October 10, 2013
ARCH FINANCIAL SERVICES, INC., PETER GALLIC and JOHN ROCK, Plaintiffs-Respondents,
CHARLES W. GEYER, STEWART SMITH, ESTELLE SMITH, DANIEL STRAFFI, ESQ., ANTHONY AMBROSIO, ESQ., NEW FALLS CORPORATION, Defendants, and EAZY BROOK, INC., CHARLES K. GEYER, LORRIEANN GEYER, GFTA, LLC and ACME AUTO BODY, Defendants-Appellants. ARCH FINANCIAL SERVICES, INC., PETER GALLIC and JOHN ROCK, Plaintiffs-Appellants,
CHARLES W. GEYER, STEWART SMITH, ESTELLE SMITH, DANIEL STRAFFI, ESQ., EAZY BROOK INC., NEW FALLS CORPORATION, CHARLES K. GEYER, LORRIEANN GEYER, GFTA, LLC, ACME AUTO BODY, Defendants, and ANTHONY AMBROSIO, ESQ., Defendant-Respondent.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued January 15, 2013
On appeal from the Superior Court of New Jersey, Law Division, Morris County, Docket No. L-2335-08.
Ronald T. Nagle argued the cause for appellants in A-2332-11.
Mitchell B. Seidman argued the cause for respondents in A-2332-11 and appellants in A-3996-11 (Seidman & Pincus, LLC, attorneys; Mr. Seidman and Andrew Pincus, on the briefs).
Edward Grossi argued the cause for respondent Anthony Ambrosio in A-3996-11.
Respondent Eazy Brook, Inc. in A-3996-11 has not filed a brief.
Before Judges Messano, Lihotz and Ostrer.
These appeals, calendared back-to-back and consolidated for purposes of this opinion, include challenges in A-2332-11 by defendants Eazy Brook, Inc., Charles K. Geyer, Lorrieann Geyer, GFTA, LLC, and Acme Auto Body (collectively defendants), seeking to vacate a judgment, made final on February 21, 2012, in favor of plaintiffs Arch Financial Services, Peter Gallic, and John Rock, and challenges in A-3996-11 by plaintiffs to the dismissal of their claims against defendants Anthony Ambrosio, Esq., Stewart and Estelle Smith (the Smiths). Following our review of the arguments presented on appeal, in light of the record and applicable law, we affirm.
Plaintiffs recovered a judgment against defendant Charles W. Geyer for breach of a commercial mortgage brokerage agreement. Prior to trial on plaintiffs' complaint, Geyer consented to entry of judgment against him in the amount of $390, 411.00, which was filed on March 6, 2001.
Efforts to satisfy the judgment were thwarted because Geyer owned no assets, with one exception. In 2000, Geyer had entered into a Collection Agreement and Limiting Assignment Agreement with the Smiths (the Geyer-Smith agreement), to collect a $1, 796, 451.57 judgment they had secured against Alfred Faiella in 1991. Under the Geyer-Smith agreement, Geyer was entitled to forty percent of any recovery above $100, 000, plus reimbursement of his out-of-pocket expenses. After accounting for accrued interest, the Smiths's judgment had increased to more than $4.3 million.
On October 14, 2005, Faiella filed a voluntary petition for bankruptcy relief. In late 2005 or early 2006, Ambrosio was retained by Geyer to attempt recovery on the Smith judgment in the bankruptcy case. A significant factual dispute litigated at trial was whether Ambrosio solely represented the Smiths or also represented and took direction from Geyer. Geyer retained Ambrosio to represent the Smiths's judgment interest. Ambrosio filed an adversary proceeding seeking to declare Faiella could not discharge the Smiths's debt.
