On appeal from the Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-9123-07.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Fuentes, Gilroy and Simonelli.
Defendants Robert Edward Auctions, LLC (REA), and Robert Lifson, REA's president and sole owner, appeal from the April 3, 2009 order that dismissed their counterclaim against the State of New Jersey and their third-party complaint against John Molinelli, the Bergen County Prosecutor; Jeffrey Ziegelheim, a Deputy Executive Assistant of the Bergen County Prosecutor; Mary Ann Salemi, Assistant Bergen County Prosecutor; and John Frazer, a Bergen County Prosecutor Office investigator (collectively, referred to as "the BCPO"). We affirm.
William Stracher owned and operated a drug store in the City of Paterson. While operating the store, Stracher illegally sold prescription legend drugs to third parties and purchased sports memorabilia with the proceeds from the sale of the drugs. On July 17, 2007, Stracher entered into a written consignment agreement (the agreement) with REA to sell specific items from his sports memorabilia collection via REA's spring 2008 online auction. Upon signing the agreement, Stracher delivered approximately 41,678 items of his sports memorabilia collection to REA, and REA commenced examining, authenticating, photographing, cataloging, insuring, advertising, and promoting the items for the auction.
Under the terms of the agreement, Stracher was only entitled to receive proceeds from the sale "net of REA's commissions and expenses, allowing for the return of any unsold items" to Stracher. At the time of execution of the agreement, REA was unaware that items in the memorabilia collection had been purchased with proceeds from the illegal sale of prescription legend drugs.
On November 13, 2007, the BCPO arrested and charged Stracher with distribution, or possession with the intent to distribute prescription legend drugs without lawful authorization, N.J.S.A. 2C:35-10.5a(4), and with financial facilitation, N.J.S.A. 2C:21-25. On the same day, the BCPO executed a search warrant at Stracher's home in Vermont and seized numerous items from his sports memorabilia collection. After his arrest, Stracher admitted the charges.
Following Stracher's arrest, Lifson read a newspaper article concerning the seizure of some of Stracher's sports memorabilia collection. Lifson contacted the BCPO and informed the agency that REA possessed items from Stracher's sports memorabilia collection. REA provided the BCPO with an itemized list of the inventory it had on consignment.
On November 9, and 14, 2007, the BCPO obtained orders restraining funds in various investment accounts in the name of Stracher, his drugstore, or related third parties. On November 21, 2007, the BCPO obtained a third order authorizing the agency to seize and restrain the items contained in Stracher's sports memorabilia collection then in possession of REA, "as property subject to forfeiture and as evidence pending criminal prosecution, pursuant to N.J.S.A. 2C:64-1a and [-1]b, pending the termination of forfeiture proceedings to be instituted within 90 days of the seizure and restraint of the captioned property, pursuant to N.J.S.A. 2C:64-1 et seq."
On December 14, 2007, the State filed a complaint seeking to, among other things, extinguish any and all property rights that Stracher and REA possessed in any of the seized sports memorabilia and to forfeit the property to the State pursuant to the civil forfeiture statutes, N.J.S.A. 2C:64-1 to -9 (collectively referred to as the forfeiture statute). On the same day, the court entered an order to show cause (OTSC) directing Stracher and REA to show cause on January 7, 2008, why the court should not grant the relief requested by the State. Lifson filed a certification in opposition to the OTSC, contending that REA would suffer damages and irreparable harm to its good will if the court granted the relief requested. Lifson also agreed that if REA was permitted to proceed with the auction, it would "account for sales receipts and deposit with the [c]court the net proceeds derived from the sale (after payment of the commissions due to REA at the rates as prescribed in the consignment contract)."
On the return date of the OTSC, the court determined that the State had failed to establish a nexus between the sports memorabilia in possession of REA and Stracher's illegal activities as charged in the criminal complaint, concluding that many items of the sports memorabilia collection may have been purchased prior to Stracher's charged criminal activities.
Accordingly, the court denied the State's application to seize the sports memorabilia in the possession of REA, dismissed the prior temporary restraining orders concerning disposition of the property, and authorized REA to proceed with the auction of Stracher's sports memorabilia collection. The court conditioned REA's proceeding with the auction, upon REA turning over the net proceeds from the auction to the BCPO's Seized Asset Trust Account, and upon remitting any unsold items from the collection to the BCPO, with the BCPO holding the funds and the items in escrow pending further order of the court. On January 29, 2008, the court entered a confirming order.
On February 19, 2008, REA and Lifson filed an answer and counterclaim seeking damages for alleged violation of their federal and state constitutional rights "arising from the State's efforts to terminate REA's rights under the consignment agreement and an artisan's lien, without paying just and reasonable compensation."*fn1 Among other things, REA sought ...