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George E. Pickett, V v. Russell Pritchard

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


March 18, 2011

GEORGE E. PICKETT, V, PLAINTIFF-APPELLANT,
v.
RUSSELL PRITCHARD, III, DEFENDANT,
AND PEAPACK GLADSTONE BANK, AS GARNISHEE AND TRUSTEE FOR THE TRUST UNDER WILL OF HAROLD FEHR AND THE TRUST UNDER WILL OF LILLIAN FEHR, DEFENDANT-RESPONDENT.

On appeal from Superior Court of New Jersey, Law Division, Mercer County, Docket No. DJ-8267-08.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Submitted December 14, 2010

Before Judges Wefing, Payne and Koblitz.

Plaintiff appeals a trial court order granting the motion of Peapack Gladstone Bank, as garnishee, to dissolve a writ of execution served upon it. After reviewing the record in light of the contentions advanced on appeal, we affirm.

Plaintiff obtained a judgment against defendant Russell Pritchard, III, in the United States District Court for the Eastern District of Pennsylvania for an amount in excess of $430,000. This appeal is a consequence of plaintiff's inability to date to collect upon this judgment.

Defendant Pritchard is a beneficiary of certain trusts created under the Will of Harold F. Fehr, deceased, and Lillian Fehr, deceased, referred to in the record as the "Fehr trusts." These trusts were originally administered in Pennsylvania, with Bryn Mawr Trust Company and John A. Coyle as trustees. Each trust contained the following clause, generally referred to as a spendthrift clause: "Until distributed, no gift or beneficial interest shall be subject to anticipation or to voluntary or involuntary alienation."

On February 11, 2008, plaintiff sought a writ of execution in Pennsylvania, seeking to attach Pritchard's income interest in these trusts to satisfy the judgment he held against him. The Court of Common Pleas of Montgomery County issued the writ of execution on February 15, 2008. On March 6, 2008, defendant filed a Claim for Exemption with the Montgomery County Court of Common Pleas, contending that his interest under these trusts could not be attached in light of these spendthrift clauses. On March 13, 2008, Bryn Mawr Trust Company, as trustee, also filed objections to the writ of execution, contending that defendant's creditors could not reach his income interest in these trusts until the money was, in fact, distributed to him. It asked the court to dissolve the writ of execution. Plaintiff opposed the trustee's motion, contending that his judgment, which was entered under the federal Mandatory Victims Restitution Act, 18 U.S.C. § 3663A, was not subject to these spendthrift clauses. The Pennsylvania court disagreed, and on October 10, 2008, it issued an order dissolving the previous attachment. Its order was not accompanied by a detailed statement of reasons. Plaintiff did not file a timely appeal from that order.

On January 14, 2008, prior to plaintiff seeking a writ of execution in Pennsylvania, he docketed his judgment in New Jersey. When his efforts to execute on his judgment in Pennsylvania were unsuccessful, plaintiff obtained a writ of execution in New Jersey on December 19, 2008. Part of plaintiff's rationale for doing so was the fact that Bryn Mawr Trust Company and John A. Coyle had, with the approval of a Pennsylvania court, resigned as trustees in favor of Peapack Gladstone Bank, a New Jersey bank, as successor trustee. Plaintiff's initial efforts in January 2009 to execute in New Jersey on defendant's interest in these trusts were unsuccessful because the trust assets had not yet been transferred to New Jersey.

By May 2009, plaintiff learned that the trust assets had been transferred to Peapack Gladstone Bank, and he asked the Somerset County Sheriff's Office to attempt again to levy on these funds. The bank objected, arguing that the earlier order of the Pennsylvania court rejecting plaintiff's attempt to levy on the trust assets was res judicata and entitled to full faith and credit in New Jersey's courts. U.S. Const., art. IV, § 1 (stating, "Full Faith and Credit shall be given in each State to the public Acts, Records, and judicial Proceedings of every other State.") Plaintiff responded that the absence of any statement of reasons or analysis by the Pennsylvania court removed its judgment from the scope of that clause. The trial court ultimately granted the bank's motion and dissolved the December 2008 writ of execution. This appeal followed.

On appeal, plaintiff raises the following arguments for our consideration:

POINT I LACK OF STANDING OF BRYN MAWR TRUST AND FACTUALLY UNTRUE STATEMENTS AND ERRORS OF LAW IN THEIR PRELIMINARY OBJECTIONS

POINT II DEFENDANT PRITCHARD FAILED TO ANSWER OR OTHERWISE RESPOND. EQUITY AND UNCLEAN HANDS OF DEFENDANT PRITCHARD

POINT III UNDATED DOCUMENT FILED BY PGB AND FACTUALLY UNTRUE STATEMENTS OF PGB IN THEIR PRELIMINARY STATEMENT FILED WITH THEIR BRIEF IN SUPPORT OF MOTION TO DISSOLVE WRIT OF EXECUTION AND LEVY AND FACTUALLY UNTRUE STATEMENTS OF PGB IN THEIR CASE INFORMATION STATEMENT FILED WITH THIS COURT OF APPEALS

