PRA III, LLC v. CAPITAL ONE, N.A.

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0453-08T30453-08T3

PRA III, LLC,

Plaintiff-Respondent,

v.

CAPITAL ONE, N.A., Successor

by Merger to NORTH FORK BANK,

Defendant-Appellant.

________________________________________

 

Argued June 3, 2009 - Decided

Before Judges Lyons and Kestin.

On appeal from Superior Court of New Jersey, Law Division, Hudson County, Docket No. L-1424-07.

Thomas Kamvosoulis argued the cause for appellant (Brach Eichler, L.L.C., attorneys; Charles X. Gormally and Mr. Kamvosoulis, of counsel and on the brief).

John A. Craner argued the cause for respondent (Craner, Satkin, Scheer, Schwartz & Arnold, P.C., attorneys; Mr. Craner, of counsel and on the brief).

PER CURIAM

Defendant, Capital One, N.A., successor by merger to North Fork Bank, appeals from three orders: an April 25, 2008, order denying its cross-motion for summary judgment; an August 15, 2008, order denying its motion to vacate two turnover orders; and a September 3, 2008, order entering summary judgment in favor of plaintiff, PRA III, LLC. The judgment entered in this case arises from plaintiff's efforts to enforce two separate judgments that plaintiff had obtained against Dominick Badolato (Badolato) in two earlier Special Civil suits. The relevant factual and procedural history concerning these two judgments against Badolato and this case are as follows.

Judgment No. DJ-2278-04

On September 22, 2003, plaintiff obtained a final judgment against Badolato in Superior Court, Hudson County, Special Civil Part, in the amount of $14,754.06, plus costs. On January 5, 2004, the judgment was docketed as DJ-2278-04 in the amount of $15,206.37.

On June 30, 2004, a writ of general execution was issued to the Sheriff of Hudson County with respect to this judgment. The caption of the writ showed Badolato as the only defendant. According to this writ, judgment had been docketed in plaintiff's favor in the amount of $15,206.37, plus interest and costs. The sheriff was directed to satisfy the judgment out of personal property of the judgment debtor, Badolato, within Hudson County, or out of real property if sufficient personal property could not be found. On August 13, 2004, the sheriff, in an attempt to levy on the writ, served papers on a representative at defendant's location in Jersey City, but the affidavit of service was returned as "no account found."

On May 27, 2005, plaintiff's attorney wrote to the sheriff, asking him to relevy the writ on funds on deposit at defendant "in the name of Global Holding Commodities, Inc. under all account numbers." According to counsel: "That 'entity' does not exist. It was a corporation, but its charter was forfeited July 28, 2004." Plaintiff's counsel claimed, "[t]he bank account at [defendant] are [sic] actually those of [Badolato]. It is [Badolato] whose signature is on the check attached." Counsel attached a check drawn on Global Holding Commodities, Inc.'s (Global) account at defendant dated November 18, 2004, and apparently signed by Badolato.

On June 27, 2005, plaintiff's attorney wrote to defendant, advising it that the sheriff had not yet received a report "of the effect of the levy." In this letter, counsel advised defendant that "Global is not a corporate entity and is a pseudonym used by [Badolato]." Defendant returned the letter to plaintiff's counsel, with the following handwritten note on the bottom: "We are unable to honor the levy served upon us for this matter. If you claim there is an interest of the debtor [Badolato] in this acct [Global's account], we will require a ct order."

On July 18, 2005, plaintiff's attorney wrote to defendant again to put defendant on notice that Badolato was "operating the entity [Global] with whom [defendant] maintain[ed] a banking relationship under the name Global Holding Commodities." The attorney stated that Global's corporate charter had been forfeited in July 2004, and that Badolato was "the party responsible for controlling [Global's account]" and it was "clear this account exists." He noted defendant had earlier reported "no account found" in response to a levy on Badolato's accounts. The attorney asserted defendant would be held "responsible for any funds in the account [Global's] not appropriately debited as a result of the Sheriff's levy."

On March 20, 2006, plaintiff's attorney wrote to defendant's legal processing department in Mattituck, New York, advising defendant that suit would be instituted if $16,097.92 was not received by plaintiff. Defendant's office responded with a handwritten note dated March 22, 2006, advising plaintiff that "there is no account in the name of Dominick Badolato."

On March 27, 2006, plaintiff's attorney again wrote to defendant's Mattituck office, advising it that the account levied upon was in the name of Global. He stated Global "had no legal status," and that this account was used by Badolato.