In January 2007, plaintiffs discovered the Smith-Geyer agreement. They secured a Writ of Execution on February 28, 2007, directing the Sheriff of Warren County to execute and levy on Geyer's assets, as follows:
All present and future rights, credits, monies, properties, and all other amounts now due and owing, or which in the future become due and owing, from [the Smiths] to Charles W. Geyer including, but not limited to, all amounts due or to become due and owing from [the Smiths] to Charles W. Geyer pursuant to the "Collection Agreement [a]nd Limited Assignment" dated November 28, 2000.
The Warren County Sheriff's Office served the writ of execution on the Smiths on March 15, 2007. Plaintiff's counsel also notified Ambrosio of the execution and levy on the Smiths and provided a copy of the writ. The correspondence requested Ambrosio to insure his clients pay plaintiffs "all monies they would otherwise pay to Charles W. Geyer including, but not limited to Charles W. Geyer's share of any money they recover from . . . Faiella in . . . bankruptcy or in the adversary proceeding" Ambrosio was prosecuting against Faiella.
After the Smiths were served with the writ, but before Ambrosio received the correspondence notifying him a writ was served upon the Smiths, Geyer sent a facsimile to Ambrosio instructing him "to please keep [the faxed document] with your Smith file." Geyer included a December 10, 2000 document assigning his rights under the Geyer-Smith agreement to Eazy Brook. Eazy Brook was solely owned by Geyer's son, Charles K. Geyer, whom we will identify as Charles K. At trial, the parties disputed whether the Assignment was actually created in 2000 and effective as of that date, a position advanced by defendants, or invalid and void as an attempt by Geyer to insulate his contract rights from his creditors by a fraudulent transfer to Charles K., the plaintiffs' position. Evidential support for plaintiffs' position the assignment represented a fraudulent transfer included that Geyer admitted his interest in the Geyer-Smith agreement was his sole asset, there was no consideration for the assignment, several versions of the purported assignment agreement existed, and Geyer had individually executed an October 11, 2005 extension of the Geyer-Smith agreement without mention of Eazy Brook or the purported assignment of rights.
Following the Faiella bankruptcy case, the Smiths joined forces with another of Faiella's creditors, New Falls Corporation. Each filed an adversary proceeding contesting the dischargability of their respective debts. The Smiths and New Falls agreed to cooperate with each other and split any recovery obtained in either action sixty-five percent in favor of the Smiths and thirty-five percent in favor of New Falls. The Smiths's adversary proceeding was tried first, and was unsuccessful. In the course of New Falls's adversary proceeding, the debtor's wife agreed to a "global." In effect, she paid $1.7 million to be distributed to the creditors, New Falls withdrew its action contesting discharge, and the trustee ended the pursuit of preferential transfers.
Plaintiffs read about the settlement as reported in the newspaper. On July 23, 2008, plaintiffs obtained and the sheriff executed a Writ of Execution to the bankruptcy trustee, executing on the portion of the funds which comprised Geyer's interest under the Geyer-Smith agreement. The trustee ignored the writ, an action later found immune from liability by the Bankruptcy Court.
Fearing Ambrosio may not honor the writ of execution, plaintiffs commenced this action to enjoin his disbursement of the proceeds of the bankruptcy settlement. The complaint, against Geyer, the Smiths, Eazy Brook, New Falls, Ambrosio and the bankruptcy trustee, asserted claims for declaratory relief and turnover, and to set aside the assignment as a fraudulent transfer. Injunctive relief was denied and the trustee delivered a check for $1, 327, 489.81 to Ambrosio, from which he retained $125, 000 as his legal fee and paid $309, 888 to New Falls, $590, 532 to the Smiths, and $302, 000 to Eazy Brook. Eazy Brook redistributed its share of the proceeds, as follows: $25, 000 to Lorrieann Geyer, Charles K.'s wife; $162, 000 to GFTA, a limited liability company owned and operated solely by Charles K.; $100, 000 to Acme Auto Body, solely owned by Charles K.; $1, 800 to Charles K.; and part to counsel for fees and costs in this case.
