ROBERT LEWIS ROSEN ASSOCIATES LTD v. WILLIAM WEBB

(NOTE: The status of this decision is .)
 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-2628-07T32628-07T3

ROBERT LEWIS ROSEN ASSOCIATES,

LTD.,

Plaintiff-Appellant,

v.

WILLIAM WEBB AND CYNTHIA WEBB,

Defendants-Respondents.

___________________________

 

Argued December 16, 2008 - Decided

Before Judges Winkelstein, Fuentes and Gilroy.

On appeal from Superior Court of New Jersey,

Chancery Division, Morris County, Docket No.

C-109-04.

Andrew P. Zacharda argued the cause for appellant

(Tompkins, McGuire, Wachenfeld & Barry,

attorneys; William C. Sandelands, of counsel and

on the brief; Mr. Zacharda, on the brief)

Jeffrey D. Ullman argued the cause for respondent

(Ullman, Furhman & Platt, attorneys; Mr. Ullman,

on the brief)

PER CURIAM

The goal of New Jersey's Uniform Fraudulent Transfer Act (UFTA), N.J.S.A. 25:2-20 to -34, is to "'prevent[ ] a debtor from placing his or her property beyond a creditor's reach.'" Barsotti v. Merced, 346 N.J. Super. 504, 515 (App. Div. 2002) (quoting Gilchinsky v. Nat'l Westminster Bank N.J., 159 N.J. 463, 475 (1999)). At issue in this appeal is whether plaintiff, Robert Lewis Rosen Associates, LTD., (RLR) is a "creditor" with a "claim," as defined under UFTA.

When this issue came before the Chancery Division, General Equity Part, Judge Langlois found that plaintiff was not a creditor under the UFTA because defendants William and Cynthia Webb were no longer indebted to plaintiff, negating the creditor/debtor relationship necessary to trigger the applicability of the UFTA. Plaintiff now appeals, arguing that it still holds a claim against defendants. We reject this argument and affirm substantially for the reasons expressed by Judge Langlois.

This case has a long and tortured procedural history. In the interest of completeness, we will summarize the salient facts leading to this appeal.

The parties' relationship began on October 7, 1986, when defendant William Webb, then a director of sports broadcasting, hired plaintiff, a sports agency, to represent him. The written agency agreement entered into by the parties included an arbitration clause providing for the adjudication of disputes before the American Arbitration Association (AAA) in New York, New York. The agreement empowered the arbitrator with the discretionary authority to award attorneys' fees as part of any award.

On April 18, 2001, a dispute arose between the parties, resulting in RLR filing a demand for arbitration. In 2002, while the arbitration was pending, Webb filed a separate ancillary action in the United States District Court for the Southern District of New York, alleging various claims against RLR.

On July 31, 2003, the AAA arbitrator found in favor of RLR. The arbitrator awarded plaintiff $355,084.32 plus interest, and declared that Webb would owe RLR future commissions under the contract if certain television networks exercised Webb's renewal options. Specifically, the award provided as follows:

1. Respondent William Webb shall pay Claimant RLR the sum of Three Hundred Fifty-Five Thousand Eighty-Four Dollars and Thirty-Two Cents ($355,084.32), which reflects amounts due Claimant as of May 31, 2003. This sum includes manager's fees due, the costs of this arbitration including fees of the American Arbitration Association and the Arbitrator's compensation, attorneys' fees and other related costs. Payment shall be rendered forthwith but in no event later than thirty days after Webb's receipt of this Award.

2. Additional payments due Claimant RLR pursuant to the 2000 Fox Renewal, the 2001 MSG Renewal and the 2005 and 2006 Fox Renewal shall be made within thirty days after William Webb's receipt of these payments.

3. Interest at the rate of six per cent (6%) per annum shall accrue after payments are due in accordance with Paragraphs (1) and (2) above.

Although the award included attorneys' fees and costs incurred by RLR during the arbitration, the arbitrator explicitly refused to award "any costs and fees relating to suits filed in a court of law."

On August 26, 2003, (a few weeks after the issuance of the award), Webb conveyed his interest in his marital home, located at 47 Cobb Road, Borough of Mountain Lakes, to his wife, Cynthia Webb. The deed reflected a purchase price of $47,667. The assessed value of the property was $495,400. During her deposition, Cynthia Webb estimated the market value of the house to be higher than the assessed value, perhaps as much as "a million-something."

On November 26, 2003, the United States District Court for the Southern District of New York entered a judgment confirming the arbitration award of $355,084.22, plus six percent interest, and it denied Webb's motion to vacate the award. The judgment did not mention future commissions, which might become due upon renewal of the Fox or MSG contracts. The court rejected RLR's claim for attorneys' fees incurred during the confirmation proceeding.

On December 23, 2003, the Southern District dismissed the majority of Webb's claims filed in the ancillary action, and denied RLR's application for sanctions under 28 U.S.C.A. 1927. On Webb's appeal, the United States Court of Appeals for the Second Circuit affirmed the district court's judgment. In January 2004, RLR domesticated the Southern District judgment in New Jersey under the Uniform Enforcement of Foreign Judgments Act, N.J.S.A. 2A:49A-25 to -33.