POINT IV PEAPACK GLADSTONE BANK FAILED TO TIMELY ANSWER SHERIFF'S LEVY IN THE TIME REQUIRED BY THE NEW JERSEY RULES OF CIVIL PROCEDURE CONCERNING TIME TO DEFEND THE SHERIFF'S LEVY

POINT V EXCLUSIVE JURISDICTION OF THE ORPHAN'S COURT: THE RULING ON A TRUST MATTER UNDER THE PRIOR EXCLUSIVE AND MANDATORY JURISDICTION OF THE ORPHAN'S COURT TRANSFERRING JURISDICTION OF THE ADMINISTRATION OF THE FEHR TRUSTS TO NEW JERSEY, PREEMPTS THE RULING IN THE PENNSYLVANIA COURT WHICH CANNOT CREATE RES JUDICATA ON THAT OVER WHICH IT HAS NO JURISDICTION AND IS ITSELF BARRED BY RES JUDICATA

POINT VI JURISDICTION CANNOT BE ACQUIRED BY PENNSYLVANIA COURT

POINT VII PENNSYLVANIA COURTS CANNOT GOVERN A RES IN THE JURISDICTION OF NEW JERSEY

POINT VIII PRIOR NEW JERSEY JUDGMENT DOCKETING PREEMPTS RES JUDICATA: THE NEW JERSEY GARNISHMENT IS BASED UPON A JUDGMENT DOCKETED IN TRENTON CREATING A CONTINUING STATEWIDE LIEN UPON THE PROPERTY OF DEFENDANT PRITCHARD PRIOR TO THE SERVICE OF THE WRIT OF GARNISHMENT IN PENNSYLVANIA AND PREEMPTS THE RES JUDICATA CLAIM

POINT IX OVERDUE MANDATORY TRUST DISTRIBUTION: NEW JERSEY LAW ALLOWS EVEN AN ORDINARY CREDITOR TO ATTACH A TRUST DISTRIBUTION AND APPELLANT'S GARNISHMENT IS WELL WITHIN THAT RIGHT AND IS SUBJECT TO GARNISHMENT. THE UNIFORM TRUST CODE AND NEW JERSEY LAW ALLOWS EVEN ORDINARY CREDITORS TO ATTACH AN OVERDUE TRUST DISTRIBUTION

POINT X PUBLIC POLICY AND MANIFEST INJUSTICE: RES JUDICATA CANNOT BE RIGIDLY APPLIED WHEN A PRIOR JUDGMENT VIOLATES PUBLIC POLICY OR RESULTED IN MANIFEST INJUSTICE TO A PARTY.

A judgment entered in the courts of a sister state is "presumptively entitled" to full faith and credit in the courts of New Jersey. Simmermon v. Dryvit Systems, Inc., 196 N.J. 316, 330 (2008). Our Supreme Court has recognized that "respect for the judgments entered by the court of a sister state is critical to avoid the type of divisive parochialism that breeds duplicative litigation and waste of judicial resources." Ibid.

New Jersey, however, will not enforce a judgment entered in another state that has been obtained through a denial of due process. Sonntag Reporting Serv., Ltd. v. Ciccarelli, 374 N.J. Super. 533, 538 (App. Div. 2005). New Jersey courts will thus not enforce a judgment against a defendant over whom the court did not have personal jurisdiction, or with respect to a matter for which the court lacked subject matter jurisdiction. Nor will New Jersey courts enforce a judgment if it was entered without adequate notice and an opportunity to be heard. Ibid.

Additionally, so long as the court that entered the judgment had competent jurisdiction to do so, the judgment entered was a "valid and final adjudication on the merits of the claim," and the causes of action, issues, parties and relief sought in New Jersey are "substantially similar or identical" to those in the original action, New Jersey will treat that judgment as res judicata. Velasquez v. Franz, 123 N.J. 498, 506 (1991); Culver v. Ins. Co. of N. Am., 115 N.J. 451, 460 (1989). If a matter has been litigated in one state, an unsuccessful party cannot institute the same litigation in another state, seeking a more favorable outcome.

Here, the trial court concluded that the Pennsylvania judgment dissolving the writ of execution was res judicata with respect to plaintiff's effort to seek satisfaction of his judgment from defendant's interest in the Fehr trusts. In our judgment, the trial court was entirely correct in this conclusion.

Plaintiff puts forth several reasons why courts in New Jersey should not view the Pennsylvania judgment res judicata. We find none to be persuasive.

His principal contention in this regard is that the Pennsylvania Court of Common Pleas lacked subject matter jurisdiction to enter this judgment. Subject matter jurisdiction, he contends, lay in the Orphans' Court, a division of the Court of Common Pleas that has jurisdiction over the administration and distribution of testamentary trusts. 20 Pa. Cons. Stat. § 711 (2010). The Court of Common Pleas, on the other hand, has broad "unlimited original jurisdiction of all actions and proceedings," with the exception of matters for which exclusive original jurisdiction has been vested elsewhere.

