NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY v. DOMENICK SCHINA and ANNA SCHINA

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-6192-03T56192-03T5

NEW JERSEY ECONOMIC DEVELOPMENT

AUTHORITY,

Plaintiff-Respondent,

v.

DOMENICK SCHINA and ANNA SCHINA,

Defendants-Appellants.

________________________________________________________________

 

Submitted September 28, 2005 - Decided

Before Judges Fall and Parker.

On appeal from Superior Court of New Jersey, Law Division, Mercer County, Docket No. L-3949-96.

Domenick M. and Anna Schina, appellants, submitted a pro se brief.

Peter C. Harvey, Attorney General, attorney for respondent (Anthony Cowell, Deputy Attorney General, on the brief).

PER CURIAM

Defendants Domenick M. Schina and Anna Schina appeal from an order entered on April 23, 2004 denying their motion to vacate a Consent Judgment entered on July 29, 2003 in favor of plaintiff New Jersey Economic Development Authority (NJEDA). The Consent Judgment was based on a Stipulation of Settlement filed on March 19, 2001. The motion judge found that defendants had defaulted on the Stipulation of Settlement, that the Stipulation and Consent Judgment were clear and unambiguous, and that defendants had not offered evidence to support their motion to vacate the Consent Judgment.

The facts pertinent to this appeal are as follows. Defendants obtained two loans from the NJEDA on which they defaulted. On March 19, 2001, the parties entered into a Stipulation of Settlement to resolve the two loans. In the Stipulation, defendants acknowledged that the amount due and owing on the loans totaled $1,108,816.40, consisting of $554,823.13 in aggregate principal and $553,993.32 in aggregate interest. At the time the Stipulation was entered into, interest continued to accrue at the rate of $173.82 per day until such time as the balance was paid in full or judgment was entered. In the Stipulation, defendants further acknowledged that they were jointly and severally liable to the NJEDA for the amount due, that "they have absolutely no defense whatsoever to this liability, [and] that any defense or counterclaim previously asserted to this liability have since been waived." Defendants agreed to make payments on the loans in accordance with the schedule set forth in the Stipulation.

The Stipulation provided that defendants would be in default if any of the following events occurred:

a. Defendants fail to make a monthly payment described in Paragraph 4 and said failure continues unremedied for ten (10) days; or

b. Defendants fail to pay the balance of the liability by April 1, 2003, described in Paragraph three (3), and said failure continues unremedied for ten (10) days; or

c. Defendants fail to redeem the ECM stock by April 1, 2004. The NJEDA shall waive the requirement to redeem the ECM stock if ECM has filed for Chapter 7 bankruptcy or has been dissolved without distribution to its stockholders; or

d. An Order for Relief is entered by the Federal Bankruptcy Court against Defendant Domenick Schina; or

e. Defendants fail to maintain the policy of insurance for the period of time that is referenced in Paragraph seven (7).

f. Defendants fail to cure or redeem the taxes on the property located at 401 Arney's Mount Road, Springfield, County of Burlington, New Jersey, ("Mortgaged Premises"), within thirty (30) days of service of an in rem tax foreclosure proceeding regarding any or all of the Mortgaged Premises unless a contesting answer is timely filed by Defendants. If Defendants timely file a contesting answer, a default shall occur upon the earlier of the happening(s) of any or all of the following three events;

(i) A default shall occur if the Defendants do not cure or redeem the taxes on the Mortgaged Premises within two weeks of the service of a dispositive motion by the plaintiff in the in rem tax foreclosure action, including for example, a motion for summary judgment or a motion to dismiss or strike the answer or other similar dispositive motions;

(ii) A default shall occur if the Defendants do not cure or redeem the taxes on the Mortgaged Premises within two weeks of receipt of a trial listing; or

(iii) A default shall occur if the Defendants do not cure or redeem the taxes on the mortgaged premises within 24 hours of the withdrawal or otherwise dismissal of the Defendants' answer.

g. The casualty, loss or taking of all or any substantial part of the Mortgaged Property; or

h. Defendants Domenick M. Schina and/or Anna Schina repudiate in writing or fail to punctually perform any obligations under this Stipulation.

On February 18, 2003, NJEDA notified defendants that they were in default on the Stipulation of Settlement for the following reasons:

1.) Failure to pay and maintain outstanding delinquent real estate taxes referencing 401 Arney's Mount Road, Jobstown, New Jersey.

2.) Failure to obtain the appropriate liability insurance covering the real property at 401 Arney's Mount Road, Jobstown, New Jersey.