On April 19, 2006, plaintiff moved for a turnover order in the Special Civil Part under this judgment number. Notice of the motion was mailed to defendant, Badolato, and Global. Notice to Global was not mailed to the address of the last designated registered agent of Global or its attorney, but to Badolato's home. According to the certification accompanying this motion, $16,097.92 remained owing on the writ.

Counsel's certification in support of the motion is exceedingly sparse. It identifies the date the judgment was docketed and the amount. It advises that there is a report of the recent levy on the account of "defendant[s]." The report is simply a Hudson County Sheriff Officer's Process Service Order, which indicates that the levy was served on defendant. It does not show the return of service in which the bank advised it had no accounts in the name of Badolato. The certification goes on to state merely that the amount of the judgment is currently $16,097.92. The certification never mentions that plaintiff is asserting that the monies in the Global account belongs to Badolato and, hence, should be applied to satisfy Badolato's debt to plaintiff. Nor does the certification at any time make reference to the fact that defendant objected to the assertion by plaintiff's counsel that Global's account belongs outright to Badolato and should be used to satisfy the judgment against Badolato. The certification makes no reference to any accounts whatsoever, other than a vague reference to "the account of the defendant[s]."

Also accompanying the motion was proof of "Notice to Debtor," pursuant to Rule 4:59-1(g), the date of which is not clear. On this notice, only Badolato was named as a defendant in the caption, but Global's name and address was typed below the caption underneath Badolato's name. The notice advised in pertinent part as follows:

Your bank account has been levied upon . . . to satisfy in whole or in part the judgment against you in the above matter. . . .

The bank has already been notified to place a hold on your account. However, the funds will not be taken from your account until the court so orders.

The certification attached to this notice indicates that it was mailed to "the defendant[s]." The only defendant listed, however, is Badolato.

On May 12, 2006, the court entered an order stating merely "[o]rdered, that North Fork Bank, turn over to Sheriff Joseph T. Cassidy, the sum of $16,097.92." The order makes no reference to any account held by defendant and makes no reference whatsoever to Global. The caption in the order showed only Badolato as a defendant. The order noted that the motion had been unopposed.

Judgment No. DJ-222032-04

On July 12, 2004, plaintiff obtained another final judgment against Badolato in Superior Court, Hudson County, Special Civil Part, in the apparent amount of $17,474.30, plus costs. On August 11 or August 19, 2004, the judgment was docketed as DJ-222032-04 in the amount of $15,821.68.

On October 27, 2004, a writ of general execution was issued to the Hudson County Sheriff with respect to this judgment. This writ showed Badolato as the only defendant. According to this writ, judgment had been docketed in plaintiff's favor in the amount of $15,821.68, plus costs, on August 19, 2004. The sheriff was directed to satisfy the judgment out of personal property of the judgment debtor within Hudson County, or out of real property if sufficient personal property could not be found. On June 28, 2005, the sheriff, in an attempt to levy on the writ, served papers on a representative at defendant's location in Jersey City, but the affidavit of service was returned as "no record of account."

The record also contains a cover letter from the Hudson County Sheriff to defendant dated July 6, 2005, to which a writ of execution was attached. The caption on the letter lists plaintiff as plaintiff and Badolato as defendant. The letter states the writ of execution is to be attached to "Defendant's Bank Account at your institution." The account number shown, though, was Global's. The letter also lists, below the account number, a social security number which was Badolato's.

A handwritten note on the bottom of this notice, from defendant, North Fork, indicated that the following notice had been sent to plaintiff's attorney: "We are unable to honor the levy served upon us for this matter. If a claim is being made that the debtor [Badolato] has an interest in the corp acct [Global], we will require a court order."

On September 20, 2005, plaintiff moved for a turnover order in the Special Civil Part under this judgment number. Notice of the motion was mailed to defendant, Badolato, and Global. Notice to Global was not mailed to the address of the last designated registered agent of Global or its attorney, but to Badolato's home. Plaintiff's attorney certified that $16,097.92 remained owing on the writ. The attorney's certification submitted in support of the motion again made no reference to any accounts in the name of Global, which plaintiff's counsel asserted to be the property of Badolato. It made no mention of the bank's position regarding that issue and did not attach a copy of the initial return on the levy which showed there were "no accounts."

