COURT A-0 NATIONWIDE REGISTRY & SECURITY, LTD v. MURAD MELHEM AND NAJAH MELHEM -

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

NATIONWIDE REGISTRY & SECURITY, LTD.,

Plaintiff-Appellant,

v.

MURAD MELHEM AND NAJAH MELHEM,

Defendants-Respondents.

____________________________________

March 11, 2016

Before Judges Lihotz and Higbee.

On appeal from Superior Court of New Jersey, Chancery Division, Atlantic County, Docket No. C-45-14.

Carl N. Tripician argued the cause for appellant.

Richard M. King, Jr., argued the cause for respondents.

PER CURIAM

Plaintiff Nationwide Registry & Security, Ltd., appeals from a December 3, 2014 Chancery Division order granting the summary judgment dismissal of its complaint against defendants Murad and Najah Melhem.1 Plaintiff challenged, as fraudulent, Murad's transfer of real property to Najah and sought relief pursuant to the Uniform Fraudulent Transfer Act (the UFTA), N.J.S.A. 25:2-20 to -34. The motion judge determined the transfer occurred on the date Murad executed the deed, which was more than four years before plaintiff filed its complaint. Accordingly, the judge concluded plaintiff's complaint was untimely.

On appeal, plaintiff argues the date of the transfer under the UFTA is the date a deed is recorded, not the date of execution. Thus, because the deed to Najah was recorded almost two years after its execution, plaintiff's complaint was timely filed within four years of the recording date. Plaintiff urges reversal of summary judgment and reinstatement of its complaint. We agree.

The facts are undisputed. In 2006, Murad incurred a significant obligation to the Las Vegas Hilton (the Hilton), when checks issued to satisfy his gambling losses were dishonored. In 2010, the Hilton assigned Murad's debt to plaintiff, which ultimately secured judgment in Nevada. The sister state judgment was registered in New Jersey and docketed on July 7, 2014.

In pursuit of the execution of its judgment, plaintiff learned Murad was the title owner of real property located in Brigantine, which he purchased at a sheriff's sale in 1994. In 2009, Murad executed a deed, prepared by a local attorney, transferring the Brigantine realty to his sister Najah for the stated consideration of one dollar. Murad asserted the real property was purchased in 1994 with Najah's funds and placed in his name as an accommodation. The record does not disclose who held the deed thereafter; however, it was not recorded until May 16, 2011. In 2012, Najah transferred the property to herself and her father, with rights of survivorship. Her father passed away and she again was the sole owner.

Plaintiff filed suit on July 17, 2014.2 The complaint sought to declare the 2009 transfer of the Brigantine realty null and void as fraudulent and requested the parties be enjoined from further transfers, pending final disposition of all claims.

Defendants moved for summary judgment. During argument, the parties focused on whether plaintiff's claim was timely asserted. Defendants maintained transfer of the realty occurred when the deed was delivered to Najah in 2009. They argued because more than four years elapsed since the deed's execution, recovery was extinguished under N.J.S.A. 25:2-31 for being untimely.3 Plaintiff opposed the motion, arguing the transfer, which was designed to avoid its collection of Murad's debt, did not occur until the deed was recorded, as provided by N.J.S.A. 25:2-28.

The judge did not consider N.J.S.A. 25:2-28 determinative of the date of transfer when applying the UFTA's period of repose. Rather, he examined N.J.S.A. 46:3-13, which states an ownership in realty is transferred by execution and delivery of a deed by the grantor and its acceptance of the grantee, and concluded "a deed transfers a property interest upon delivery." Thus, he held the transfer was not dependent on the deed's recording.4 The judge granted summary judgment and dismissed plaintiff's complaint. This appeal ensued.

A question of statutory interpretation is a legal issue. Therefore, "[a] trial court's interpretation of the law and the legal consequences that flow from established facts are not entitled to any special deference" by this court. Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995). "When deciding a purely legal issue, [appellate] review is de novo." Kaye v. Rosefielde, 223 N.J. 218, 229 (2015) (quoting Fair Share Hous. Ctr., Inc. v. N.J. State League of Municipalities, 207 N.J. 489, 493 n.1 (2011)).

"Like the majority of our sister jurisdictions, New Jersey has adopted the UFTA." Banco Popular N. Am. v. Gandi, 184 N.J. 161, 175 (2005). "The UFTA was designed as a vehicle by which creditors may recover from debtors and others who hinder their collection efforts." Id. at 177. More specifically, the UFTA "modernizes the law respecting the rights and remedies of creditors in cases of transfers of assets by debtors the design or effect of which is to prevent or impede satisfaction of claims out of the debtor's assets, or to prefer favored claimants." Flood v. Caro Corp., 272 N.J. Super. 398, 403 (App. Div. 1994). Plainly, the UFTA prevents "a debtor from placing his or her property beyond a creditor's reach[,]" and stops a debtor's efforts to "deliberately cheat a creditor by removing his property from the 'jaws of execution.'" Gilchinsky v. Nat'l Westminster Bank N.J., 159 N.J. 463, 475 (1999). See also Rosario v. Marco Constr. & Mgmt., __ N.J. Super. __, __ (App. Div. Jan. 12, 2016) (slip op. at 15).

Critical to application of the UFTA is its definition of transfers that are deemed fraudulent. N.J.S.A. 25:2-25(a), (b).5 These transfers may be avoided or subject to various remedies outlined in the UFTA. N.J.S.A. 25:2-29.