Plaintiffs amended their verified complaint alleging legal malpractice, professional negligence, and conversion against Ambrosio, seeking turnover of Geyer's portion of the recovery of the Smiths's judgment and fraudulent transfer and conversion against any person or entity to which the funds were paid. A second amended complaint added claims against the Smiths for conversion and failure to turn over the portion of funds to which plaintiffs claimed entitlement after serving the writs of execution.
The trial judge conducted a three-day bench trial and issued a written opinion. He made specific factual findings including credibility determinations. He determined Geyer and Charles K. were not truthful, that the assignment was not presented to the Smiths on the claimed date of execution, December 10, 2000, and the only verifiable evidence of its creation was the day it was faxed to Ambrosio. He found Ambrosio represented the Smiths and Geyer, "who gave Ambrosio instructions as to how to proceed in the later distribution of funds obtained from the bankruptcy trustee." However, Ambrosio did not know the assignment of interest to Eazy Brook was fraudulent. The judge concluded plaintiffs established the transfer to Eazy Brook of Geyer's share of the distribution received from the bankruptcy trustee was fraudulent, requiring the subsequent transferees to disgorge all amounts received. The judge rejected as unfounded plaintiffs' claims for conversion, violation of the execution statute and legal malpractice.
Judgment against defendants was entered on December 8, 2011. Defendants' appeal (A-2332-11) challenges the articulated factual finding that the transfer to Eazy Brook was fraudulent. A separate order entered December 8, 2011, dismissed plaintiffs' claims against Ambrosio and the Smiths. Plaintiffs appealed (A-3996-11) arguing Ambrosio and the Smiths were legally obligated to comply with the writ of execution.
In our review of the decision of a trial judge sitting without a jury, we defer to the judge's factual findings if they are "supported by adequate, substantial and credible evidence." Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 484 (1974). Thus, "we do not disturb the factual findings and legal conclusions of the trial judge unless we are convinced that they are so manifestly unsupported by or inconsistent with the competent, relevant and reasonably credible evidence as to offend the interests of justice." Seidman v. Clifton Sav. Bank, S.L.A., 205 N.J. 150, 169 (2011) (internal quotation marks and citations omitted). "Deference is especially appropriate 'when the evidence is largely testimonial and involves questions of credibility.'" Cesare v. Cesare, 154 N.J. 394, 412 (1998) (quoting In re Return of Weapons to J.W.D., 149 N.J. 108, 117 (1997)). This is because a trial judge who observes witnesses and hears them testify has the best perspective to assess credibility. RAB Performance Recoveries, L.L.C. v. George, 419 N.J.Super. 81, 86 (App. Div. 2011). However, in our review we will reverse if we determine the court's findings are so "wide of the mark as to constitute a manifest denial of justice[.]" Hisenaj v. Kuehner, 194 N.J. 6, 25 (2008) (internal quotation marks and citations omitted). Moreover, "[a] trial court's interpretation of the law and the legal consequences that flow from established facts are not entitled to any special deference." Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995).
Before we examine defendant's arguments raised on appeal, we recite the relevant provisions of the Uniform Fraudulent Transfer Act (UFTA), N.J.S.A. 25:2-20 to -34, upon which plaintiffs' claims were based.
The purpose of the UFTA "is to prevent a debtor from placing his or her property beyond a creditor's reach." Gilchinsky v. Nat'l Westminster Bank N.J., 159 N.J. 463, 475 (1999) (citations omitted). The underlying policy is to prevent debtors from deliberately cheating creditors by removing their property from "the jaws of execution." Ibid. The plaintiff must demonstrate fraud under the UFTA by clear and convincing evidence. Jecker v. Hidden Valley, Inc., 422 N.J.Super. 155, 164 (App. Div. 2011), certif. denied, 210 N.J. 28 (2012).
In determining whether a transfer is fraudulent, a court must make two inquiries:
The first is whether the debtor or person making the conveyance has put some asset beyond the reach of creditors which would have been available to them at some point in time but for the conveyance. . . . The second is whether the debtor transferred property with an intent to defraud, delay, or hinder the creditor. Transfers calculated to hinder, delay, or defeat collection of a known debt are deemed fraudulent because of the debtor's intent to withdraw the assets from the reach of process. Both inquiries involve fact-specific determinations that must be resolved on a case-by-case basis.