On October 21, 2005, the court entered an order that stated, "[o]rdered, that North Fork Bank, turn over to Sheriff Joseph T. Cassidy, the sum of $16,097.92." No accounts were referenced in the order nor was Global. The caption of this order showed only Badolato as a defendant. The order noted that the motion had been unopposed.

The Instant Litigation

On March 19, 2007, plaintiff filed suit against defendant in Superior Court, Law Division, Hudson County, alleging that defendant had failed to comply with both turnover orders. Defendant answered the complaint, contending that it never held any bank accounts in Badolato's name, and that it had never received any order to turn over funds held in Global's name.

On March 12, 2008, plaintiff moved for summary judgment. According to the attorney certification accompanying this motion, subsequent to the return of the writs on Badolato's bank accounts, plaintiff had learned that Badolato was employed by Global, whose address was the same as Badolato's. Plaintiff obtained a check signed by Badolato drawn on Global's bank account with defendant, and also sought, unsuccessfully, to garnish his wages from Global. Plaintiff further learned from the New Jersey Secretary of State that Global's corporate charter had been forfeited on July 28, 2004. "Therefore, this meant that as a matter of law that the Global account belonged to [Badolato]," claimed plaintiff's counsel.

Plaintiff's attorney maintained that his letters of June 27, 2005, and July 18, 2005, to defendant made it clear that the sheriff was levying on both Global's and Badolato's accounts, "the former being subject to levy because Global was [Badolato]." Moreover, according to counsel, when defendant did not object to the turnover motions, it was presumed to hold the Global monies for Badolato.

The corporate status report issued by the New Jersey Secretary of State on January 10, 2005, indicated that Global's original corporate charter had been filed on October 16, 1996, and was forfeited on July 28, 2004, for failure to file annual reports. No receiver had been reported as of the date of the status report, and Global's last registered agent was listed as Hasan Syed, whose address was different from Global's and Badolato's.

On April 15, 2008, defendant cross-moved for summary judgment. On April 25, 2008, the motion judge heard argument on the motions. Plaintiff argued that defendant was liable for the amounts due on the judgments because it had not opposed the motions for the turnover orders. Its failure to object to these motions was equivalent to an admission that it held funds in the Global account that were owed to Badalato, claimed plaintiff.

Defendant responded that the only judgment debtor on the underlying judgments was Badolato, and that only money belonging to a judgment debtor could be levied upon in execution. Defendant argued that the forfeiture of Global's corporate charter was irrelevant, since under New Jersey corporate law, the assets of a dissolved corporation remain with the corporation. Counsel stated that although individuals who maintain an interest in a corporation may be liable for the corporation's debts, no law allowed a corporation to be liable for an individual shareholder's debts. It concluded that if plaintiff was not entitled to Global's money, then defendant could not be required to turn it over.

When questioned by the motion court regarding whose account it had levied upon, plaintiff's attorney responded that plaintiff had levied upon monies held by defendant that "belonged" to Badolato. That is, it did not levy upon a specific account holder or account number. Rather, it levied on Badolato's assets that were held by defendant and Global's account was Badolato's asset. It acknowledged that the turnover orders did not specify any account; they merely specified amounts of money that had to be turned over and did not refer to a source of such funds.

According to plaintiff, if defendant wanted to deny that it held any of Badolato's assets, then it should have objected to the turnover motions. By not objecting, plaintiff asserted, it was presumed that defendant owed the Global account money to Badolato and that plaintiff was entitled to collect it. Plaintiff claims this was not a rebuttable presumption, and the turnover orders had the effect of final judgments and were res judicata with respect to this litigation.

Defendant responded that, because the turnover motions did not refer to Global, defendant assumed that the only money it would be obligated to turn over was that belonging to the defendant named in the docketed judgments, Badolato. Because defendant did not have any accounts in Badolato's name, there was no point in spending money to oppose the motions. Defendant also noted that it could expose itself to liability if it were to turn over money that belonged to a party not named in the underlying lawsuits, absent a clear court order to do so.

The motion court denied plaintiff's motion for summary judgment, noting that it was "illogical" to contend that one could levy on an account in the name of someone other than the judgment debtor. The court, which had signed one of the turnover orders in question, also noted that it would not have signed the order had it realized that plaintiff was seeking to levy on money belonging to someone other than Badolato. Plaintiff's remedy should have been to move in the underlying litigation to pierce the corporate veil, said the court.

