BOUND BROOK FORD, INC. v. FLEET NATIONAL BANK

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-2810-05T32810-05T3

BOUND BROOK FORD, INC.,

Plaintiff-Respondent,

v.

SHERRY SEABOLT (a/k/a SHERRY

FEABOLT, SHERRY KLEMSER, or

SHERRY SEABLOT), MICHAEL SACHT,

COMMERCE BANK, JEROME SHINFELD AND

ASSOCIATES, P.C.,

Defendants,

and

FLEET BANK,

Defendant-Appellant.

________________________________________

UNIVERSAL UNDERWRITERS INSURANCE

COMPANY, as otherwise subrogated to

the rights of Bound Brook Ford, Inc.,

Plaintiff,

v.

SHERRY SEABOLT (a/k/a SHERRY

FEABOLT, SHERRY KLEMSER, and/or

SHERRY SEABLOT), MICHAEL SACHT,

individually and as MICHAEL'S

JEWELRY, and JEROME SHINFELD AND

ASSOCIATES, P.C.,

Defendants,

and

FLEET BANK,

Defendant-Appellant.

___________________________________

 

Argued November 28, 2006 - Decided March 19, 2007

Before Judges Coburn, Axelrad and Gilroy.

On appeal from the Superior Court of New Jersey, Chancery Division, Bergen County, Docket Nos. C-371-02E and C-149-03.

Patrick J. Spina argued the cause for appellant (Sodini & Spina, attorneys; Mr. Spina, on the brief).

Robert L. Ritter, argued the cause for respondent (Schiffman, Abraham, Kaufman & Ritter, attorneys; Mr. Ritter and David J. Wallman, on the brief).

PER CURIAM

Defendant, Fleet National Bank (Fleet), incorrectly identified in the caption as Fleet Bank, appeals from a November 16, 2005, order of the Chancery Division that: 1) vacated a consent judgment of August 29, 2005, entered in favor of Fleet and against defendant Sherry Seabolt; 2) vacated a second order of August 29, 2005, directing that certain jewelry in possession of the Somerset County Prosecutor's Office be turned over to Fleet; and 3) directed that, upon termination of criminal proceedings against Seabolt, the jewelry in possession of the Prosecutor be turned over to plaintiff, Bound Brook Ford, Inc. Fleet also appeals from the January 19, 2006, order denying its motion for reconsideration and in aid of litigant's rights. We affirm.

Seabolt, plaintiff's former secretary, treasurer, and bookkeeper, had stolen close to one million dollars from plaintiff though a check forging scheme between November 2001 and November 2002. Seabolt deposited many of the checks into the Fleet bank account of her accomplice/co-conspirator, defendant Michael Sacht, who in turn gave her jewelry in exchange for the stolen funds. Seabolt then re-laundered the jewelry by selling it over the Internet to third parties. On November 18, 2002, plaintiff filed a complaint and order to show cause alleging that Seabolt had stolen its money. Plaintiff also asserted claims against Fleet for accepting and processing the forged checks. Fleet denied these allegations and cross-claimed against Seabolt and Sacht.

Seabolt never appeared in the action, and plaintiff obtained a default judgment against her on July 21, 2003, in the amount of $1,098,559.04, plus $22,502.04 in pre-judgment interest. The judgment was recorded as a statewide lien on August 27, 2003.

In the interim, the Somerset County Prosecutor's office commenced a criminal investigation of this matter, and on January 3, 2003, Seabolt was arrested in Atlantic City. In connection with the arrest and execution of a subsequent search warrant, the Prosecutor seized several pieces of jewelry from Seabolt. On or about May 11, 2005, Fleet became aware of the jewelry and appropriately informed the court and parties of its existence. Plaintiff and Fleet agreed that the jewelry would remain with the Prosecutor until the completion of the criminal case. On May 16, 2005, without notice to the Prosecutor, a consent order was entered, directing that the jewelry be held by the Prosecutor's Office in custodia legis for the benefit of all parties to this action.