On July 16, 2004, RLR filed a complaint against Webb and his wife in the Superior Court of New Jersey, Chancery Division, alleging that the transfer of the marital residence was a fraudulent conveyance in violation of the UFTA. During discovery in this action, plaintiff learned that defendant had also transferred other assets to his wife and his two children. On January 5, 2005, RLR moved to amend its complaint to include these additional alleged fraudulent transfers.

Defendants filed a cross-motion requesting that the Chancery judge fix the amount presently owed to plaintiff, based on the domesticated judgment; defendants also requested the court to dismiss defendant's complaint upon Webb's payment of that sum. RLR opposed defendants' motion, arguing that even if Webb paid the amount presently due, its UFTA claim was still valid based on the future commissions it would receive if Fox or MSG renewed Webb's contract.

On January 21, 2005, the Chancery judge granted defendants' cross-motion, fixed the amount due at $375,391.62, and ordered that plaintiff's claim be dismissed upon Webb's payment of that amount. In so doing, the court held that once Webb paid this sum, the domesticated judgment would be completely paid, and RLR's fraudulent transfer claim would be moot.

On February 4, 2005, RLR filed a motion in the Southern District seeking an "additional judgment" against Webb because certain networks had exercised Webb's renewal options. Thereafter, Webb paid RLR $375,391.62, the total amount found due and owing by the Chancery judge; by order dated on February 14, 2005, the Chancery judge dismissed RLR's claim.

On that same say, RLR filed a motion for reconsideration of the Chancery judge's January 21, 2005 order. On March 18, 2005, the Chancery judge denied RLR's motion for reconsideration. Plaintiff appealed the Chancery judge's dismissal of its UFTA claim to the Appellate Division.

On June 1, 2005, the Southern District entered a "supplemental judgment" against Webb finding he owed plaintiff an additional sum of $106,441.72, plus interest as a result of three renewals for Webb's services: a 2000 Fox renewal, a 2001 MSG renewal, and a 2005-2006 Fox renewal. On August 8, 2006, we reversed the Chancery judge's decision dismissing RLR's claim. Robert Lewis Rosen Assoc. v. Webb, No. A-3761-04 (App. Div. Aug. 8, 2006) (slip op. at 2). We held that plaintiff's UFTA action was not moot because RLR was still a creditor of Webb based on its entitlement to receive future commissions. We reinstated plaintiff's claim, remanded the case to the Chancery Division, and authorized RLR to amend its complaint.

On January 30, 2007, Webb tendered $218,521.58 to plaintiff. According to Webb, this amount represented all additional funds owed to plaintiff under the "supplemental judgment." On February 13, 2007, Webb wrote to RLR and demanded that it dismiss the UFTA action, asserting he had now paid his entire debt to RLR, and plaintiff no longer had a "claim" against him. By letter dated February 15, 2007, RLR acknowledged that Webb's debt under the original and supplemental judgment had been satisfied, but maintained that it still had a "claim" against Webb, as defined under UFTA, for its legal fees.

On March 2, 2007, defendants filed a motion for summary judgment seeking to dismiss RLR's UFTA claim. Defendants argued that RLR was no longer a creditor of Webb. On March 19, 2007, RLR filed a second demand for arbitration with the AAA, seeking to recover the legal fees and expenses it spent while enforcing and defending the arbitration award during:

(i) RLR's confirmation of the Final Award in the Southern District of New York;

(ii) RLR's petition to the Southern District of New York for entry of a Supplemental Judgment to the Final Award;

(iii) Webb's appeal of the Supplemental Judgment;

(iv) RLR's fraudulent conveyance action against William and Cynthia Webb in satisfaction of the Final Award in the State of New Jersey;

(v) RLR's appeal from the final judgment dismissing its complaint against William and Cynthia Webb in the Superior Court of New Jersey; and

(vi) Webb's federal action and subsequent appeal against RLR in an effort to disgorge the money received pursuant to the Final Award.

As a result, the Chancery court stayed discovery in the action before it and adjourned the hearing, pending the outcome of the arbitration.

Acting on Webb's motion, the arbitrator dismissed RLR's demand for arbitration, and denied RLR's claim for legal fees associated with the confirmation proceeding, because the Southern District Court judge had considered and rejected that claim during that proceeding. With respect to the claims for fees associated with the other legal proceedings the arbitrator found that:

Claimant was involved in numerous other litigations, appeals, and administrative proceedings in an effort to collect the award, and Claimant seeks to recover the legal fees and costs expended in those various other legal proceedings as well. While it certainly appears to this arbitrator that Respondent acted in a questionable manner in order to frustrate and delay Claimant's recovery on the final award, the arbitration provision at issue does not empower me to award attorney fees or costs with respect to these subsequent collection efforts. They do not present a controversy or claim arising from the breach of the agreement at issue; rather they arise from Respondent's efforts to enforce the final arbitral award. The law clearly allows the courts to award attorneys' fees where a party has acted in bad faith and Claimant's requests for costs and fees belonged in the various forums in which it was forced to appear.