Moreover, the motion court found that, even though defendant did not formally oppose the turnover orders, it had put plaintiff on notice that it was objecting to turning over any funds belonging to someone other than the judgment debtor. At the very least, it concluded there were genuine issues of material fact as to whom Global's money belonged, and for that reason, the court denied both parties' motions for summary judgment.

When plaintiff asked what was left to be tried, defendant announced that it would be moving to vacate the turnover orders. The court noted it could vacate those orders sua sponte because they had been based on misinformation, but it did not do so.

On April 25, 2008, the motion court entered orders denying both parties' motions for summary judgment. Plaintiff's motion for leave to appeal was denied.

On May 30, 2008, defendant moved to vacate the turnover orders entered on October 21, 2005 (Docket No. DJ-222032-04) and on May 12, 2006 (Docket No. DJ-2278-04). In opposition, plaintiff filed a certification and supporting documents that purported to show that Badolato had been writing checks against Global's account at defendant to cover his personal debts. These checks were dated August through November 2004 and were made payable to Bank of New York, with whom Badolato had a credit card account.

In addition, plaintiff produced copies of the monthly statements for Global's checking account with defendant, from January through November 2005, which showed checks payable to such establishments as Pathmark, Staples, Home Depot, Walgreens, Rite Aid, TGI Friday's, Exxon Mobil, and the Sands Hotel. The statements also showed substantial withdrawals in May 2005 (over $81,000), and a substantial deposit in July 2005 ($499,0000).

Plaintiff also opposed defendant's motion on the ground that defendant did not have standing to object to plaintiff's right to levy on Global's account because that account was a "fraud" on Badolato's creditors, and on the additional ground that defendant had waited more than two years to move to vacate the orders, which was an unreasonable amount of time pursuant to Rule 4:50-2.

The same motion court that had decided the summary judgment motions heard argument on these motions on July 18, 2008. Plaintiff relied on an unpublished Appellate Division opinion, which will be discussed below, to argue that there was no requirement that the sheriff identify the precise account to be levied upon, that a bank's failure to respond to a turnover motion suggests that the bank has no objection to the relief sought, and that if a plaintiff shows that service of the motion was properly made, a turnover order should be granted as a matter of course.

Plaintiff also argued that, if defendant had objected to the turnover motion, the court could have conducted a hearing to determine whether the money in Global's account was Badolato's property. The burden was on the bank to object, it argued. Moreover, according to plaintiff, it had supplied sufficient proofs to show the court that the Global account was being used by Badolato as his own personal account.

The motion court was persuaded by plaintiff's arguments. It found that if both Badolato and Global were properly served with the turnover motions and did not object to them, then plaintiff had complied with N.J.S.A. 2A:17-63. Moreover, contrary to its earlier ruling, the court found that defendant's written notations in reply to plaintiff's correspondence did not constitute formal opposition to plaintiff's turnover motions. The motion court, nevertheless, reserved on its decision so that plaintiff could verify that Badolato and Global had in fact been properly served with the turnover motions.

Thereafter, plaintiff sent the court written proof that both Badolato and Global had been sent copies of the turnover motions by certified mail at Badolato's home address. However, Global's mailings had either been refused or returned.

In addition, plaintiff's counsel informed the court that, back in April 2006, his law firm had worked out a consent order with Badolato's attorney, whereby Badolato agreed to turn over monies in Global's account with defendant to cover both judgments. Although that settlement had fallen through and the consent order was never signed, plaintiff believed that the settlement negotiations supported plaintiff's position that both Badolato and Global were aware that Badolato was using the Global account for his personal obligations and that plaintiff would be seeking Global's monies held on deposit with defendant.

Based on this additional information, the motion court agreed "wholeheartedly" with plaintiff's position. It held that its earlier decision had been based on its belief that there had been a lack of notice to Global. It was now satisfied that Global had in fact been notified. Also, the attempts to settle the judgments with Badolato's attorney indicated that permission had been granted to use Global's funds to satisfy the judgment, even though that settlement ultimately fell through.

The motion court further noted that defendant had not formally objected to the turnover motions, and that its only informal objection was that it needed a court order to turn over any funds belonging to Global. In response to that objection, plaintiff had obtained two turnover orders. Hence, the court denied defendant's motion to vacate the turnover orders and, sua sponte, reversed the denial of summary judgment in favor of plaintiff.

On August 15, 2008, the motion court entered an order denying defendant's motion to vacate the turnover orders or to dismiss the complaint. On September 3, 2008, the court entered an order vacating the order of April 25, 2008, that had denied summary judgment to plaintiff, and entering judgment in favor of plaintiff and against defendant in the amount of $32,195.85, plus prejudgment interest, for a total judgment of $36,727.23, plus costs. On September 25, 2008, defendant filed its notice of appeal.