[Gilchinsky, supra, 159 N.J. at 475-76 (internal quotation marks and citations omitted).]
The UFTA defines "transfer" as "every mode, direct or indirect, absolute or conditional, voluntary or involuntary, of disposing of or parting with an asset or an interest in an asset, and includes payment of money, release, lease, and creation of a lien or other encumbrance." N.J.S.A. 25:2-22. Further, the statute defines fraudulent transfer as:
A transfer made or obligation incurred by a debtor is fraudulent as to a creditor, whether the creditor's claim arose before or after the transfer was made or the obligation was incurred, if the debtor made the transfer or incurred the obligation:
a. With actual intent to hinder, delay, or defraud any creditor of the debtor; or
b. Without receiving a reasonably equivalent value in exchange for the transfer or obligation, and the debtor:
(1) Was engaged or was about to engage in a business or a transaction for which the remaining assets of the debtor were unreasonably small in relation to the business or transaction; or
(2) Intended to incur, or believed or reasonably should have believed that the debtor would incur, debts beyond the debtor's ability to pay as they become due.
In determining whether the debtor acted with "actual intent" to defraud creditors, the court must consider several statutory factors, or "badges of fraud, " including whether:
a. The transfer or obligation was to an insider;
b. The debtor retained possession or control of the property transferred after the transfer;
c. The transfer or obligation was disclosed or concealed;
d. Before the transfer was made or obligation was incurred, the debtor had been sued or threatened with suit;
e. The transfer was of substantially all the debtor's assets; f. The debtor absconded;
g. The debtor removed or concealed assets;
h. The value of the consideration received by the debtor was reasonably equivalent to the value of the asset transferred or the amount of the obligation incurred;
i. The debtor was insolvent or became insolvent shortly after the transfer was made or the obligation was incurred;
j. The transfer occurred shortly before or shortly after a substantial debt was incurred; and
k. The debtor transferred the essential assets of the business to a lienor who transferred the assets to an insider of the debtor.
In an action alleging a fraudulent transfer, the court must consider "whether the badges of fraud are present, not whether some factors are absent." Gilchinsky, supra, 159 N.J. at 477. The "confluence of several [badges of fraud] in one transaction generally provides conclusive evidence of an actual intent to defraud." Ibid. (citing Max Sugarman Funeral Home, Inc. v. A.D.B. Investors, 926 F.2d 1248, 1254-55 (1st Cir. 1991)).
A fraudulent transfer may also be established under N.J.S.A. 25:2-27, "designed to protect creditors whose claims arose before the time of a transfer by a debtor ('present creditors')." Flood v. Caro Corp., 272 N.J.Super. 398, 404 (App. Div. 1994). Although N.J.S.A. 25:2-25 requires actual intent to defraud, N.J.S.A. 25:2-27 does not include a similar requirement.
Under N.J.S.A. 25:2-27(a) a transfer is "fraudulent as to present creditors where the debtor made the transfer without receiving a reasonably equivalent value in exchange for the transfer and the debtor was insolvent at the time or became insolvent as a result of the transfer." United Jersey Bank v. Vajda, 299 N.J.Super. 161, 164 (App. Div. 1997). Subsection (b) provides a transfer is fraudulent if it is "made to an insider for an antecedent debt, the debtor was insolvent at the time, and the insider had reasonable cause to believe that the debtor was insolvent." N.J.S.A. 25:2-27(b). When the debtor is an individual, an "insider" includes, inter alia, any relatives of the debtor, which includes "an individual related by consanguinity within the third degree as determined by the common law, a spouse, or an individual related to a spouse within the third degree as so determined, and includes an individual in an adoptive relationship within the third degree." N.J.S.A. 25:2-22a(1). See United Jersey Bank, supra, 299 N.J.Super. at 165 ("Transfers made to close relatives are especially suspect.") (citations omitted).