To recover, a creditor's action to declare a transfer fraudulent as defined in the UFTA must be filed within the specified time period or be extinguished. The general provisions of repose states

A cause of action with respect to a fraudulent transfer or obligation under this article is extinguished unless action is brought

a. Under [N.J.S.A. 25:2-25(a)], within four years after the transfer was made or the obligation was incurred or, if later, within one year after the transfer or obligation was discovered by the claimant . . . .

[N.J.S.A. 25:2-31.]

We need not determine whether the transfer of the Brigantine property by Murad to Najah was fraudulent. Our inquiry is limited to when the transfer took place.

A transfer is specifically defined in the UFTA 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. Transfers involving real property are specifically addressed at N.J.S.A. 25:2-28, which provides in pertinent part

For the purposes of [the UFTA]

a. A transfer is made

(1) With respect to an asset that is real property . . . when the transfer is so far perfected that a good-faith purchaser of the asset from the debtor against whom applicable law permits the transfer to be perfected cannot acquire an interest in the asset that is superior to the interest of the transferee . . . .

When interpreting statutes we follow these well-established rules of construction. "The goal of all statutory interpretation 'is to give effect to the intent of the Legislature.'" Maeker v. Ross, 219 N.J. 565, 575 (2014) (quoting Aronberg v. Tolbert, 207 N.J. 587, 597 (2011)). "We first look to the statutory language, which generally is the 'best indicator' of the Legislature's intent. Ibid. (quoting DiProspero v. Penn, 183 N.J. 477, 492 (2005)). "Only if the language of the statute is shrouded in ambiguity or silence, and yields more than one plausible interpretation, do we turn to extrinsic sources, such as legislative history." Ibid. Further, when interpreting a statute where "the Legislature has clearly defined a term, the courts are bound by that definition." Febbi v. Bd. of Review, 35 N.J. 601, 606 (1961). Additionally, we must consider "not only the particular statute in question, but . . . the entire legislative scheme of which it is a part." Kimmelman v. Henkels & McCoy, Inc., 108 N.J.123, 129 (1987).

In light of the UFTA's unambiguous statement defining a transfer involving real property found in N.J.S.A. 25:2-28(a), we conclude the trial judge's reliance on other definitions was erroneous. This court has repeatedly held "[f]or cases involving real property, 'transfer' has been defined as the date real property is recorded." Rosario, supra, __ N.J. Super. at __ (slip op. at 12); Flood, supra, 272 N.J. Super. at 407-08 ("[T]he transfer of an asset consisting of a debt secured by a mortgage on real estate is a transfer permitted by law to be perfected by recording"); Boardwalk Regency Corp. v. Burd, 262 N.J. Super. 162, 165 (App. Div. 1993) (holding transfer of real estate under the UFTA was the date the deed was recorded and not the date it was received); see also Intili v. DiGiorgio, 300 N.J. Super. 652, 656 n.4 (Ch. Div. 1997) ("It should be noted that the 'transfer' date is the date that the real property deed was recorded.").

We reject defendants' suggestion to apply N.J.S.A. 25:2-28(a)(1) only when determining whether a transfer is fraudulent under N.J.S.A. 25:2-25, -26, and -27, and not when examining whether the claim is extinguished pursuant to N.J.S.A. 25:2-31. Indeed, the section requiring recordation clearly states the conditions apply to a transfer of real property. N.J.S.A. 25:2-28(a). Further, a timely claim must be filed "within four years after the transfer was made." N.J.S.A. 25:2-31 (emphasis added). It is antithetical to conclude the same term used in two provisions of the same statutory scheme was intended to have different meanings. Kimmelman, supra, 108 N.J.at 129.

We also reject the suggestion a creditor who learns of a transfer must file an action within one year of discovery, notwithstanding that the four year period following a transfer has not expired. The provisions are drafted in the disjunctive. More important, the one-year provision purposely provides additional time for filing by creditors unable to learn of the transfer until the four-year period has passed.

Finally, defendants' suggestion that recording does not aid the intent and purpose of the statute is specious. As set forth in N.J.S.A. 46:26A-12(a)

Any recorded document affecting the title to real property is, from the time of recording, notice to all subsequent purchasers, mortgagees and judgment creditors of the execution of the document recorded and its contents.

Therefore, recording places all on notice of the transfer. Whether this transfer is fraudulent as defined by the UFTA, under N.J.S.A. 25:2-25 remains to be analyzed.

We reverse the judge's determination and vacate summary judgment. We remand the matter to reinstate plaintiff's complaint and for further proceedings to conclude the litigation.

Reversed and remanded.

1 The defendants are brother and sister. Because they share the same surname, we differentiate between them by using their first names.

2 Plaintiff's complaint states an earlier action filed against Murad in April 2011 was dismissed on jurisdictional grounds in the summer of 2011.

3 Defendants also argued plaintiff could not claim recent discovery because the realty had been disclosed in the course of the prior action in July 2011. This issue is not raised on appeal.

4 Although the record is clear regarding the date Murad executed the deed, the judge made no finding on the deed's date of delivery and no mention of who had the deed from the date of execution to the date of recording.

5 The UFTA permits actions for fraudulent transfers of property that occurred both before and after an unpaid debt was incurred. In relevant part, N.J.S.A. 25:2-25 states

A transfer made . . . by a debtor is fraudulent as to a creditor, whether the creditor's claim arose before or after the transfer was made . . . if the debtor made the transfer . . .

a. With actual intent to hinder, delay, or defraud any creditor of the debtor . . . .