On appeal from Superior Court of New Jersey, Law Division, Atlantic County, Docket No. L-2917-05.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted September 9, 2009
Before Judges Payne and Waugh.
Dawn Puchalsky appeals the order of the Law Division enforcing a "consent judgment" that embodies a memorandum of understanding (MOU) signed by her then attorney, whom she contends was not authorized to sign the MOU or to settle the within forfeiture action on her behalf.*fn1 We reverse and remand for a plenary hearing consistent with this opinion.
For the purposes of this appeal, the relevant facts need be summarized only briefly. This case has its origins in an investigation and prosecution by the New Jersey Division of Criminal Justice with respect to allegations of health care fraud and related criminal activity. The target of the investigation was a dental practice known as Craig C. Puchalsky, D.D.S., P.A., which was located at 48 South New York Road in Absecon. The practice was operated by Craig C. Puchalsky, who is a dentist, and Dawn, who served as the office manager. Both individuals were indicted as a result of the investigation.
Following the indictment, the State filed a forfeiture action, N.J.S.A. 2C:64-3, with respect to certain real and personal property that it contends were either derived from, or used in connection with, Craig and Dawn's illegal activities. In addition, civil enforcement proceedings were also commenced against them pursuant to the Insurance Fraud Prevention Act, N.J.S.A. 17:33A-1 to -30.
Efforts were made among counsel representing the various parties to effectuate an overall resolution of all pending matters, both criminal and civil. The MOU at issue on this appeal was negotiated and signed by all counsel for that purpose. The essential terms of the MOU addressed the simultaneous resolution of the three matters. In the criminal matter, the MOU provided that Dawn would plead guilty to third-degree health care claims fraud, serve a non-custodial probationary term, and be jointly obligated with Craig to pay restitution of $8,057.65. Craig was to plead not guilty to third-degree theft by deception, to apply to the Pre-Trial Intervention Program (PTI), and to be jointly obligated with Dawn to pay the $8,057.65 restitution. In the civil administrative matter, the MOU provided that Dawn and Craig would be jointly liable for a penalty of $50,000, which was to be paid from the seized funds.
The MOU further provided that Dawn and Craig would relinquish all seized assets (approximately $417,469), which would be disbursed to pay the $8,057.65 in restitution and the civil administrative penalty of $50,000. The sum of $40,000 was to be released to pay part of the Puchalskys' state and federal tax liability, which with interest exceeded $1,000,000. The remaining funds would be forfeited to the State.
A payment in the approximate amount of the equity in the property that housed the dental office, estimated to be $57,766, was also to be paid to the State. With respect to the Puchalskys' residential property, located at 6 Lake Drive in Linwood, the MOU required the Puchalskys to pay fifteen percent of the net equity in the property to the State if they did not timely sell the residence to pay the IRS and other creditors. If they failed to make the required payment, the State would be authorized to seek an order "permitting the State to foreclose on the property, to retain 15 percent of the net proceeds and to distribute the balance to lienholders and  to the Puchalskys."
Shortly before the scheduled trial date of the foreclosure action, the State requested that the matter be marked "settled," pending the submission of the consent judgment. The matter was, consequently, marked as settled and removed from the trial list.
As contemplated by the MOU, Craig entered a plea of not guilty to attempted theft by deception in October 2007 and applied for admission to PTI. In November 2007, however, Dawn's then attorney advised Craig's attorney that his client had not yet entered her plea of guilty as contemplated by the MOU and was contemplating a plea of not guilty.
In late December 2007, Dawn's current attorney was substituted as new counsel. He eventually advised the State that Dawn was upset that the MOU afforded her husband "a better deal" than she had received in the criminal matter.*fn2 At that time, the Puchalskys were involved in a divorce. New counsel also asserted that Dawn had not authorized her prior counsel to execute the MOU on ...