On appeal, defendant raises the following arguments for our consideration.

POINT I

THE TRIAL COURT'S DECISION TO GRANT SUA SPONTE RECONSIDERATION OF THE APRIL 25, 2008 ORDER DENYING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT WAS INCORRECT AND MUST BE REVERSED.

A. New Jersey statutory law prohibits plaintiff from levying upon monies belonging to Global. As a result, plaintiff was only permitted to levy upon monies belonging to Badolato, the defendant and judgment debtor in the underlying lawsuits.

B. Plaintiff failed to take the appropriate steps to pierce the corporate veil in the underlying lawsuits and, thus, Global cannot be held liable for the underlying judgments.

C. North Fork's failure to respond to the motions to turnover did not entitle plaintiff to the monies belonging to Global.

1. The Wildwood and GNOC cases are distinguishable on their facts and do not control the outcome of this action.

2. Despite plaintiff's claims to the contrary, and as the trial court initially held, North Fork repeatedly denied the debt.

POINT II

THE TRIAL COURT DID NOT MEET THE REQUIRED ELEMENTS FOR RECONSIDERATION UNDER NEW JERSEY COURT RULE 4:49-2.

POINT III

THE TRIAL COURT ERRONEOUSLY DENIED NORTH FORK'S CROSS-MOTION FOR SUMMARY JUDGMENT.

POINT IV

THE TRIAL COURT ERRED IN DENYING NORTH FORK'S MOTION TO VACATE THE TURNOVER ORDERS.

We note at the outset that we engage in de novo review of a trial court's grant of summary judgment, using the same standard as the trial court is to employ. Dugan Constr. v. N.J. Tpk. Auth., 398 N.J. Super. 229, 238 (App. Div.), certif. denied,

196 N.J. 346 (2008). Accordingly, we must determine whether there is a genuine issue as to any material fact challenged and, if not, whether the moving party is entitled to judgment or order as a matter of law. R. 4:46-2(c). None of the parties argue that there are any genuine issues of material fact, and based on our having reviewed the record, we agree. The question becomes, therefore, whether plaintiff was entitled to summary judgment as a matter of law.

We have carefully reviewed the syllogistic arguments of plaintiff in this matter. While we generally agree with its logical analysis, we find that the facts underlying some of its premises in a number of key areas are either inaccurate or omitted, thereby undermining its conclusions. Consequently, we find the ultimate conclusion reached is seriously flawed.

No one denies that plaintiff has properly obtained two judgments against Badolato and docketed them. Nor does anyone disagree that plaintiff, therefore, had the right to begin collection efforts, including a levy and execution on Badolato's assets. Counsel, though, went on to conclude and then assert that Global's account was an asset of Badolato.

The difficulty lies, however, in the fact that there was no finding by any court at any time prior to the issuance of the turnover orders that the Global account, a corporate account, was an asset of Badolato. Plaintiff's counsel's ipse dixit is one of the "facts" supporting plaintiff's argument that it was entitled to a turnover order and judgment in this case.

While it is certainly true that Global's corporate charter was dissolved for failure to file its annual report, N.J.S.A. 14A:12-9(1) provides in pertinent part that "a dissolved corporation shall continue its corporate existence which shall carry on no business except for the purpose of winding up its affairs. . . ." The dissolution of a corporation, pursuant to N.J.S.A. 14A:12-1(1)(g), does not automatically result in a distribution of the assets of the corporation to its shareholders without the appropriate legal steps being taken. While N.J.S.A. 12A:12-16 provides that "[a]ny assets remaining after payment of or provision for claims against the corporation shall be distributed among the shareholders according to their respective rights and interests," the New Jersey Business Corporation Act sets forth a method for notifying potential creditors and winding up a corporation. See N.J.S.A. 14A:12-1 to -19. None of the appropriate steps to effectuate a distribution of a dissolved corporation's assets to its shareholders were shown to have been complied with in this case. The mere fact that a corporation appears to have paid what is argued to be the expenses of an individual or that an individual shareholder was a signatory of a corporate account does not legally vest that individual with title to the corporate funds.