In their appeal, defendants challenge the judge's factual findings relied upon to support the legal conclusion the transfer from Geyer to Eazy Brook violated the UFTA. Defendants argue the trial court's decision was "completely at odds with [the] undisputed facts" and "plainly wrong and should be reversed as a matter of law and in the interest of justice." We conclude these arguments are without merit. We provide these brief comments.
Defendants' first attack suggesting Geyer's rights under the Geyer-Smith agreement expired in 2006 so plaintiffs could not collect under that agreement thereafter is specious. The direct and circumstantial evidence reflect Geyer and Smith continued to abide the terms of their agreement and it is unmistakable that the funds transferred to Eazy Brook derived from Geyer's interest as defined in the Geyer-Smith agreement.
Building on the flawed premise the Geyer-Smith agreement had expired, defendants also incorrectly contend the bankruptcy recovery did not result from the Smiths's claim, but from their deal with New Falls. Therefore, they maintain all funds belonged to the Smiths, who directed Ambrosio gratuitously to pay Eazy Brook because of a sense of obligation. Further, they attempt to refute the trial judge's findings that Ambrosio represented Geyer as well as the Smiths, and Geyer instructed Ambrosio regarding the distribution of bankruptcy recovery. Each of these assertions is rejected.
It cannot escape notice that the Smiths never appeared or testified at trial, reducing defendants' arguments attributed to the Smiths's intentions to mere desired inferential findings, which were soundly rejected by the trial judge. As to the bankruptcy litigation, the Smiths's adversarial action was not to establish their debt, but to avoid its discharge. The trustee's recovery created a fund to pay all creditors that filed claims, in accordance with the priority provisions of the Bankruptcy Code, 11 U.S.C.A. § 507. In fact, after expungement two creditor claims remained: one by New Falls and the other by the Smiths.
The judge cited ten distinct reasons supporting the conclusion the assignment was fraudulent: (1) its date was inconsistent with the omission of Eazy Brook's assent to the 2005 extension of the Geyer-Smith agreement; (2) Geyer was unable or unwilling to describe how and when he delivered the assignment or informed the Smiths; (3) the only direct evidence of the assignment was Geyer's April 2, 2007 fax to Ambrosio; (4) Ambrosio stated the Smiths received the assignment after the bankruptcy recovery; (5) multiple different "originals" of the document were produced; (6) "for a substantial period of time the intent to transfer allegedly pursuant to the assignment was concealed"; (7) plaintiffs obtained their judgment against Geyer before the transfer took place; (8) Geyer's transfer of this asset represented substantially all of his assets; (9) there was no consideration, much less reasonably equivalent value exchanged between Geyer and Eazy Brook; and (10) the express finding that Geyer's and Charles K.'s testimony was not truthful such that the evidence as a whole evinced "the whole point of creating the so-called assignment was to aid [Geyer] in his plan to defraud plaintiffs[.]" We also reject defendants' arguments refuting the judge's findings of badges of fraud. The judge concluded plaintiffs demonstrated by clear and convincing evidence a fraudulent transfer, under N.J.S.A. 25:2-25(a), stating "it is plain from the evidence . . . that the whole point of creating the so-called assignment was to aid [Geyer] in his plan to defraud plaintiffs as well as all the other creditors who had obtained judgments against him."
Applying these facts to the statute, he identified four badges of actual fraud, including N.J.S.A. 25:2-26(c), "since for a substantial period of time the intent to transfer allegedly pursuant to the assignment was concealed"; N.J.S.A. 25:2-26(d), because plaintiffs obtained their judgment against Geyer before the transfer; N.J.S.A. 25:2-26(e), "is applicable since the transfer was of substantially all of [Geyer]'s assets"; and N.J.S.A. 25:2-26(h), "is applicable since the transfer was not made for any consideration." Two additional badges of fraud are shown; this was an insider transfer as the transfer to Eazy Brook was a transfer to Geyer's son, N.J.S.A. 25:2-26(a), and Geyer was insolvent when the transfer was made, N.J.S.A. 25:2-26(i). Notably, these findings also clearly and convincingly established the alternative conclusion of fraud under N.J.S.A. 25:2-27(a).
