STATE OF NEW JERSEY ex rel. LEONARD M. CAMPAGNA, Plaintiff-Appellant,
POST INTEGRATIONS, INC., EBOCOM, INC., and MARY GERDTS, Defendants-Respondents.
March 28, 2017
appeal from the Superior Court of New Jersey, Law Division,
Essex County, Docket No. L-6341-14.
G. Zambrano (Miller, Egan, Molter & Nelson, LLP) of the
Texas bar, admitted pro hac vice, argued the cause for
appellant Leonard M. Campagna (Clayton Giles (Law Offices of
Joshua Parkhurst) and Mr. Zambrano, attorneys; Mr. Giles and
Mr. Zambrano, of counsel and on the briefs).
S. Pereira, Deputy Attorney General, argued the cause for
respondent State of New Jersey (Christopher S. Porrino,
Attorney General, attorney; Andrea M. Silkowitz, Assistant
Attorney General, of counsel; Joan Karn and Marlene G. Brown,
Deputy Attorneys General, on the brief).
L. Sinatra, Jr. (Hodgson Russ LLP) of the New York bar,
admitted pro hac vice, argued the cause for respondents Post
Integrations, Inc., Ebocom, Inc., and Mary Gerdts (Jacquelyn
R. Trussell (Hodgson Russ LLP) and Mr. Sinatra, attorneys;
Daniel C. Oliverio, Mr. Sinatra, and Ms. Trussell, on the
Judges Reisner, Rothstadt and Sumners.
qui tarn action, we are asked to determine whether a claim
against a corporation arising from its alleged failure to pay
certain statutory obligations owed to the State relates to
taxes that are expressly excluded from the purview of the New
Jersey False Claims Act (NJFCA or the Act), N.J.S.A.
2A:32C-1 to -18. For the reasons stated herein, we hold that
such obligations are taxes and, therefore, the Law Division
properly dismissed plaintiff's complaint.
Leonard M. Campagna, the relator, appeals from the Law
Division's November 6, 2015 order allowing the Attorney
General to appear in support of defendants' motion to
dismiss and from the order of the same date dismissing his
complaint. The complaint alleged that defendants, Post
Integrations, Inc., Ebocom, Inc., and Mary Gerdts, were
out-of-state credit card processors who served New Jersey
based hotels, and that they violated the NJFCA by making
false statements in order to avoid paying New Jersey
"assessments, fees, license costs and other
charges." In response to plaintiff's complaint, the
Attorney General filed a notice of his decision not to
intervene in the action and defendants filed a motion to
dismiss the complaint for failure to state a cause of action
upon which relief could be granted, R. 4:6-2(e), and
for failing to plead a fraud claim with particularity,
R. 4:5-8(a). The State sought leave to file a
statement of interest and to participate in oral argument in
further support of defendants' motion. Judge Michelle
Hollar-Gregory allowed the State to participate, over
plaintiff's objection, even though Attorney General had
declined to intervene in the action.
considering the parties' and the State's arguments,
Judge Hollar-Gregory dismissed the complaint, concluding that
plaintiff's allegations related to false statements that
were made to avoid paying taxes and similar liabilities and
that the NJFCA, N.J.S.A. 2A:32C-2 (the tax bar),
expressly excluded "claims, records, or statements made
in connection with state tax laws." The judge rejected
plaintiff's contention that his claims were excluded from
the tax bar because N.J.S.A. 2A:32C-3(g), which sets
forth conduct prohibited under the NJFCA, does not include
the word "claim." Relying on DiProspero v.
Penn, 183 N.J. 477 (2005), the judge observed that
reading section (g) in isolation as plaintiff argued would
"not give sense to the legislation as a whole."
Judge Hollar-Gregory also rejected plaintiff's argument
that even if the tax bar applied to "claims" such
as those he asserted, the other fees he alleged defendants
avoided were not taxes. The judge disagreed finding that the
fees were alternative minimum assessments (AMA) required as a
tax on corporate income by the "Corporation Business Tax
Act [(CBT), N.J.S.A. 54:10A-1 to -40]."
appeal, plaintiff argues that the judge erred by applying the
NJFCA's tax bar to his claim and by concluding that the
AMA "is a tax under New Jersey's tax laws." He
also contends that other unpaid "non-tax fees"
alleged in his complaint were not subject to the tax bar. In
addition, plaintiff argues that the judge should not have
allowed the State to participate in the argument of
review of the judge's order entered under Rule
4:6-2(e) is de novo. See Major v. Maquire, 2 24 N.J.
1, 2 6 (2016). Having reviewed the record in light of that
standard, we affirm the dismissal of the complaint
substantially for the reasons expressed by Judge
Hollar-Gregory in her oral decision. We add only the
primary argument about the applicability of the tax bar
relies upon two separate provisions of the NJFCA. As
plaintiff acknowledges, the NJFCA's definition of a
prohibited "claim" expressly excludes matters
addressed by state tax laws. It states:
"Claim" means a request or demand, under a contract
or otherwise, for money, property, or services that is made
to any employee, officer, or agent of the State, or to any
contractor, grantee, or other recipient if the State provides
any portion of the money, property, or services requested or
demanded, or if the State will reimburse the contractor,
grantee, or other recipient for any portion of the money,
property, or services requested or ...