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First Pennsylvania Bank, N.A. v. Lloyd


December 11, 2007


On appeal from Superior Court of New Jersey, Law Division, Cape May County, L-538-90.

Per curiam.


Argued October 3, 2007

Before Judges Axelrad and Payne.

Defendant, Michael Lloyd, appeals from orders of the trial court denying his motion to vacate a 1990 judgment in the amount of $107,535.79 entered against him and in favor of plaintiff, First Pennsylvania Bank, N.A.,*fn1 and ordering that Lloyd submit to supplementary proceedings pursuant to R. 4:59-1(e), as previously required by a discovery order entered to enforce litigant's rights.

We briefly summarize the facts of the matter. In a collection action in the Law Division, Cape May County, judgment by confession was entered against Lloyd and in favor of First Pennsylvania Bank in the amount of $627,548.18 on June 22, 1990 on the first three counts of First Pennsylvania's complaint. Thereafter, on December 3, 1990, a default judgment was entered against Lloyd and in favor of the Bank on the fourth count of the same complaint in the amount of $100,000 plus interest of $7,535.79, representing the amount of a promissory note given by Lloyd and payable on demand. Following the entry of judgment, the loan was assigned, in connection with a December 2002 asset sale agreement, by First Union National Bank, a successor to First Pennsylvania,*fn2 to The Cadle Company, which in turn assigned the loan to Buckeye Retirement Co., LLC, Ltd.

In 2004, Buckeye instituted two state court actions on the note, one in New Jersey and one in Pennsylvania, both of which were dismissed without prejudice. Learning that the obligation on the note had been reduced to judgment, Buckeye then obtained an assignment on the judgment from First Union and, later, from its successor, Wachovia Bank, N.A. When Buckeye sought to enforce an order permitting discovery of Lloyd's assets, Lloyd moved pursuant to R. 4:50-1 to vacate the judgment, alleging payment, but failing to provide satisfactory proof of same. The judge did not accept Lloyd's argument, and denied Lloyd's motion, while enforcing his discovery obligations. This appeal resulted.

On appeal, Lloyd argues (1) that the assignment of the judgment to Buckeye was "fraudulent" and that Buckeye lacks standing to seek its enforcement; (2) a verbal settlement between Buckeye and Lloyd in the prior Pennsylvania action bars Buckeye's enforcement action; (3) Buckeye is estopped from enforcing the judgment because it failed to timely inform Lloyd that it held that judgment; (4) the trial judge should have addressed Lloyd's claims of fraud and found it to exist; (5) the court erred in failing to find the assignments to be void; and (6) a plenary hearing should have been held. We conclude that the assignments of the loan and judgment were valid, that no settlement was reached in the Pennsylvania action, which we note, was dismissed without prejudice, and that no evidence has been presented of payment. We thus affirm the orders entered in the trial court. We decline to consider Lloyd's argument, presented for the first time in his reply brief, that this action is barred by the terms of a stay entered in a Securities and Exchange Commission action against Lloyd Securities, Inc., Mortgage Associates, Ibex International, Michael Lloyd and Warren C. Nachmann in the Eastern District of Pennsylvania, because the argument was not presented at the trial level either when the judgment was entered or when Lloyd sought to vacate it. Nieder v. Royal Indem. Ins. Co., 62 N.J. 229, 234 (1973).

In large measure, we find Lloyd's arguments in the present appeal to lack sufficient merit to warrant extended discussion in a written opinion. R. 2:11-3(e)(1)(A) and (E). We add only the following comments.

When reviewing a trial court's denial of a motion to vacate a prior judgment, we utilize an abuse of discretion standard. Cho Hung Bank v. Kim, 361 N.J. Super. 331, 336 (App. Div. 2003), citing In re Guardianship of J.N.H., 172 N.J. 440, 473 (2002). In this matter, Lloyd appears to argue that the judgment against him should be vacated pursuant to R. 4:50-1(a) (excusable neglect); -1(c) (fraud); -1(d) (the judgment is void); and -1(e) (the judgment has been satisfied or released). However viewed, Lloyd's motion is untimely pursuant to the one-year time limitations applicable to R. 4:50-1(a) and -1(c) and the requirement, applicable to the remainder of the rule, that the motion be brought within a "reasonable" time. See R. 4:50-2. We do not regard a lapse of sixteen years to be reasonable.

Further, we note with respect to R. 4:50-1(e) that the burden of proof lies with Lloyd to demonstrate payment of the debt or release of the judgment. Robino v. Santanello, 34 N.J. Super. 329, 332 (App. Div. 1955). We concur with the determination of the trial judge that sufficient evidence of satisfaction of the debt or judgment was not presented. Significantly, satisfaction of the debt does not appear to have been claimed by Lloyd in either the New Jersey or the Pennsylvania debt collection matters. Moreover, the only evidence offered in the present case by Lloyd in this regard is his statement that the judgment does not appear in his credit report - a document that Lloyd has failed to include in the record on appeal. Additionally, we note that satisfaction constitutes merely one of Lloyd's shifting and inconsistent defenses, which also include the absence of any debt, because Lloyd never drew against the line of credit offered to him, and lack of any knowledge by Lloyd of the judgment that he now claims to have previously satisfied.