We also reject defendants' effort to undermine these convincingly supported findings, by mischaracterizing the record and overlooking the repudiation of Geyer and Charles K.'s testimony. Any remaining contentions raised by defendants on appeal not specifically addressed lacked sufficient merit to warrant discussion in our opinion. R. 2:11-3(e)(1)(E). Following our review, we determine the substantial credible evidence in this record, including the judge's credibility determinations, support the trial judge's findings and conclusions, which will not be disturbed.
Finally, defendants' final argument attacking the value of the assignment is unsupported. Defendants argue the assignment had no value on December 10, 2000, the date on which the transfer was effectuated. Therefore, the circumstances of the transfer are essentially irrelevant. The argument fails as it is grounded on the transfer actually occurring on December 10, 2000, a fact that is not supported. As detailed above, the judge found the assignment was a false document and in reviewing application of the UFTA, the relevant transfer took place on October 15, 2008, the date Ambrosio distributed $302, 000 to Eazy Brook.
In their appeal, plaintiffs argue the judge erred in dismissing claims against the Smiths and Ambrosio (collectively referred to as defendants in this section), who failed to honor two "properly served executions" to satisfy plaintiffs' "properly perfected lien" on Geyer's contract rights under the Geyer-Smith agreement. Plaintiffs claim defendants' willfully violated New Jersey's execution statute by failing "to properly respond to [p]laintiffs' executions" and converted their property interest. Finally, plaintiffs argued the judge erred in dismissing their professional negligence claims against Ambrosio, whose conduct ignoring the execution constituted a breach of his duty of professional responsibility which he owed to plaintiffs, "who relied upon his proper compliance with the execution statute[.]" As this appeal presents issues of law, our review is de novo. Manalapan Realty, L.P., supra, 140 N.J. at 378 ("A trial court's interpretation of the law and the legal consequences that flow from established facts are not entitled to any special deference.").
We first examine the effect of the execution undertaken in this matter. A judgment creditor may obtain a writ commanding the sheriff execute upon "goods and chattels in his county of the party against whom such execution issues[.]" N.J.S.A. 2A:17-1. Also, N.J.S.A. 2A:17-50 permits execution against "wages, debts, earnings, salary, income from trust funds, or profits of the judgment debtor." Giving these terms their ordinary meaning, DiProspero v. Penn, 183 N.J. 477, 492 (2000), the question is whether the monies due Geyer under the Geyer-Smith agreement fall within any of these categories. We easily eliminate wages, salary and income from trusts as being inapplicable and concentrate on whether Geyer's percentage of collection from the Faiella debt to the Smiths represents "debts, earnings . . . or profits of the judgment debtor."
This court has recently examined this issue and concluded:
Construing the term "debt" in the execution statute, our former Supreme Court held that 'debt' should be accorded not only its ordinary legal meaning as "an obligation for the payment of money founded upon a contract, express or implied, " but more broadly as "that which one person is bound to pay to another under any form of obligation." Passaic Nat'l Bank & Trust Co. v. Eelman, 116 N.J.L. 279, 281 (Sup. Ct. 1936). "Whatever the law enjoins one to pay takes the legal classification of a debt." Id. at 282.
[Cameron v. Ewing, 424 N.J.Super. 396, 404 (App. Div. 2012).]
In Cameron, we examined whether the judgment debtor's right to receive payments under a reverse mortgage were "debts" as defined in the statute. Id. at 405. We concluded they were, noting "'[i]t was patently not the intention to limit the operation of the statute strictly to contractual obligations to pay for the judgment debtor's labor or personal service.'" Id. at 404-05 (quoting Passaic Nat'l Bank & Trust, supra, 116 N.J.L. at 283).