42 Pa. Cons. Stat. § 931 (2010). Jurisdiction of the Orphans' Court is not exclusive in the context of a matter such as this.

20 Pa. Cons. Stat. § 712 grants jurisdiction to the Court of Common Pleas in such a case "where there are substantial questions. .. ."

Further, we agree with the bank that this matter did not involve solely "administration and distribution" of trust property but rather also presented questions of creditors' rights. We also reject plaintiff's argument that because the Orphans' Court had initial jurisdiction over these trusts, it retained exclusive subject matter jurisdiction. The Pennsylvania Supreme Court has rejected such a contention.

We reject, however, appellant's notion that the mere presence of the testamentary spendthrift trust as the property sought to be attached automatically vests jurisdiction exclusively in the orphans' division. The notion is novel and unsupportable in light of past cases in which common pleas court adjudicated the attempted garnishment of trusts in support of marital obligations without interference by this Court. The instant case does not involve the administration of a trust or the distribution of the property which forms the trust res. Neither are we concerned with an interpretation or construction of the trust instrument. What is involved is the liability of a beneficiary to his former wife and children and whether or not the garnishee has property of Sheridan which ought to be paid to the judgment winner. [Posner v. Sheridan, 299 A.2d 309, 313 (Pa. 1973) (citations omitted).]

Additionally we reject plaintiff's argument that the Pennsylvania court lacked jurisdiction when it entered the order because of the resignation of Bryn Mawr Trust and John A. Coyle in favor of Peapack Gladstone Bank. At the time the Pennsylvania court entered the order dissolving the writ of attachment, the trust assets had not yet been transferred to New Jersey but remained in Pennsylvania, and thus its courts had jurisdiction over them.

The fact that plaintiff may have docketed his judgment in New Jersey before he sought to execute on the assets in Pennsylvania is also insufficient to have deprived the Pennsylvania court of jurisdiction. The docketing of a judgment does not have the same legal significance as entry of a judgment. The Pennsylvania judgment was entered before plaintiff sought to execute in New Jersey, and it is thus prior in time. We are satisfied that plaintiff has not presented a legal basis for us to conclude that the Pennsylvania Court of Common Pleas did not have subject matter jurisdiction when it entered its judgment dissolving the levy on defendant's interest in these trusts.

Plaintiff puts forth an additional argument why the Pennsylvania judgment should not be deemed res judicata; doing so, he contends, would result in a manifest injustice to him and violate public policy. We recognize that some commentators have expressed the view that res judicata should not be applied if it would result in a denial of substantial justice. Moore's Federal Practice para. 0.405[12] (2d ed. 1992); Restatement (Second) of Judgments Ch. 1. We also recognize and sympathize with plaintiff's efforts to obtain monetary satisfaction from defendant. The record, moreover, discloses that plaintiff is not the only party seeking to collect monies due from defendant. The United States government is also seeking to collect restitution from defendant of more than $800,000, and there are outstanding child support orders from both Pennsylvania and New Jersey. We are unable to find that plaintiff is entitled to the extraordinary conclusion that according the Pennsylvania judgment the res judicata effect to which it is entitled will visit a manifest injustice upon him.

Plaintiff's remaining contentions do not require extended discussion. He asserts that Bryn Mawr Trust Company lacked standing to seek the dissolution of the levy. Plaintiff did not raise this issue before the trial court. Nieder v. Royal Ins. Indem. Co., 62 N.J. 229, 234 (1973) (recognizing that appellate courts will decline to consider issues raised for the first time on appeal). Pennsylvania, moreover, has held that "[w]hether a party has standing to maintain an action is not a jurisdictional question." Beers v. Unemployment Comp. Bd. of Review, 633 A.2d 1158, 1160 n.6 (Pa. 1993) (citation omitted).

Despite plaintiff's attempts to the contrary, there is no legal significance in the context of this matter that defendant did not appear in the Pennsylvania matter. The Pennsylvania court had jurisdiction over the trust res; that was sufficient. It did not need personal jurisdiction over defendant. Further, it is immaterial that the trial court may have misstated the date on which plaintiff docketed his judgment in New Jersey; as we noted earlier, the date of docketing in New Jersey does not give New Jersey priority over the Pennsylvania judgment. He also complains that the bank's objection to the levy should not have been considered because it was not raised within the 35 days permitted under Rule 4:60-10(a). In our judgment, the strong public policy of according full faith and credit to judgments from a sister state trumps the rule. That deadline, moreover, is not one which may not be enlarged. R. 1:3-4(c). Plaintiff's final argument is that he is nonetheless entitled to execute upon the accumulated income that the bank has been holding pending a resolution of the claims of defendant's several creditors. We agree with the bank that to permit plaintiff to proceed in such a fashion would be to ignore completely the valid Pennsylvania judgment.

The order under review is affirmed.

20110318

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