BANC OF AMERICA LEASING AND CAPITAL, LLC v. FLETCHER-THOMPSON INC.

 

(NOTE: The status of this decision is Published.)

                   NOT FOR PUBLICATION WITHOUT THE
                  APPROVAL OF THE APPELLATE DIVISION


                                SUPERIOR COURT OF NEW JERSEY
                                APPELLATE DIVISION
                                DOCKET NO. A-0848-16T4


BANC OF AMERICA LEASING AND
                                   APPROVED FOR PUBLICATION
CAPITAL, LLC,
                                       January 2, 2018
     Plaintiff-Respondent,
                                      APPELLATE DIVISION
v.

FLETCHER-THOMPSON INC.,
MICHAEL MARCINECK and KURT
BAUR, jointly and severally,

     Defendants-Appellants.
_______________________________


         Argued December 6, 2017 - Decided January 2, 2018

         Before Judges Fuentes, Koblitz and Manahan.

         On appeal from Superior Court of New Jersey,
         Law Division, Mercer County, Docket No. DJ-
         171959-15.

         Paul F. Campano argued the cause for
         appellants (Curcio Mirzaian Sirot, LLC,
         attorneys; Paul F. Campano, of counsel;
         Jessica A. Tracy, on the brief).

         Michael Korik argued the cause for respondent
         (Law Offices of Charles A. Gruen, attorneys;
         Charles A. Gruen, of counsel and on the brief;
         Michael Korik, on the brief).


     The opinion of the court was delivered by

KOBLITZ, J.A.D.
     Defendant Kurt Baur and his wife Kristi Baur1 appeal from a

September 16, 2016 order denying Kurt and Kristi's motion to vacate

a bank levy and from a September 26, 2016 order granting plaintiff

Banc of America Leasing & Capital, LLC's (BOA) motion to turn over

the funds in a joint account in the names of Kurt and Kristi.

Kristi is neither a judgment debtor nor a party to the underlying

debt.2   We reverse because the court did not require BOA to

demonstrate that the funds levied belonged to Kurt alone.

     BOA obtained a default judgment in the State of Michigan on

July 15, 2015, in the sum of $361,093.47, plus interest, against

defendants   Fletcher-Thompson   Inc.   (F-T),   Kurt,   and   Michael

Marcineck pursuant to a lease between BOA and F-T, guaranteed by

Kurt and Marcineck.    BOA domesticated and registered the Michigan

judgment in New Jersey in September 2015.   A writ of execution for

a bank levy was issued to the Mercer County Sheriff, who served

it on PNC Bank.    The levy froze the funds of a joint account held

in both Kurt and Kristi's names in the amount of $20,523.83 in

January 2016.     Kristi claims that the funds in the joint account




1
  We will refer to the Baurs by their first names for ease of
reference and intending no disrespect.
2
  We question the wisdom of the same law firm representing both
Kristi and Kurt in this matter. See RPC 1.7, Conflict of Interest:
General Rule.
                                  2                            A-0848-16T4
are her personal property derived primarily from her pension, as

well as her earnings and tax refunds.

     BOA filed a motion for turnover of the levied funds, which

both Kurt and Kristi opposed.   Before the motion court ruled on

the motion, however, BOA and defendants entered into a consent

order.

     The consent order states in pertinent part:

          1. The funds levied from the bank account of
          the Defendant, Kurt Baur, at PNC Bank, in the
          amount of $20,523.83, shall be replaced by the
          Defendants, with other funds of the Defendants
          in the same amount ("replacement funds"),
          within thirty (30) days from the date hereof,
          by wire transfer . . . . Upon receipt of the
          wire transfer, the levied funds shall be
          released by Plaintiff's counsel back to the
          Defendants.   The levied funds shall remain
          frozen until Plaintiff's counsel has confirmed
          that the wire transfer of the replacement
          funds has been received . . . .

          2. Defendants shall remit the sum of $25,000
          per quarter . . . by wire transfer . . . until
          Plaintiff's Judgment is paid in full; and

          3. The Defendants shall also remit the sum
          of $6,000 per month, by wire transfer . . .
          commencing on May 1, 2016, also until
          Plaintiff's Judgment is paid in full;

     Defendants defaulted on their agreement to make payments and

BOA filed a new motion for turnover of the levied funds.   Kurt and

Kristi once again opposed the motion and filed a motion to vacate

the levy, again claiming that the funds held in the joint account



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belonged exclusively to Kristi, and were primarily exempt pension

payments.