Undaunted, however, by these factual and legal insufficiencies, plaintiff's counsel, in response to defendant's statement that it had no accounts in the name of Badolato and that it could not turn over corporate funds in the name of a corporation that is not a named defendant without a court order, sought to obtain turnover orders. The turnover order applications were on their face consistent with N.J.S.A. 2A:17-63. That statute reads as follows:

After a levy upon a debt due or accruing to the judgment debtor from a third person, herein called the garnishee, the court may upon notice to the garnishee and the judgment debtor, and if the garnishee admits the debt, direct the debt, to an amount not exceeding the sum sufficient to satisfy the execution, to be paid to the officer holding the execution or to the receiver appointed by the court, either in 1 payment or in installments as the court may deem just.

With respect to bank accounts, we note that a bank account is a "debt due" to an account holder from the bank. Therefore, in reading the statute, the bank is the garnishee. The question became whether the bank's debt to Global, represented by Global's account with the bank, was a "debt due" to Badolato, the judgment debtor, under N.J.S.A. 2A:17-63. According to plaintiff, Badolato actually owned the account. According to the bank, it wanted a judicial resolution of the issue before it would turn over corporate assets to satisfy a personal judgment.

A turnover order, as called for in N.J.S.A. 2A:17 63, is granted if there has been a levy on a "debt due" a "judgment debtor" and the "garnishee" admits the "debt." The parties do not dispute that there was a levy on the account of Global. But, they disagree whether Global is the "judgment debtor," and whether the garnishee admitted to the debt or is deemed to have done so by not contesting the motions for the turnover orders.

We note, first, that the notices of motion for the turnover orders were not served on the last registered agent of the corporation or its counsel, but rather were served at Badolato's home address and were not accepted.

Most critically, we note that the moving papers submitted to the courts and the bank seeking the turnover orders in no way informed the courts and the bank of the complete factual and legal issues surrounding the applications. The applications never mention that plaintiff sought to have funds in a corporate account turned over to satisfy an individual judgment debtor's debt or the factual basis entitling it to such relief. It never mentioned that the bank objected to same. The forms of order, which plaintiff submitted, and which the court signed, are vague and unclear. The orders do not direct the bank from which, or whose, account or accounts to withdraw funds. The applications and the orders do not mention Global at all.

Rule 1:6-2(a) requires that "[e]very motion shall state

. . . the grounds upon which it is made and the nature of the relief sought. . . ." The turnover motions submitted inadequately stated the nature of the relief sought and insufficiently set forth the grounds upon which they were made. "Grounds" are defined as "the logical basis of a conclusion, action, etc.; valid reason, motive or cause." Webster's New World College Dictionary 627 (4th ed. 2001). The submissions to the court here did not outline the logical bases for the requested orders to turn over the Global account, let alone any valid reasons to do so. All the applications said were that plaintiff has a judgment and wants a sum certain turned over from the bank. This anemic filing hardly complies with the requirements of Rule 1:6-2(a).

In interpreting a predecessor statute to N.J.S.A. 2A:17-63, our Court of Errors and Appeals stated when there is a levy on rights and credits under the statute, and "a rule is issued against the garnishee and the judgment debtor, an order directing the garnishee to pay the money over may be made only when the garnishee admits the debt is due the judgment debtor." Beninati v. Hinchliffe, 126 N.J.L. 587, 588-89 (E. & A. 1941). That is, the bank must admit that it owes money to, or is holding money belonging to, the judgment debtor. "[T]he admitting of the debt [is] a jurisdictional sina qua non." Id. at 589 (citations omitted).

The Beninati Court noted that "where the garnishee does not expressly admit the debt but fails to deny it or stands without answer upon that question at the hearing, the failure to deny it is tantamount to an admission of its existence within the meaning of the statute." Ibid. However, the Court refused to apply that rule to the situation before it, where the proofs showed that the bank account in question was in the name of a company, that the account had been opened by one individual, that a second individual was later authorized to sign checks on the account, and that the underlying judgment was obtained against that second person both individually and trading as the company. Id. at 587-89. Under those circumstances, the Court found that the bank never admitted that there was a debt due from the bank to that second person either individually or trading as the company. Id. at 588. Hence, there was "neither an admission of the debt nor a standing without answer upon the question." Id. at 589.