On November 30, 2007, Webb notified the Chancery Division that the arbitrator had dismissed plaintiff's claim for fees. After several adjournments, the court was prepared to hear Webb's summary judgment motion December on 20, 2007.

On December 19, 2007, RLR filed a petition in the United States District Court for the Southern District of New York seeking to vacate the arbitration award, which denied its request for legal fees. On December 20, 2007, Judge Langlois heard oral argument for Webb's summary judgment motion.

Defendants argued that Webb had paid RLR all of the monies he owed to it; plaintiff thus no longer had a "claim to serve as a predicate to justify this lawsuit." Plaintiff argued that based on the action filed in the Southern District seeking to vacate the arbitration award, it still had a claim pending. Judge Langlois rejected plaintiff's argument, finding there was no longer a debtor creditor relationship between the parties. The Judge explained her ruling thusly:

I dismiss this complaint. I am satisfied that enough is enough. That while Rosen and Associates has asserted and in the beginning of this action it certainly had a claim, that the defendant has since the filing of that complaint and up until this very day paid everything it has been obligated to pay, that the only potential claim that would maintain a debtor/creditor relationship was that as to an attorney fee through the New York and arbitration context.

That claim was resolved by the decision of the arbitrator, November 28th, 2007, in which the arbitrator ruled that any demand for counsel fees through that process was appropriately before the Court, that the Court, with the appropriate request, was the appropriate forum for that request, and that the arbitrator does not have unending jurisdiction to repeatedly award new attorneys fees each and every time costs are incurred and collecting them in the next final award, end quote, in which he rejected the plaintiff's position.

Similarly, this Court must take into context the fraudulent Transfer Act in which a claim does create a debtor creditor relationship and is defined as a right to payment, whether or not the right is reduced to judgment, liquidated, un-liquidated, fixed, contingent, matured, un-matured, disputed, undisputed[ ] legal, equitable, secured or unsecured.

There is no right to counsel fees. It has been resolved by the arbitration process. And while Rosen Associates may proceed through its, what is becoming an unending process of appeal, for purposes of this New Jersey Superior Court action in which the plaintiff seeks to continue to enjoin disposition of property, a levy on real property, appoint a receiver, and prohibit the transfer of any other income which is the judgment that they request, there is no basis upon which a potential attorney fee appeal should impact any longer on these defendants.

The debtor creditor relationship is over. And while all of the terms used in the statute would seem to encourage litigation over the smile on the Cheshire Cat, this Court in the context of this dispute between Rosen Associates and Mr. Webb in the contract of the procedural history regarding the Southern District of New York, the post arbitrable proceedings to confirm that arbitration award, the supplemental judgment received, the appeal to the Appellate Division here, the appeal to the Second Circuit, and now the appeal on the review of the arbitration decision, the uniqueness of this history and the fact that the only debt truly at issue has fully been paid, satisfied and discharged this action will now be dismissed.

Judge Langlois granted Webb's motion for summary judgment and discharged the lis pendens that plaintiffs had filed against the marital property. On July 10, 2008, while this appeal was pending, Webb submitted to this court an opinion from the Southern District of New York finding no basis to vacate the arbitrator's decision in this case, and granting Webb's cross motion to confirm the award. At oral argument in this appeal, counsel confirmed that the United States Court of Appeals for the Second Circuit affirmed the district court's judgment.

Summary judgment must be granted "if the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact challenged and that the moving party is entitled to a judgment or order as a matter of law." R. 4:46-2. To determine whether there exists a "genuine issue as to any material fact" the court must "consider whether the competent evidential materials presented, when viewed in the light most favorable to the non-moving party, are sufficient to permit a rational factfinder to resolve the alleged disputed issue in favor of the non-moving party." Coyne v. State Dep't of Transp., 182 N.J. 481, 490 (2005) (quoting Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995)).

We review a trial court's grant of summary judgment by applying the same standards used by the trial court. EMC Mortg. Corp. v. Chaudhri, 400 N.J. Super. 126, 136 (App. Div. 2008) (citing Liberty Surplus Ins. Corp. v. Nowell Amoroso, P.A., 189 N.J. 436, 445-46 (2007)). If there is no genuine issue of fact, then this court must decide whether the trial court's legal ruling was correct. Ibid. (citing Liberty Surplus, supra, 189 N.J. at 446). In reviewing a legal determination this court does not give any deference to the trial court's views; it considers the matter de novo. Dickson v. Twp. of Hamilton, 400 N.J. Super. 189, 195 (App. Div. 2008) (citing Manalapan Realty v. Manalapan Twp. Comm., 140 N.J. 366, 378 (1995)). Against the procedural history we have described here, this matter is ripe for summary judgment.

 
The UFTA defines a "creditor" as "a person who has a claim" and a "claim" is broadly defined as "a right to payment, whether or not the right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured." N.J.S.A. 25:2-21. Under a plain reading of this definition, plaintiff is no longer a creditor under the statute because it no longer has a legally recognized right to payment from defendants.

Affirmed.

(continued)

(continued)

13

A-2628-07T3

June 15, 2009