On appeal from Superior Court of New Jersey, Law Division, Essex County, L-5012-99.
Before Judges Wefing, Lisa and Fuentes.
The opinion of the court was delivered by: Lisa, J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted October 2, 2002
This appeal requires us to interpret the meaning of the term "net proceeds" in N.J.S.A. 2A:17-56.23b, enacted on August 14, 2000. L. 2000, c. 81. The statute provides that a docketed child support judgment constitutes a lien against the net proceeds of any recovery by way of settlement, judgment or arbitration award arising out of a civil claim, or an inheritance or a workers' compensation award. N.J.S.A. 2A:17- 56.23b(a). "Net proceeds" is defined in the statute to mean "any amount of money in excess of $2,000, payable to the prevailing party or beneficiary after attorney fees, witness fees, court costs, fees for health care providers, [and other similar costs]," which we will refer to collectively as "litigation costs." Ibid.
The trial court determined that because the amount plaintiff is entitled to receive out of his personal injury settlement after litigation costs exceeds $2,000, the entire amount he would receive is subject to the lien. We disagree and reverse. We hold that only the amount of plaintiff's settlement after litigation costs which exceeds $2,000 is subject to the lien imposed by N.J.S.A. 2A:17-56.23b.
Plaintiff authorized his attorney to settle his personal injury lawsuit against defendants for $7,500. Against that gross recovery, litigation costs totaling $3,353.92 *fn1 were applicable, thereby entitling plaintiff to receive $4,146.08.
As required by N.J.S.A. 2A:17-56.23b(b)(2), plaintiff's counsel held the settlement proceeds and ordered a child support judgment search. The search revealed two child support judgments docketed against plaintiff totaling $9,271.53. Pursuant to N.J.S.A. 2A:17-56.23b(c), plaintiff's counsel contacted the Probation Division and tendered $2,146.08. The Probation Division demanded the entire $4,146.08.
Plaintiff filed a motion for distribution, on notice to the county probation division and the Probation Services Division of the Administrative Office of the Courts (AOC). The AOC cross- moved for leave to appear as amicus curiae in the motion for distribution proceeding because of its role as the entity responsible, on a statewide basis, for collecting and distributing child support payments and enforcing child support judgments and because of the public importance attached to this statutory interpretation. See R. 1:13-9. Without opposition, the motion was granted, and the AOC participated in the trial court and before us.
In pertinent part, N.J.S.A. 2A:17-56.23b provides: a. A judgment for child support . . . docketed with the Clerk of the Superior Court shall be a lien against the net proceeds of any settlement negotiated prior or subsequent to the filing of a lawsuit, civil judgment, civil arbitration award, inheritance or workers' compensation award . . . . The lien shall stay the distribution of the net proceeds to the prevailing party or beneficiary until the child support judgment is satisfied.
As used in this act "net proceeds" means any amount of money, in excess of $2,000, payable to the prevailing party or beneficiary after [litigation costs].
. . . . c. If the [child support search] certification shows that the prevailing party or beneficiary is a child support judgment debtor, the attorney . . . that initiated the search shall contact the Probation Division of the Superior Court to arrange for the satisfaction of the child support judgment. The attorney . . . shall notify the prevailing party or beneficiary of the intent to satisfy the child support judgment prior to the disbursement of any funds to the prevailing party or beneficiary. Upon receipt of a warrant of satisfaction for the child support judgment, the attorney . . . shall pay the balance of the settlement . . . to the prevailing party or beneficiary. If the net proceeds are less than the amount of the child support judgment, the entire amount of the net proceeds shall be paid to the Probation Division as partial satisfaction of the judgment. [Emphasis added.]
Plaintiff argues that the plain language of N.J.S.A. 2A:17- 56.23b exempts the first $2,000 of the amount he is entitled to recover from his settlement after litigation costs from the lien imposed by the statute. The AOC argues that the $2,000 is a "threshold" amount which "triggers" the search provisions of the statute. It argues that when a party is entitled, after deduction of litigation costs, to receive in excess of $2,000, a child support judgment search is required. However, the automatic lien of N.J.S.A. 2A:17-56.23b applies to the full amount to which the party is entitled, not only that which exceeds $2,000. Conversely, where the party is entitled to recover $2,000 or less after deduction of litigation costs, no search is required. Where there is no search, of course, there is no lien and no payment against the child support judgment.
Thus it is the AOC's position that the term "net proceeds" establishes a threshold, not an exemption. It supports this argument by contending the term "net proceeds" is subject to conflicting interpretations. The AOC urges the rules of statutory construction lead to the conclusion that the Legislature intended this remedial legislation to be construed liberally to best achieve the purpose of the statute, payment of child support debts, by compelling the maximum amount possible to be applied to satisfaction of such debts. ...