ANGELO S. MALLOZZI v. CONNECTONE BANK

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

ANGELO S. MALLOZZI and

382 BLOOMFIELD ACCOUNT,

LLC,

Plaintiffs-Appellants,

v.

CONNECTONE BANK FORMERLY

NORTH JERSEY COMMUNITY BANK,

THE AGRESTA FIRM PC, and

SHERIFF OF UNION COUNTY,

Defendants-Respondents.

-

October 24, 2014

Before Judges Fasciale and Hoffman.

On appeal from Superior Court of New Jersey, Chancery Division, Union County, Docket No. C-0079-13.

The Margolis Law Firm, LLC, attorneys for appellants (Martin G. Margolis, on the briefs).

The Agresta Firm, P.C., attorneys for respondents ConnectOne Bank and the Agresta Firm (Anthony K. Modafferi, III, on the brief).

Robert E. Barry, Union County Counsel, attorney for respondent Sheriff of Union County (William T. Donegan, Assistant County Counsel, on the brief).

PER CURIAM

Plaintiffs, Angelo Mallozzi and 382 Bloomfield Account, LLC (382 Bloomfield), appeal from Law Division orders dismissing their complaint with prejudice, pursuant to Rule 4:6-2(e), against defendants ConnectOne Bank (ConnectOne), The Agresta Law Firm, P.C. (Agresta) and the Sheriff of Union County (the Sheriff). We affirm in part, reverse in part, and remand for further proceedings.

I.

ConnectOne obtained a judgment in Bergen County against plaintiffs. ConnectOne instituted supplementary proceedings there to satisfy the judgment. The Bergen County court issued a bench warrant for Mallozzi because he failed to respond to an information subpoena. ConnectOne then obtained a Bergen County order permitting it to sell Mallozzi's real property to satisfy the judgment.

On July 29, 2013, plaintiffs filed this complaint and order to show cause (OTSC) against defendants essentially seeking to attack ConnectOne's Bergen County judgment. In their complaint, they allege that ConnectOne and its lawyers in the Bergen County case, Agresta, and the Sheriff, were negligent and breached an implied covenant of good faith regarding the collection of rents at plaintiffs' Union County property.1 Specifically, plaintiffs' complaint alleges that ConnectOne had filed an OTSC in Bergen County requesting the appointment of "a special fiscal agent," and that the court granted that request. Rather than following through with the appointment of a special fiscal agent, plaintiffs allege that ConnectOne and Agresta took control of plaintiffs' Union County property, assisted by the Sheriff, and thereafter they did "a miserable job of maintaining the Union County property," collecting less than fifteen percent of total rents, leaving "$89,568.39 in rent uncollected, in addition to . . . thousands of dollars in pass-throughs." Based on these allegations, plaintiffs therefore sought to enjoin the sheriff's sale of their real property in Union County scheduled for July 31, 2013, and also demanded money damages.

Defendants filed cross-motions to dismiss plaintiffs' complaint, pursuant to Rule 4:6-2(e). The OTSC judge denied plaintiffs' request for temporary restraints in an order entered on July 30, 2013. The judge did not rule on defendants' motions to dismiss.

Proceeding under the incorrect assumption that the OTSC judge also denied defendants' motions to dismiss, plaintiffs requested the entry of default on September 6, 2013, based upon defendants' failure to answer plaintiffs' complaint.2 Defendants promptly moved to vacate the default. On October 11, 2013, the motion judge heard oral argument on the motion to vacate the default and defendants' cross-motions to dismiss. The motion judge subsequently vacated the default for good cause, pursuant to Rule 4:43-3. The judge also granted defendants' Rule 4:6-2(e) motions and entered orders dismissing the complaint with prejudice.