The significant difference between the periodic payment due the debtor in Cameron and the obligation in this matter due Geyer under the Geyer-Smith agreement is the contingent nature of the latter. "'A debt which is uncertain and contingent, in the sense that it may never become payable, is not subject to levy and sale.'" Id. at 406 (quoting Cohen v. Cohen, 126 N.J.L. 605, 610 (Sup. Ct. 1941)). "[D]ebts may be subject to execution 'if liquidated and certain in their existence[.]'" Ibid. (quoting Canger v. Froysland, 283 N.J.Super. 615, 621 (Ch. Div. 1994) (also citing Passaic Nat'l Bank & Trust, supra, 116 N.J.L. at 282 (stating that a debt must be "for a sum certain, or a sum readily reducible to a certainty, " that may be payable in a single amount, or in installments)).
Plaintiffs' execution sought to seize Geyer's percentage of any recovery by the Smiths, an attempt to levy on future payments. When served, the Smiths had not received payment from the bankruptcy trustee making Geyer's payment not yet due under the Geyer-Smith contract; in essence the obligation for payment to Geyer was still speculative, uncertain, contingent and unliquidated.
"To be subject to levy and execution, such rights and credits must not only be liquidated, but must also be certain existing debts." T & C Leasing, Inc. v. Wachovia Bank, N.A., 421 N.J.Super. 221, 228 (App. Div. 2011). Consequently, a garnishment of rights and credits is ineffective as to debts accruing after service of the writ of execution. Id. at 229-30. See also Cohen, supra, 126 N.J.L. at 610 (holding a final lump sum payment on a life insurance policy contingent on the judgment debtor being alive on the distribution date was "too uncertain and speculative . . . to be subject to levy and sale" under the execution laws). Unlike installment obligations, a debt or similar obligation "'which is uncertain and contingent, in the sense that it may never become payable, is not subject to levy and sale.'" Cameron, supra, 424 N.J.Super. at 406 (quoting Cohen, supra, 126 N.J.L. at 610). This concept is well settled as was explained in Terry v. Owatonna Canning Co., 119 N.J.L. 455, 457 (E. & A. 1938):
It is argued by [the creditor] that there was a debt due to [the debtor] from [its customer] and that it was subject to attachment. It is undoubted that a levy under execution or attachment may be made "upon any debt due or accruing from a third person." A debt at common law was "a sum of money due by certain and express agreement." Flanagan v. The Camden Mut. Ins. Co., 25 N.J.L. 506 [(Sup. Ct. 1856)]. It is beyond dispute that, on the day of the attempted execution of the writ of attachment, there was no debt due to [the debtor] from the [customer]. The contract between the parties was conditional. If shipment was made a sum of money would become due thirty days from date of invoice, and, prior to shipment, nothing was due and, under certain conditions, nothing might ever become due. Nor, at the time of the attempted levy, can it be said that a certain sum of money was to come due on the contract. To meet this statutory provision, there must be an existing debt, not presently due necessarily, but to thereafter grow due. In this connection, moneys to grow due connotes moneys fully earned and owning, but not yet demandable by the creditor. But, in either event, whether the attempt be to fasten a levy upon a debt due or to grow due, there must be an existing debt. The plaintiff can levy only on rights and credits which were possessed by the defendant at the time of the levy.
At the time of the sheriff's March 15, 2007 execution upon the Smiths, Geyer was not entitled to any money because under the parties' agreement his rights to payment did not actually come into existence until the money was received from the bankruptcy trustee. Just as in Terry, where "[i]f the goods were never shipped, there would be no debt[, ]" ibid., if there was never any recovery on the Smiths's judgment against Faiella, there would be no debt to Geyer. See also T & C Leasing, supra, 421 N.J.Super. at 230 (holding a levy on a bank account is fixed as of the date of service by the sheriff on the bank, and does not create a continuing lien against a debtor's account so as to require the bank to turn over to the debtor's creditor funds deposited into the debtor's account thereafter). The simple fact is an execution on Geyer's share of monies under the Geyer-Smith agreement required plaintiffs to have re-levied upon the defendants once the trustee released the monies and the debt to Geyer was fixed and ascertainable. See T & C Leasing, supra, 421 N.J.Super. at 229-30.
