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Bernheim v. Leone

March 5, 2010


On appeal from the Superior Court of New Jersey, Law Division, Somerset County, Docket No. L-946-07.

Per curiam.


Argued: February 3, 2010

Before Judges Axelrad and Espinosa.

Plaintiff L. Andrew Bernheim appeals from the Law Division's order of August l5, 2008, granting summary judgment to defendants and dismissing plaintiff's amended complaint in its entirety. We affirm.

In his amended complaint filed on December 21, 2007, plaintiff alleged that he and his wholly-owned corporation owned real property located at Campbell Road in Far Hills; in l987 the property was sold to defendants in connection with his and his corporation's Chapter 11 Bankruptcy; the sale was not conducted in compliance with the statutory requirements and court order, and the purchasers did not pay fair market value; plaintiff had been declared insane by the United States Bankruptcy Court at the time of the sale and for many years thereafter, and the guardian ad litem appointed for plaintiff in that court was relieved prior to sale, leaving no one to protect plaintiff's interests; defendants knew or should have known that the sale only encompassed the realty and not the valuable personal contents, which were to be returned to him pursuant to a settlement approved by the Bankruptcy Court; and defendants interfered with the contractual relationships between plaintiff and his siblings regarding his right to the property. Plaintiff demanded judgment rescinding the sale and restoring the property to him, for compensatory damages based on deprivation of his personal property, and for compensatory damages for deprivation of his rights and property. Defendants filed an answer and subsequently moved for summary judgment, in part, to dismiss plaintiff's complaint.

In his oral decision on August l5, 2008, Judge Ashrafi set forth the extensive, repetitive history of this case. Suffice it to say that since December 1985, plaintiff, represented and pro se, has unsuccessfully attempted to set aside the sale in the United States Bankruptcy Court for the District of New Jersey, the United States District Court for the District of New Jersey, and the United States Court of Appeals for the Third Circuit. He then filed an adversary proceeding in Bankruptcy Court on June 6, l986, asserting similar facts as contained in the present complaint, which was dismissed by court order of June l0, 1986. The sale became final on June 11, 1986.

The circumstances surrounding the October 31, 1985 order of Bankruptcy Judge Gindin respecting the appointment of a guardian ad litem for plaintiff "for purposes of [those] proceedings" and Judge Gindin's December l3, 1999 order, prepared by plaintiff, declaring him to "once again be sane, competent and no longer in need of guardianship as of November 22, 1999," are mentioned by the motion judge and explained at length in In re Bernheim Litigation, 290 B.R. 249 (D.N.J. 2003).*fn1

The motion judge set forth the following reasons for dismissing plaintiff's complaint: most importantly, the state court does not sit as an appellate court reviewing the decisions of the Bankruptcy Court, particularly those made twenty years ago; the state court does not have subject matter jurisdiction over the challenges to the sale and thus plaintiff's complaint does not set forth a claim upon which the court could grant relief; and plaintiff had a full opportunity in the federal court to challenge the propriety, scope (inclusion of personalty as implicitly provided in the Bankruptcy Court order), and amount of the sale, which decisions are res judicata. The court stated that even if it might have had subject matter jurisdiction over a potential conversion claim for the personal property (weapons), assuming the weapons were not included in the sale, that claim was time-barred whether or not the statute was tolled because plaintiff was deemed insane for a period of time. This appeal ensued.

Plaintiff does not challenge the court's finding of lack of subject matter jurisdiction. Rather, he challenges the ruling that the prior Bankruptcy Court orders act as res judicata and that his claims are barred by the statute of limitations. According to plaintiff, after having determined it lacked jurisdiction over challenges to the sale of the house, the court erred in dealing with that claim "on the merits" by determining it was barred by the doctrine of res judicata. Plaintiff further argues that once the court determined it lacked jurisdiction as to the sale of the property, it also should have dismissed the personal property claims on the same ground, not on statute of limitations grounds, because the bankruptcy sale encompassed both the realty and the personalty. Plaintiff also argues the court erred in disregarding Bankruptcy Court orders declaring him to be insane and in finding his personal property claims to be barred in view of the factual issues relating to his insanity that would toll the time period.

Based on our review of the briefs, oral argument and applicable law, we affirm substantially for the reasons articulated by Judge Ashrafi. We add the following brief comments. Plaintiff submitted himself to the jurisdiction of the state court when he filed this complaint over twenty years after the sale was approved by the Bankruptcy Court. The motion judge properly determined that the claims for which plaintiff sought relief involved matters cognizable in the Bankruptcy Court. However, the identical challenges had been made and the issues had been addressed and rejected throughout the federal courts. Accordingly, the motion judge did not err in dismissing the duplicative claims under the doctrine of res judicata.

Reliance on the theory of res judicata requires: (1) a final judgment by a court of competent jurisdiction; (2) identity of issues; (3) identity of parties; and (4) identity of the cause of action. Selective Ins. Co. v. McAllister, 327 N.J. Super. 168, 172-73 (App. Div.), certif. denied, 164 N.J. 188 (2000). The fact the judge referenced only res judicata, and not collateral estoppel because defendants herein were not technically parties to the federal actions, is not fatal to the ruling as collateral estoppel is merely a "branch of . . . res judicata." Figueroa v. Hartford Ins. Co., 241 N.J. Super. 578, 584 (App. Div. l990). For collateral estoppel to apply, the party asserting the bar must show: (1) the particular issue to be precluded is identical to the issue decided in the previous proceeding; (2) there was a full and fair opportunity to litigate the issue in the prior action; (3) a final judgment on the merits was issued in the previous proceeding; (4) the determination of the issue was essential to the prior judgment; and (5) the party against whom preclusion is asserted was a party to, or in privity with, a party to the prior proceeding. Monek v. Bor. of South River, 354 N.J. Super. 442, 454 (App. Div. 2002) (citing In re Dawson, 136 N.J. 1, 20-21 (1994)).

We reject plaintiff's argument that the Bankruptcy Court orders approving the sale and the related challenged orders in the federal court are "void as a matter of law" due to his alleged insanity. ...

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