In Winchell v. Clayton, 133 N.J.L. 168, 168-69 (Sup. Ct. 1945), the plaintiff recovered a judgment against a defendant individually, but sought satisfaction of the judgment from funds on deposit with a bank held in her name as administratrix of a decedent's estate. When levy was made on that account pursuant to an execution issued upon the judgment, the individual judgment debtor and the garnishee bank were ordered to show cause why the moneys from the account should not be paid over to the sheriff. Id. at 169. The court held that the burden rested upon the plaintiff "to prove that the moneys thus deposited are the individual property of the judgment debtor, and therefore applicable to the satisfaction of the judgment." Ibid. Because the debt from the bank was due to the administratrix in her administrative capacity rather than her individual capacity, the bank did not admit the debt and the plaintiff could not rely on the summary process of the predecessor statute. Id. at 171.

In Piechowski v. Matarese, 54 N.J. Super. 549, 550 (Law Div. 1959), the plaintiff recovered a judgment against a corporation, but his claims against three individual defendants who were officers of the corporation were dismissed. Relying on the authority of N.J.S.A. 2A:17-63, the plaintiff maintained that he had the right to collect the amount of his judgment from the officers because they had been responsible for making loans out of corporate funds. Id. at 551-52. The court held that this statute "must be interpreted carefully lest a garnishee would have property taken from him by other than due process of law." Id. at 552. "[B]efore the court may direct the satisfaction of a debt out of the fund or assets of the garnishee, the garnishee must admit the debt." Ibid.

In the instant case, the trial court relied instead on Wildwood Trust Co. v. DeCorrevant, 20 N.J. Super. 559 (Ch. Div. 1952), a trial court decision. In Wildwood, the defendant was one of four individuals who obtained a judgment against a company that had an account with the plaintiff bank. Id. at 561-62. Levy was thereafter made under the defendant's judgment by the county sheriff to the plaintiff; when the plaintiff did not pay the amount of the levy, the county court directed the plaintiff to show cause why said amount should not be turned over. Id. at 562. On the return day of the order to show cause, no one appeared, and the court signed an order directing the plaintiff as garnishee to pay that amount over to the sheriff. Ibid.

The plaintiff later obtained an order to show cause directing the sheriff to show cause why the monies turned over should not be repaid to the plaintiff. Ibid. The plaintiff alleged that, by reason of the payment, there were insufficient moneys available to pay the other three judgments obtained against the same company, and that the defendant had been unjustly enriched. Ibid.

The court found that the plaintiff had full and complete knowledge of the nature of the claim of each of the judgment creditors in the underlying actions and the amount of money allegedly due each of them from the account that the company had with the plaintiff. Id. at 563. Although the court recognized that a levy of funds in the hands of a garnishee will not be made absolute unless the garnishee admits the debt, it also held that "[i]f the garnishee, upon the return day [of the order to show cause] fails to appear and deny that he owes a debt to the defendant which has been levied upon, such failure is tantamount to an admission of the existence of the debt." Ibid.

The Wildwood court further found that the plaintiff was "under no delusion or mistake as to the facts, nor does it allege any mistake as to its legal rights." Id. at 564.

It had available one of two courses in connection with the payment now complained of. It could either (1) have appeared upon the return day of the order to show cause and denied that it had in its hands the monies or credits alleged by the defendant as being available for the satisfaction of his judgment, or (2) have refused to appear upon the return day of the order to show cause and, by its silence, admit that it had in its hands as garnishee monies available for that purpose. It not only saw fit to pursue the second alternative but actually thereafter paid the same, before it had recourse to the courts.

[Ibid.]

Hence, the court concluded that the plaintiff's payment was voluntary and not recoverable. Ibid.

The Wildwood case is clearly distinguishable from the instant case. Most importantly in Wildwood, the court made it abundantly clear that the issue concerning various potential claims against the bank with respect to the bank account was well known to the bank. Therefore, when the bank in Wildwood failed to appear with respect to the turnover motion, the court found it waived its rights. In this case, the notices of motion for turnover and the supporting papers provided the bank with no facts or legal arguments upon which it could make an intelligent waiver or admission. The motions to turn over funds, together with the supporting papers, did not provide sufficient information for us to find that defendant could be deemed to have admitted and conceded the truth that Global's account was, in fact and in law, an asset of Badolato.

An admission is a concession or grant of the truth of something. Webster's New World College Dictionary 18 (4th ed. 2001). It is difficult to perceive how one could be deemed to have admitted to an assertion when the assertion was never made in the moving papers. Consequently, while we do not disagree with the holding in Wildwood, we find it to be distinguishable given the facts in this case. If the applications for the turnover orders had contained a full and complete disclosure of the legal issues presented and the facts asserted by plaintiff in support of its application, we would agree that defendant, by not opposing the motion, would have been deemed to admit the debt, but that did not occur here.