At a case management conference on August 1, 2005, plaintiff presented a writ of execution pertaining to the seized jewelry to Judge Escala. The trial judge signed the writ despite Fleet's objection. However, because the writ needed to be signed by the Assignment Judge, Assignment Judge Moses signed a second writ for plaintiff on August 2, 2005. The writ was served on the Somerset County Prosecutor's Office on August 5, 2005.

By letter dated August 3, 2005, plaintiff notified the court that its claims against all defendants had either been adjudicated or settled. On August 4, 2005, Fleet requested a case management conference to resolve its remaining cross-claims against Seabolt and Sacht, stating that "it appears that all of plaintiff's claims against all parties in the matter have been resolved." On August 8, 2005, Judge Escala scheduled a case management conference for August 29, 2005, and advised that if the settling parties chose, they need not attend. On August 12, 2005, plaintiff informed the court that the writ of execution had been served on the Somerset County Prosecutor's Office.

At the conference on August 29, 2005, two orders were entered without notice to plaintiff: (1) a judgment amending the May 16, 2005, consent order, holding the jewelry in custodia legis for the benefit of all parties; and (2) a consent judgment between Fleet and Seabolt, whereby Seabolt turned over her interest in the jewelry to Fleet in order to satisfy Fleet's claims against her. On September 12, 2005, Seabolt entered a plea of guilty to second-degree theft by deception and first-degree money laundering. On November 17, 2005, Seabolt was sentenced to seventeen years in prison. An anti-money laundering penalty of $500,000 was imposed, and Seabolt was also ordered to pay restitution to plaintiff in the amount of $516,034.81.

On September 13, 2005, plaintiff moved to vacate the two August 29, 2005 orders, arguing that they were entered ex parte; and that its writ of execution pre-dated the August 29, 2005 judgments, thus entitling it to the jewelry. Fleet countered that the writ of execution was void because it was interlocutory; that the parties had agreed via the May 16, 2005 consent order that the jewelry be held in custodia legis; and that a writ of execution cannot be executed against property that is so held. By letter to the court dated October 20, 2005, the Prosecutor opined that the only victim in this matter was plaintiff, thus plaintiff should be awarded the jewelry.

On November 16, 2005, the court granted plaintiff's motion and entered an order that: 1) vacated the two August 29, 2005 orders; and 2) directed that, upon completion of the criminal proceedings pending against Seabolt, the jewelry shall be turned over to plaintiff. The court's statement of reasons for granting the motion provided:

Bound Brook [Ford] filed and served a writ on August 2nd and 3rd respectively and thus had priority. While on its face it seems that Rule 4:59-1 supports Fleet's position, Bound Brook [Ford] still filed and served the writ prior to the Order dated August 29, 2005. The rule states that, "process to enforce a judgment or order for the payment of money and process to collect costs allowed by a judgment or order, shall be a writ of execution, except if the court otherwise orders." Here, there was an Order dated August 29, 2005, directing that ownership of the jewelry held by the Prosecutor's office be transferred to Fleet. Bound Brook's writ was dated August 2, 2005. Does the Order trump Fleet's writ, even though it was entered after the writ was executed. Bound Brook's writ was already established, there were no open issues. Thus, there was no need for them to attend the case management conference held on August 29, 2005 where the orders were entered ex parte and as it has developed, improvidently[,] Fleet's claim based on an assignment by the criminal defendant's execution of a document in favor of Fleet does not convey ownership of the jewels to Fleet, inasmuch as the thief cannot assert an ownership interest in such goods. (emphasis omitted).

On or about December 6, 2005, Fleet filed a motion for reconsideration and in aid of litigant's rights. The motion was denied, the judge determining that independent of the writ of execution, the jewelry should be turned over to plaintiff in accordance with the criminal proceedings in Somerset County. A confirming order was entered on January 19, 2006. In the interim, on January 11, 2006, the Prosecutor's Office released the jewelry to plaintiff.

On appeal appellant argues:

POINT I.

BOUND BROOK FORD HAS NO LEGAL RIGHT TO THE JEWELRY BECAUSE THE JEWELRY HAS BEEN HELD IN CUSTODIA LEGIS AND IS NOT SUBJECT TO A WRIT OF EXECUTION.

