On appeal from the Superior Court of New Jersey, Chancery Division, General Equity Part, Monmouth County, Docket No. C-339-03.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Stern and C.L. Miniman.
Plaintiffs Russell P. Goldman, P.C. (Goldman PC) and Russell P. Goldman (Goldman) (collectively, plaintiffs) appeal from two orders enforcing litigants' rights entered on July 6, 2007, and one order entered on August 17, 2007, amending the July orders. We reverse and remand for a plenary hearing.
This is a dispute between two creditors' rights attorneys over the sums due plaintiffs from defendants Martin Rubin, P.C. (Rubin PC); Martin Rubin (Rubin); and Hayt, Hayt & Landau, P.C. (Hayt PC), subsequent to the dissolution of Hayt, Hayt & Landau (HHL), a partnership in which both Goldman and Rubin had been the sole remaining equal partners. This action was filed on October 31, 2003, stating claims against all defendants, including First National Acceptance Co., LLC (FNAC), "a business purchasing and referring delinquent consumer accounts for collection," which was wholly owned by Goldman and Rubin.
The claims relating to FNAC were resolved by agreement (the FNAC Agreement) on May 28, 2004, pursuant to which Goldman and Rubin agreed to dissolve FNAC and transfer its assets, including uncollected debt, equally to Sycamore Financial Services, LLC (Sycamore), wholly owned by Goldman, and First American Acceptance Co., LLC (FAAC), wholly owned by Rubin. Like FNAC, both limited liability companies intended to engage in the business of purchasing and collecting debt. The FNAC Agreement provided for an equal sharing of costs incurred in dissolving FNAC, with the cost of substitutions of attorney to be borne by Sycamore.
The claims relating to the dissolution of HHL settled in October 2004 and the essential terms of the settlement were placed on the record on October 6, 2004. The settlement was thereafter reduced to writing (the HHL Agreement) on December 6, 2004. Among other things, Rubin P.C., Rubin, HHL and Hayt P.C. agreed to pay Goldman P.C. and Goldman the sum of $57,000 by January 5, 2005, and $120,000 in five equal installments beginning on November 1, 2005. Defendants failed to make the first $57,000 payment due on January 5, 2005, and were ordered to do so on April 29, 2005. They also failed to make the second payment and on January 30, 2006, were again ordered to do so.
Defendants again failed to make payment in full when due on November 1, 2006, in the amount of $29,280, instead issuing a check in the amount of $6025.31. To arrive at that number, defendants made the following deductions from the $24,000 principal amount due: (1) $10,000 as one-half of the deductibles in connection with settlement of two professional liability lawsuits; (2) $826.73 for fees advanced by HHL to outof-state co-counsel; (3) $1078.13 for one-half of the January 10, 2006, Hayt LLC statement for professional services rendered by Rubin and James A. Fedorko, Jr., in connection with the transfer of "FNAG accounts"*fn1 to plaintiffs; (4) $7012.50 for one- half of the November 1, 2006, Hayt LLC statement for professional services rendered by Rubin and the firm's IT Department for the FNAG file transfer operation;*fn2 and (5) $3125 for preparation, review and signature of 297 substitutions of attorney.*fn3 Also, defendants determined that the amount of interest due was $4067.67 rather than the amount specified in the Agreement, $5280. No explanation was given for the interest calculation.
Plaintiffs filed a third motion in aid of litigants' rights, this time on November 29, 2006, to compel payment of the full amount due, contending that the HHL Agreement only allowed setoffs for adjustments to the buyout consideration for transferred files and for certain attorney's liens in connection with clients other than FNAC. Plaintiffs also disputed the amounts of and the entitlement to the claimed setoffs. While the motion was pending, the parties resolved certain issues, but not all. As a result, plaintiffs filed a revised motion on or about February 9, 2007, seeking an order compelling defendants to (1) pay the funds due for Goldman's interest in HHL, (2) certify that they did not remove any documents from the Sycamore files and transfer such files to plaintiffs, (3) provide copies of substitutions of attorney to plaintiffs, and (4) provide plaintiffs with payments and correspondence that defendants receive with respect to Sycamore within three days of receipt. Plaintiffs also sought an award of counsel fees.
Defendants cross-moved for an order enforcing certain rights under the settlement agreement respecting the transfer of certain files. They sought an order (a) compelling plaintiffs to complete the transfer of HHL files handled for Sycamore, (2) declaring that the data transfer from defendants to plaintiffs was "full and final," (3) declaring that Goldman was the attorney responsible for the transferred accounts, (4) finding plaintiffs in breach of "the Settlement Agreement," (5) adjudicating that defendants had fully satisfied all obligations under "the Settlement Agreement," and (6) awarding defendants attorneys' fees and costs pursuant to Rule 1:10-3.
On March 16, 2007, after reciting each party's contentions, the judge engaged in the following colloquy with counsel:
When is this going to end, people? This is the most ridiculous thing I've ever seen. Two very good, very competent professsionals, engaged in a ...