The court below also relied on an unpublished Appellate Division opinion that had been brought to its attention by plaintiff. In GNOC t/a Atl. City Hilton Casino Resort v. Lautato, No. A-448-04 (App. Div. March 15, 2006), the plaintiff obtained a default judgment against the defendant. Following the issuance of a writ of execution, the plaintiff directed the county sheriff to levy on the defendant's money on deposit with a certain bank, specifically to levy on a specific account number, as well as any other accounts, including checking, savings, CDs, safe deposit or holiday clubs of defendant. (slip op. at 2).

After the sheriff reported that the writ had been served on an officer of the bank, and after the bank failed to respond to a follow-up letter, the plaintiff moved for a turnover order with notice to both the defendant and the bank. Ibid. The trial court denied the motion, noting on its order that "no funds have been identified at this time to turn over." The plaintiff then moved for reconsideration, which was also denied. (slip op. at 3).

On appeal, we reversed. We agreed with plaintiff that there was no requirement that a judgment creditor identify specific funds that may be the subject of a turnover order. (slip op. at 4). Moreover, the sheriff's levy did in fact identify at least one bank account, and "also informed the Bank that there might be a checking account in the name of Marianna Ferrar of which defendant was an authorized signatory." Ibid.

In addition, "[t]he failure of the Bank to respond to plaintiff's turnover application, of which it had notice, was 'tantamount to an admission' that it had funds in its hands subject to the Sheriff's levy." (quoting Wildwood Trust Co., supra, 20 N.J. Super. at 563). "If service is properly made and no objection is filed by the debtor or the garnishee, the turnover order should be granted as a matter of course." (slip op. at 5) (citing Morristown Mem. Hosp. v. Caldwell, 340 N.J. Super. 562, 564 (App. Div. 2001)).

Again, we do not disagree with the law as stated in GNOC, but find it factually distinguishable from this case. In the GNOC case, the bank never responded to the levy. There is no indication that the judgment creditors in GNOC were seeking funds other than those in the name of the judgment debtor. We also note that the Morristown Mem. Hosp. case is also distinguishable, as the issue in that case was whether a judgment creditor was required to provide proof of service in order to demonstrate entitlement to a turnover order under N.J.S.A. 2A:17-63 and the court rules.

Plaintiff, however, argues that, aided by the turnover orders it had, the bank's ignoring the orders made it directly liable for the amounts in the turnover orders. Again, we find no argument with that logic, but find it difficult to apply in this factual scenario where the orders did not make reference to any accounts whatsoever of anyone.

Consequently, we agree with the overall logic put forth by plaintiff, that is, that if one has a judgment against a debtor and levies on a bank account owned by the debtor and receives a turnover order and serves that order on the bank, that the bank will be liable if it does not comply with that order. However, the facts in this case are not so simple. While plaintiff had a judgment against a debtor, it sought to levy on another's account without any judicial recognition that the holder of that account is liable for the debts of the judgment debtor. Further, in seeking to obtain a court order without being forthright and detailed, plaintiff cannot assert that the bank, by not responding to the application, admitted to a state of affairs that was never asserted in plaintiff's applications. Lastly, we find it difficult for a bank to comply with orders which are as imprecise as the orders in this case. Consequently, we hold that the summary judgment in favor of plaintiff is reversed. The order denying defendant's cross-application for summary judgment is reversed, its summary judgment motion dismissing plaintiff's complaint is granted, and its motion to vacate the turnover orders is likewise granted.

In light of our disposition of this matter, we need not address defendant's remaining arguments.

Reversed and remanded for entry of judgment consistent with this opinion.

 

We note not only the factual and legal failings in plaintiff's submissions for the turnover orders but the apparent failure to be candid with the court in making its application as required by R.P.C. 3.3(a).

Plaintiff below insisted that Rule 1:36-3 now permits a court to rely on unpublished opinions. That is not correct. The rule provides that "[n]o unpublished opinion shall constitute precedent or be binding upon any court." Ibid. Nor, except in circumstances not present here, shall an "unpublished opinion

. . . be cited by any court." Ibid.

The motion court focused on this language to conclude that a judgment creditor may seize assets of someone other than the judgment debtor. However, as defendant pointed out, it is unclear from the opinion what relationship Marianna Ferrar had to the judgment debtor in that case.

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A-0453-08T3

July 23, 2009