Proof of an oral settlement of the prior Pennsylvania collection action is likewise lacking, and the existence of such a settlement is belied by the entry of a dismissal of that action without prejudice. Moreover, a settlement, like any other contract, requires evidence of an offer, acceptance and consideration. Nolan v. Lee Ho, 120 N.J. 465, 472 (1990) (holding that a settlement is a contract); Creek Ranch, Inc. v. N.J. Tpk. Auth., 75 N.J. 421, 430 (1978) (declaring contractual elements). Yet, in the present case, Lloyd has failed to provide any evidence of consideration in connection with the purported oral settlement of the Pennsylvania action. Although he initially filed a counterclaim and third-party complaint in the matter against Buckeye and various individuals and law firms, the dismissal of which could have been deemed such consideration, the entry on September 1, 2005 of an order of dismissal of those claims by the court was substantively based, and it preceded the alleged "settlement" by three months. Additionally, evidence of the alleged settlement contained in Lloyd's November 22, 2005 letter to counsel for Buckeye provides insufficient proof of an offer and acceptance to permit a conclusion by us that any settlement agreement was ever reached, permitting a dismissal with prejudice.

We likewise find Lloyd's invocation of estoppel and laches against Buckeye to be unavailing. N.J.S.A. 2A:17-3 provides "execution may issue, without revival of the judgment, at any time within 20 years after its entry." The Supreme Court has held that a judgment establishes a right, the most obvious consequence of which is "that it establishes an indisputable obligation and confers upon the successful party the right to issue execution or other process of the court for its enforcement." West Jersey Title & Guar. Co. v. Industrial Trust Co., 27 N.J. 144, 150 (1958). No statute or decision requires that a judgment creditor act within a particular time prior to the expiration of the twenty-year period. We attribute no significance, in the present context, to the fact that Buckeye failed to notify Lloyd, prior to the 2004 suits, that it was the holder of the long-defaulted debt or to notify him of the newly-discovered judgment.

As a final matter, we find nothing in the asset sale agreement between First Union National Bank and The Cadle Company, or in any subsequent agreement, that would preclude Buckeye's execution on the judgment in the present matter. The asset sale agreement provided for the sale of loans contained in enumerated pools to Cadle, and it specified the documents that would be required as evidence of the loans. The agreement also acknowledged that some of the loans that were subject to purchase had been reduced to judgment, and provided in that respect:

(3) Notwithstanding the foregoing, in the event that a Loan contained in any Pool has been reduced to Judgment and a copy of such Judgment is contained in the Loan Files, Seller's only obligation under this Article III C. shall be to deliver to Purchaser the Loan Files in Seller's possession at time of Closing and to execute and deliver to Purchaser an assignment of Judgment.

The record suggests that, at the time of the closing of the asset sale, First Union either was unaware that a judgment had been entered on this particular loan or that it neglected to include the judgment and an assignment of that judgment in the files transferred to Cadle. Nothing in this scenario serves to void the judgment, or to preclude its conveyance as a part of the sale transaction. To argue, because the loan merged with the judgment*fn3 and the judgment was not found in the files conveyed by First Union, that neither was conveyed, unreasonably vaults a technical and remediable defect over the substance of the agreement existing between the parties. We will not effectuate a result so counter to the manifest intention of the parties to the sale agreement in order to permit Lloyd to avoid his lawful obligation.

We do not construe the asset sale agreement itself to preclude the further assignment of the assets that were the subject of the agreement. The agreement provides:

Assignment. Neither this Agreement, nor any of Purchaser's rights or obligations hereunder, shall be assignable by Purchaser, and any purported assignment by Purchaser shall be void and of no effect. Subject to the foregoing restrictions, this Agreement shall be binding upon, and shall inure to the benefit of, the Parties and their respective successors and assigns.

However, when the agreement is read in its entirety, see Republic Business Credit Corp. v. Camhe-Marcille, 381 N.J. Super. 563, 568-69 (App. Div. 2005), it is clear that this provision precludes actions against the seller by an assignee of the purchaser based upon the seller's undertakings. It does not preclude a further assignment of the assets that were the subject of the agreement. Article IV, paragraph C provides in this regard:

Each of Seller's representations and warranties expressed in this Article IV shall survive Closing and terminate on the one hundred twentieth (120th) day following the Closing Date . . . . However, upon Purchaser's assignment, sale or transfer of any Asset to any Person subsequent to Closing, Seller's representations and warranties as to that Asset shall terminate effective as of the date of such assignment, sale or transfer.

We discern no fraud or other misconduct in connection with the assignment of the note by Cadle to Buckeye. A conclusion finding fraud to exist would require evidence of a material misrepresentation of a presently existing or past fact; knowledge of its falsity, and intention that it be relied upon; evidence of reasonable reliance; and resulting damages. Gennari v. Weichert Co. Realtors, 148 N.J. 582, 600 (1997). Lloyd's proofs in this regard consist merely of pejorative comments, and lack any substantial factual basis relevant to the present action.

We likewise find no fraud in the assignment of judgment executed on August 30, 2005 by Daniel Stanger in his capacity as Vice-President of First Union National Bank. We regard that assignment as a misguided effort to simplify the trail of bank mergers and acquisitions that we have previously detailed, that was superseded by the proper amended assignment later provided by Wachovia on June 21, 2005.

As a consequence of the foregoing, we find no abuse of discretion on the part of the trial judge in declining to vacate the 1990 judgment or in enforcing the discovery order.

The orders from which this appeal is taken are affirmed.

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