We need not address in detail plaintiffs' next contention asserting the Smiths and Ambrosio were liable for conversion, bottomed on the proposition the execution was on Geyer's future contract interest. We reject this argument substantially for the reasons set forth in the judge's written opinion. R. 2:11-3(e)(1)(A).
Finally we address plaintiffs' argument that Ambrosio had a duty to them which he breached resulting in damages. As a threshold matter, any legal malpractice claim depends on the existence of a duty. The trial court, citing Banco Popular North America v. Gandi, 184 N.J. 161, 179-86 (2005), concluded plaintiffs failed to demonstrate Ambrosio held a duty which he breached. We agree.
A client establishes liability for professional negligence by showing the existence of an attorney-client relationship, creating the attorney's duty to the client, breach of the duty, and causation of damages. Conklin v. Hannoch Weisman, 145 N.J. 395, 416 (1996). Generally, privity of contract is a prerequisite to maintaining a cause of action against an attorney. Banco Popular No. Am. v. Gandi, 184 N.J. 161, 179 (2005). As our Supreme Court has observed, "the grounds on which any plaintiff may pursue a malpractice claim against an attorney with whom there was no attorney-client relationship are exceedingly narrow." Green v. Morgan Props., N.J., (2013) (slip op. at 48). See also Petrillo v. Bachenberg, 139 N.J. 472, 483-84 (1995).
If the attorney[']s actions are intended to induce a specific non-client's reasonable reliance on his or her representations, then there is a relationship between the attorney and the third party. Contrariwise, if the attorney does absolutely nothing to induce reasonable reliance by a third party, there is no relationship to substitute for the privity requirement. Indeed . . . when courts relax the privity requirement, they typically limit a lawyer[']s duty to situations in which the lawyer intended or should have foreseen that the third party would rely on the lawyer's work. . . . Put differently, the invitation to rely and reliance are the linchpins of attorney liability to third parties.
[Banco Popular, supra, 184 N.J. at 180-81 (internal quotation marks and citations omitted).]
Here, Ambrosio did not act in any way to induce plaintiffs' reliance on his representations and plaintiffs do not identify any act or representation by Ambrosio inducing their reliance on his legal services. Rather, plaintiffs suggest only that he was to comply with the writ of execution, once informed. As we have explained, Ambrosio was not served with the writ. Even if he had been, plaintiffs are incorrect in their assertion the execution when made was effective; it was not. The May 15, 2007 execution triggered no obligation by the Smiths or Ambrosio to turn over monies due Geyer that may come into their possession in the future.
Plaintiffs also maintain Ambrosio had a duty not to further the fraudulent transfer perpetrated by Geyer in creating an assignment to Charles K.'s company. Indeed, plaintiffs offer no evidence to require setting aside the trial judge's express finding that Ambrosio had no reason to believe the assignment to Eazy Brook was fraudulent. Moreover, in their brief, plaintiffs conceded Ambrosio did not "counsel or orchestrate the fraudulent transfer of . . . Geyer's interest in the [Geyer-Smith] [a]greement to Eazy Brook[.]" There was no evidence he drafted the assignment or acted to further Geyer's fraud. We conclude Ambrosio neither had nor breached a duty to plaintiffs.
Following our review of the record and applicable law, we have no basis to set aside the entry of judgment against defendants Charles K. Geyer, Lorrieann Geyer, Acme Auto Body, GFTA, LLC, and Eazy Brook, Inc., or the order dismissing plaintiffs' claims against defendants Ambrosio and the Smiths.