The notice further advised defendants that NJEDA

hereby demands repayment of the entire amount owed under the Loans, on or before February 26, 2003. If the Lender does not receive your payment by February 26, 2003, the Lender may exercise all remedies available to it, including but not limited to, a foreclosure against the mortgages securing these loans and suit against all personal guarantors. In addition, the New Jersey Economic Development Authority will exercise its right to enter the Consent Judgment executed on March 9, 2001 and obtain a writ of execution.

Defendants owed $1,230,216.49, including accrued interest and late charges, on the date of the notice. Defendants were unable to make any of the requisite payments and on July 29, 2003 the Consent Judgment was entered.

In December 2003, defendants moved to vacate the Consent Judgment pursuant to R. 4:50-1(c) and (f). The motion was argued on April 23, 2004, and after hearing arguments, the motion judge rendered her decision on the record:

Pursuant to Rule 4:50-1, a motion brought thereunder with briefs, and upon such terms as are just, the court may relieve a party or the party's legal representative, from a final judgment or order for fraud, whether heretofore denominated intrinsic or extrinsic misrepresentation, or other misconduct of an adverse party. Secondly, under (f), any other reason justifying relief from the operation of the judgment or order and, under (f) in order to obtain relief under that subsection, the moving party must show that circumstances are exceptional and that enforcement of the order or judgment at issue would be unjust, oppressive, or inequitable. Quagliano versus Bodner, 115 N.J. Super. 133.

On March 19, 2001, the plaintiffs entered into a stipulation of settlement with defendants. The defendants also executed a consent judgment which permitted the plaintiff, upon the defendants['] default of any of the terms of the stipulation of settlement, to collect the entire debt. The consent judgment also permitted the plaintiff to apply ex parte for a final judgment or writ of execution.

There's no dispute that the defendants defaulted under the terms of the stipulation of settlement. Specifically, a tax foreclosure action had been commenced on the real estate collateral, defendants had file[d] no response thereto. Defendants failed to produce proof of a liability insurance policy covering the real property collateral, defendants failed to produce copies of the Federal Income Tax returns for the years 2001 and 2. The defendants also failed to pay the balloon payment due April 1st, 2003.

The defendants attempted to arrange a post default sale of the real estate collateral, however, that sale was rejected by the plaintiffs inasmuch as it would not satisfy the debt due and owing to the plaintiffs.

This Court finds that the defendants have failed to establish exceptional circumstances. The loans are more than 12 years old, the New Jersey Economic Development Authority has compromised those loans significantly, notwithstanding that the defendants have failed to repay their obligations to the extent that they now argue as a basis for setting aside a judgment, that the plaintiffs acted in bad faith, that the plaintiffs were guilty of misconduct, misrepresentation. That is based solely on the unsubstantiated certifications of the defendants. There is no other competent evidence in the form of affidavits or certifications presented by the defendants.

The exceptional circumstances requirements are just not demonstrated. The consent judgment and the stipulation of settlement are clear and unambiguous and accordingly, this Court finds that there are no exceptional circumstances on this record which support the setting aside of the judgment and for these reasons the motion to set aside the judgment is denied.

In this appeal, defendants argue that the motion judge erred in finding that they were in default of the Stipulation of Settlement. Specifically, defendants maintain that (1) they filed a timely answer to the tax foreclosure action, a copy of which was sent to the NJEDA on February 4, 2003; (2) they provided proof of liability insurance covering the property, a copy of which was sent to the NJEDA on February 4, 2003; (3) their Federal Income Tax Returns were provided to the NJEDA on February 10, 2003; and (4) they did not pay the balloon payment due April 1, 2003 because they "were led to believe that the NJEDA would extend their request for an extension on the Stipulation of Settlement." Defendants' proofs were presented to the trial court in a certification submitted by their counsel, James H. Landgraf, in support of their motion to vacate the Consent Judgment.

We have carefully reviewed the record in this matter and we are satisfied that defendants presented material issues of fact that could not be resolved on motion. D'Amato v. D'Amato, 305 N.J. Super. 109, 114 (App. Div. 1997) (citing Brill v. Guardian Life Ins. Co., 142 N.J. 520, 523 (1995)). Genuine factual disputes must be resolved by a trier of fact. Prudential Prop. & Cas. Ins. Co. v. Boylan, 307 N.J. Super. 162, 167 (App. Div.), certif. denied, 154 N.J. 608 (1998).

 
Reversed and remanded.

(continued)

(continued)

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A-6192-03T5

December 1, 2005