A. BROUND BROOK FORD HAS NO LEGAL RIGHT TO THE JEWELRY BY WAY OF WRIT OF EXECUTION.

B. BROUND BROOK FORD CANNOT BREACH THE CONSENT ORDER THAT PROVIDED THE JEWELRY BE MAINTAINED IN CUSTODIA LEGIS.

C. BOUND BROOK FORD'S WRIT OF EXECUTION DOES NOT HAVE PRIORITY OVER THE CONSENT ORDER.

POINT II.

THE TRIAL COURT ERRED IN PERMITTING THE PROSECUTOR'S OFFICE TO DETERMINE THAT BOUND BROOK FORD HAS A RIGHT TO THE JEWELRY.

Reviewing courts "'do not disturb the factual findings and legal conclusions of the [motion] judge unless we are convinced that they are so manifestly unsupported by or inconsistent with the competent, relevant and reasonably credible evidence as to offend the interests of justice . . . .'" Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 484 (1974) (quoting Fagliarone v. Twp. of No. Bergen, 78 N.J. Super. 154, 155 (App. Div. 1963)). However, "[a] [motion judge's] interpretation of the law and the legal consequences that flow from established facts are not entitled to any special deference." Manalapan Realty v. Manalapan Tp. Comm., 140 N.J. 366, 378 (1995).

We have considered the arguments advanced by Fleet in light of the record and applicable law and conclude that Fleet's contentions are without merit and do not warrant discussion in a full written opinion. R. 2:11-3(e)(1)(A) and (E). We affirm substantially for the reasons expressed by Judge Escala in his statement of reasons of October 21, 2005, and his oral opinion of January 6, 2006. Notwithstanding, we add the following comments.

Procedurally, Fleet argues that the trial judge erred in determining that plaintiff had priority to possession of the jewelry over Fleet because the jewelry was held in custodia legis pursuant to the consent order of May 16, 2005. Fleet contends the normal rules governing collection on judgments do not apply to property held in custodia legis, and only the court, placing property in custodia legis, possesses jurisdiction to disburse it. Fleet asserts that the writ of execution served upon the Prosecutor's Office on August 5, 2005, was the writ executed by Assignment Judge Moses, not Judge Escala.

Although there was not a formal motion to vacate or amend the May 16, 2005, consent order, Judge Escala executed plaintiff's first writ of execution, thereby informally determining that plaintiff had priority to the jewelry over Fleet. Moreover, on September 12, 2005, Seabolt pled guilty to charges of theft and money laundering. She admitted to taking approximately $1,000,000 from plaintiff and laundering the money by depositing part of the stolen funds into Sacht's bank account in exchange for jewelry, which she then re-laundered through sales on the Internet. Therefore, pursuant to N.J.S.A. 2C:65-3, after the final determination in the criminal case, the jewelry could be returned to the victim of the crime. "After final determination of any action or proceeding, the court on application of the person claiming ownership, or an agent designated in writing by the person, may order all the property, other than documentary exhibits, to be delivered to the person." N.J.S.A. 2C:65-3a.

Here, Fleet was not a victim of the crimes committed by Seabolt. Seabolt never stole anything from Fleet; never came into possession of property that belonged to Fleet; and was never directed to pay restitution to Fleet. The only victim of the crimes was plaintiff, to whom Seabolt was directed to pay restitution. The turning over of the jewelry to plaintiff served to reduce plaintiff's loss caused by Seabolt's criminal actions.

Substantively, Fleet never obtained any lawful interest in the jewelry by the August 29, 2005, consent order. Seabolt was a thief, having stolen funds from plaintiff. A thief cannot acquire lawful title to property purchased with stolen funds. See O'Keeffe v. Snyder, 83 N.J. 478, 488 (1980) (holding that "the thief acquire[s] no title and [cannot] transfer good title to others regardless of their good faith and ignorance of the theft."). Accordingly, Seabolt never owned any of the jewelry seized during the criminal investigation, and therefore, could not have transferred any lawful interests in the jewelry to Fleet.

Affirmed.

 

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A-2810-05T3

March 19, 2007