On appeal from the Superior Court of New Jersey, Law Division, Middlesex County, Docket No. L-9099-07.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Rodríguez and Yannotti.
Plaintiff Andrew J. Spinnell appeals from an order entered by the Law Division on May 15, 2009, which denied his motion for summary judgment and granted a cross-motion for summary judgment by defendants Philip Seldon (Seldon), Birddog Associates, Inc. (Birddog); Magazine Emporium, Inc. (Magazine); and Silence Is Golden Foundation, Inc. (Silence). For the reasons that follow, we reverse.
This appeal arises from the following facts. On August 3, 2006, a jury in the New York Supreme Court, New York County, returned a verdict for plaintiff and against Seldon in the amount of $500,000. On the following day, $500,000 was withdrawn from Birddog Associates' account in a Connecticut bank. On August 9, 2006, the $500,000 withdrawn from the Connecticut bank was deposited in an account in the name of Birddog Associates at Sun National Bank (Sun National) in Old Bridge, New Jersey.
On November 17, 2006, a judgment for plaintiff and against Seldon was entered in the New York action in the amount of $515,013. Plaintiff claims that on November 13, 2006, Seldon had Magazine incorporated in Delaware, with himself as President and sole shareholder. On November 20, 2006, $400,000 was transferred from Birddog's account at Sun National to a new account opened at that bank in Magazine's name. In addition, on March 23, 2007, $200,000 was transferred from Magazine's account to another account at Sun National in Silence's name.
Plaintiff filed an action in the New York Supreme Court seeking an order requiring that monies in Birddog's bank accounts be turned over to him to satisfy his judgment against Seldon. On June 7, 2007, plaintiff docketed his New York judgment against Seldon in the Superior Court of New Jersey.
The filing of the New York judgment apparently caused Sun National to restrict Magazine and Silence from gaining access to monies in their respective bank accounts. In July 2007, Magazine and Silence filed an action against Sun National in the Superior Court, Middlesex County, seeking to enjoin and restrain Sun National from restricting access to their accounts. This action was docketed as MID-L-5977-07.
Sun National filed an answer and third-party interpleader complaint, naming Seldon, Birddog and plaintiff as third-party defendants. Sun National sought a determination as to the parties' respective interests in the monies on deposit in Magazine's and Silence's accounts. The parties thereafter agreed that the monies in the accounts, which totaled $255,906.52, would be deposited in the court's Trust Fund Unit, pending a decision on the parties' respective interests in those monies.
Sometime thereafter, Magazine and Silence filed a motion in MID-L-5977-07, seeking to withdraw the monies being held in the court's Trust Fund Unit, and plaintiff filed a cross-motion seeking to withdraw those monies to satisfy his judgment against Seldon. The court conducted the first of three evidentiary hearings on the motions on September 25, 2007.
On October 25, 2007, plaintiff filed a four-count complaint in this case, naming Seldon, Birddog, Magazine and Silence as defendants. In his complaint, plaintiff alleged that: Seldon's transfer of $400,000 from Birddog to Magazine was a fraudulent conveyance (count one); the transfer by Seldon and Magazine of $200,000 to Silence was a fraudulent conveyance; Magazine's corporate veil should be "reverse pierced" and it should be liable for Seldon's liabilities and obligations (count three); and Silence's corporate veil also should be "reverse pierced" and it should be liable for Seldon's liabilities and obligations (count four).
By letter dated November 16, 2007, counsel for defendants demanded the voluntary dismissal of plaintiff's complaint, asserting that "[t]he exact issues raised" by plaintiff were being litigated in MID-L-5977-07. Counsel stated that, if the complaint was not withdrawn, he would file a motion for sanctions pursuant to Rule 1:4-8.
On November 23, 2007, plaintiff filed an amended complaint, which limited the claims in this case to the first two counts, seeking the invalidation of the transfer of $400,000 from Birddog to Magazine and the subsequent transfer of $200,000 from Magazine to Silence on the ground that both were fraudulent conveyances. Seldon, Birddog, Magazine and Silence ...