On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Hunterdon County.
King, Dreier and Brochin. The opinion of the court was delivered by Dreier, J.A.D.
The parties have cross-appealed in this matrimonial action which was extended by a third-party complaint to include three corporations and a partnership in which the plaintiff husband had an interest, as well as plaintiff's brother, father, mother, and business associate. Plaintiff appeals from the principal determinations of Judge Herr who found that plaintiff was the owner or beneficial owner of substantial disputed interests in the corporations and partnership, and who determined that the individual third-party defendants had participated in a course of conduct to shield these assets from plaintiff's claims. Plaintiff also disputes the valuation of the property and the amount of counsel fees awarded. Defendant cross-appeals from the failure of Judge Herr to state definitively that plaintiff was a 75%
stockholder of Randolph Mfg. Corp. and a 50% partner in D.D. & R. Partners. Although Judge Herr made such a finding and based her division of assets upon such an assumption, rather than enter a judgment to this effect against the third-party defendants, she dismissed the third-party complaint after establishing the payments defendant must make to plaintiff.
We dwell on the issue of inclusion or exclusion of the corporate and partnership property, because plaintiff, more than a month prior to filing his appellate brief, filed for personal bankruptcy. (He and his attorneys neglected to note this fact in his appellate brief). If Judge Herr's order stands, plaintiff is indebted to defendant in the amount of $289,765, to be paid from his business interests as well as his half of the equity in the marital home and various personal property. However, if plaintiff's bankruptcy estate does not include the interests determined by Judge Herr, this estate in the bankruptcy proceeding might be inadequate to satisfy the marital judgment and defendant's other creditors. If an order is entered imposing a constructive trust, the appointment of a receiver, or other relief originally demanded by defendant, plaintiff's assets in the bankruptcy proceeding could be sufficiently augmented so that the petition could be discharged or equivalent action taken by the bankruptcy Judge.
At the outset, we are somewhat in a quandary how to proceed because the automatic stay provision of the Bankruptcy Code, 11 U.S.C. § 362, might be read as staying the continuation of this appeal. The trial Judge's judgment had been entered June 18, 1990, and the petition in bankruptcy was filed April 15, 1991. The appeal by plaintiff sought to overturn those aspects of the trial Judge's decision which could be viewed as augmenting plaintiff's estate. Thus perceived, we can understand that this appeal could affect the bankrupt estate, and might be stayed. We understand from counsel that the Bankruptcy Court is aware of this appeal and has expressed interest in its outcome. We are loathe, however, to tread upon the
jurisdiction of the Bankruptcy Court. And we note that our decision does not in any way actually deplete the bankrupt's estate. Rather, it not only confirms Judge Herr's determinations, but also directs further implementation, if necessary, against the third-party defendants. We therefore do not envision our decision as inimical to the purposes of the automatic stay.
We recognize, however, that our view of bankruptcy jurisdiction may not be the same as that of the Bankruptcy Judge. We therefore preface our determination with a statement of its conditional nature. This decision shall not be implemented unless or until either (1) defendant shall present this opinion to the Bankruptcy Judge to have the automatic stay lifted with respect to the prosecution of this appeal, or for the Judge to abstain in the exercise of the bankruptcy jurisdiction over this appeal, with a suitable order to be filed in this proceeding; or (2) the bankruptcy petition is withdrawn or dismissed. With that express understanding, we will proceed to pass upon the merits of the appeal.
The trial in this matter was conducted for nine days between September 18, 1989 and February 13, 1990. The parties were granted mutual divorces on the complaint and counterclaim. The value of the marital home was established at $148,000, and was awarded to plaintiff who had resumed residence there, subject to his paying defendant one-half of the equity after deduction for the outstanding balance of the mortgage.
With regard to plaintiff's commercial investments, and notwithstanding the short duration of this childless marriage, defendant was awarded substantial shares of both Randolph Mfg. Corp. and DD & R Partners. Although substantial time was spent proving the respective interests in DD & R Partners, the partnership equity was not of great monetary significance. The proofs, however, gave the ...