     Without allowing the requested oral argument, the motion

court entered an order denying the Baurs's motion to vacate the

levy and later granted BOA's motion for a turnover of the levied

funds.    The motion court wrote only the following in its September

26 order:

            There was an agreement reached by the parties
            to avoid turnover of the funds. The terms of
            the agreement appear to have been breached and
            so turnover is granted.      This motion was
            opposed by way of a cross-motion which was
            denied.

     A turnover of funds held by a third party may proceed if the

third    party   admits   owing   the   funds   to   the   judgment   debtor.


N.J.S.A. 2A:17-63 states:

            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 . . . .

     Unquestionably, when seeking a turnover from a joint account,

the judgment creditor has the burden "to prove that the moneys

thus deposited are the individual property of the judgment debtor,

and therefore applicable to the satisfaction of the judgment."


                                        4                             A-0848-16T4
Esposito v. Palovick, 
29 N.J. Super. 3, 10-11 (App. Div. 1953)

(quoting Winchell v. Clayton, 
133 N.J.L. 168, 169 (Sup. Ct. 1945)).

In Esposito, we upheld the order vacating a levy and releasing the

funds in a joint account held by husband and wife where the

judgment was solely against the wife.        Id. at 11.   The proofs

showed the funds deposited into the joint account came solely from

the husband's earnings, and the husband had not intended to gift

the wife the funds.   Id. at 6.       We thus held, many decades ago,

that it could not be presumed "that one depositing his [or her]

own funds in a joint account in the names of himself [or herself]

and another has thereby created a joint tenancy in the account."

Id. at 8.

     Kristi certifies with supporting documentation that the funds

in the joint account derive solely from her earnings, teacher's

pension and reimbursements for funds paid out for Kurt's business

expenses.   She argues that the funds are not only hers alone, but

also exempt from seizure as protected pension payments.            See


N.J.S.A. 25:2-1(b); C.P. by J.P. v. Twp. of Piscataway Bd. of

Educ., 
293 N.J. Super. 421, 437 (App. Div. 1996).         The motion

court did not determine whether the levied funds belonged to the

judgment debtor, Kurt, or to Kristi, nor if the funds were exempt

from seizure.




                                  5                          A-0848-16T4
     BOA did not demonstrate that the funds in the account are the

property of the judgment debtor, Kurt.     BOA argues instead that

the consent order constituted a settlement agreement and that the

motion court properly enforced the settlement agreement by denying

the cross-motion and turning over the funds.     Neither Kristi nor

Kurt signed the agreement.     Defense counsel signed the agreement

on behalf of defendants.     Counsel stated at oral argument before

us that he had also represented that Kristi agreed as well.

     The consent order discusses the consequences of a default in

Paragraph 7, which reads:

          The Defendants hereby consent to Plaintiff's
          commencement of any and all actions by
          Plaintiff    necessary    to   collect    upon
          Plaintiff's Judgment, including, but not
          limited to, any remedies or activities
          permitted by this agreement, the Judgment
          and/or any applicable law, within five (5)
          days after Defendants fail to make any payment
          on its due date as defined herein which shall
          be considered to be a default.      Defendants
          shall be responsible for all costs and
          attorneys' fees associated with any and all
          actions by Plaintiff necessary to collect upon
          the agreement set forth in this Consent Order
          and/or Plaintiff's Judgment, including those
          incurred in connection with any default
          notices and/or collection letters, and such
          costs and attorneys' fees shall be added to
          the balance due;

     These terms do not constitute a waiver of the Baurs's right

to dispute the bank levy.    Certainly Kristi, who was not a party

to the underlying litigation, nor a signatory to the agreement,


                                  6                        A-0848-16T4
did not forfeit her right to her sole funds deposited in the joint

account. BOA must demonstrate to the court that these funds belong

to Kurt.   Also, if the funds are statutorily immune from seizure,

they are not subject to the BOA levy.

     Reversed and remanded for further proceedings in accordance

with this opinion.   We do not retain jurisdiction.




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