND DISMISSING THE COMPLAINT.
A. The Defendants Have Not Demonstrated Excusable Neglect For Failing To Answer The Complaint.
B. Cadles And Its Predecessors–In–Interest Have Standing To Collect The Lawfully Entered Judgment.
C. Even If Cadles Did Not Receive Proper Assignment Of The Judg-ments, The Court Still Erred By Vacating The Judgment And Dismiss-ing The Complaint.
II. THE LAW DIVISION ERRED BY FAILING TO MAKE SUFFICIENTLY CLEAR AND COMPLETE FINDINGS OF FACT.
We agree with the motion judge that execution should not be permitted until the proper judgment creditor comes forth. We also agree with the current alleged judgment creditor that the remedy for the inability to demonstrate standing is not a vacation of the existing judgment or the dismissal of the complaint. We, therefore, vacate that part of the December 10, 2012 order that dismissed the complaint.7
The identification of the person or entity who has standing to execute on the judgment, or judgments, is a matter not yet conclusively determined in the trial court – indeed, that target keeps moving. The motion judge only denied reconsideration because she could not be certain about Brown Bark's right to execute on either judgment. The judge's uncertainty is understandable; based on what has been presented to us, we are satisfied that any firm conclusion about Brown Bark's standing would be purely speculative. It is also clear that the judge did not mean for her conclusion at the time to be the final word on the subject. We assume there will be further applications regarding the correct identity of the judgment creditor in the trial court following today's decision. In that regard, we pose one further question that the trial court may also be required to decide – one that has only been begged and never directly addressed in the appeal briefs: in reaching the settlement agreement, did the parties intend to supersede the judgment entered against Johnson in 2001? As we have observed, Johnson was a party to the settlement agreement, which required the payment from all defendants of $16,500, not the $47,856.55, for which Johnson was adjudicated liable in 2001. When the 2007 settlement was breached, judgment was entered against only Ray and Heads Up for the settlement amount, which, with interest, had increased to $17,158.53. And, later, the prior judge “merged” the two existing judgments. Although we are by no means certain as to what merger meant in that context, it may have been the trial judge's intention or assumption that Johnson would no longer be held liable to the extent of $47,856.55, but only to the extent that Ray and Heads Up had been adjudicated liable in the November 29, 2007 judgment. If and when there are further proceedings in the trial court, this may be a matter that requires clarification before further execution against Johnson is permitted.8
Affirmed in part; reversed in part.
3. FN3. Brown Bark II, L.P. filed this appeal. Cadles moved in this court to be substituted as appellant; its unopposed motion was granted and Cadles filed an amended notice of appeal reflecting that change.
4. FN4. The record does not otherwise identify which “defendant” filed that motion or otherwise identify the existence of a November 19, 2002 judgment. It may be that the referenced November 19, 2002 judgment was simply the result of a typographical error and the intent was to refer to the November 29, 2007 judgment in the second action.
5. FN5. A copy of the notice of motion was not included in any appendix in this appeal, nor is it clear to us what the parties may have submitted in support of or in opposition to the motion.
6. FN6. We again note that the November 29, 2007 judgment was entered only against Ray and Heads Up. The asset manager's certification asserts that the subsequent court order “merged” the judgments – whatever that means –and that this merger somehow enhanced whatever was assigned by NC Two to Brown Bark. We further observe that the asset manager did not assert she had personal knowledge of these events, only that her description of the events was based on her review of Brown Bark's books and records.
7. FN7. Because the order refers only to the docket number in the first action, we assume the complaint that was dismissed was the 2001 complaint filed by Fleet. The order also did not declare that any judgment was vacated but that would have been a consequence – at least in part – of the complaint's dismissal in the first action.
8. FN8. In this regard, we also observe that execution against Johnson was previously barred because her sole source of income was social security. Without reference to the record, defendants argue in their appeal brief that Johnson is ninety-two years old and infirm. Nevertheless, even if there is no likelihood that a judgment against Johnson in any amount could be satisfied, the trial court should – if requested – determine whether the April 12, 2001 judgment should be discharged in light of the settlement agreement and the November 29, 2007 judgment.