On appeal, plaintiffs argue that the motion judge erred when she heard (and granted) defendants' motions to dismiss on October 11, 2013, claiming that the motions were previously decided and denied by the OTSC judge on July 30, 2013. Plaintiffs also argue that the motion judge failed to "read all facts in [p]laintiffs' complaint as true . . . ." Plaintiffs further argue that their request for a stay of the sheriff's sale should result in an exception to the requirement imposed by N.J.S.A. 59:8-8 that litigants wait six months from the date a public entity receives notice of a claim before filing suit on their damage claims. Finally, plaintiffs argue that the dismissal of their complaint against the sheriff should have been without prejudice.

II.

Rule 4:6-2(e) provides that a complaint may be dismissed for "failure to state a claim upon which relief can be granted[.]" This rule tests "the legal sufficiency of the facts alleged on the face of the complaint." Printing Mart-Morristown v. Sharp Elecs. Corp., 116 N.J. 739, 746 (1989).

On such a motion to dismiss, a plaintiff need not prove the case, but need only "'make allegations which, if proven, would constitute a valid cause of action.'" Kieffer v. High Point Ins. Co., 422 N.J. Super. 38, 43 (App. Div. 2011) (quoting Leon v. Rite Aid Corp., 340 N.J. Super. 462, 472 (App. Div. 2001)). On such a motion, plaintiff is "entitled to every reasonable inference of fact." Printing Mart, supra, 116 N.J. at 746 (citing Indep. Dairy Workers Union v. Milk Drivers Local 680, 23 N.J. 85, 89 (1956)).

We review de novo the trial court's Rule 4:6-2(e) dismissal of plaintiffs' claims, applying the same standard as the trial court. Rezem Family Assocs. v. Borough of Millstone, 423 N.J. Super. 103, 114 (App. Div.), certif. denied, 208 N.J. 366 (2011). We limit our inquiry "'to examining the legal sufficiency of the facts alleged on the face of the complaint[.]'" Nostrame v. Santiago, 213 N.J. 109, 127 (2013) (quoting Printing Mart, supra, 116 N.J. at 746).

When courts decide Rule 4:6-2(e) dismissal motions, "'plaintiffs are entitled to every reasonable inference of fact[,]'" and "'[t]he examination of a complaint's allegations of fact . . . should be one that is at once painstaking and undertaken with a generous and hospitable approach.'" Green v. Morgan Props., 215 N.J. 431, 452 (2013) (quoting Printing Mart, supra, 116 N.J. at 746).

Such an indulgent examination of plaintiffs' complaint does not support dismissal of plaintiffs' complaint with prejudice. It does support, however, a without-prejudice dismissal of plaintiffs' complaint against the Sheriff and Agresta.

Plaintiffs first challenge the motion judge's decision to rule on the motions to dismiss, asserting that the OTSC judge already denied the motions at the OTSC hearing. Upon careful review of the order to show cause transcript and subsequent order, we conclude that the OTSC judge did not rule on the motions to dismiss; instead, he addressed each of the requirements for granting temporary restraints and explicitly stated "the [c]ourt will deny the order to show cause." The OTSC judge then ordered that "the balance of this case, if there is a balance, will proceed with [the motion judge]."

On the written order, the OTSC judge crossed out the first two paragraphs which addressed the motions to dismiss. However, drawing lines through the paragraphs of an order does not indicate a ruling on the issue. Even if the order could be interpreted as ruling on the motions to dismiss, the OTSC judge did not give any decision or reasoning on the record regarding the motions to dismiss. When there is a discrepancy between a judge's written order and an oral opinion, the oral opinion controls.3 Taylor v. Int'l Maytex Tank Terminal Corp., 355 N.J. Super. 482, 498 (App. Div. 2002). Accordingly, we conclude the OTSC judge only denied plaintiffs' application to enjoin the sheriff's sale and did not issue any ruling on defendants' motions to dismiss. Therefore, the motion judge properly heard the dismissal motions.

We next address dismissal of plaintiffs' complaint against the Sheriff. Plaintiffs' complaint alleges that ConnectOne and Agresta took control of plaintiffs' Union County property, assisted by the Sheriff, and thereafter negligently maintained the property and collected less than fifteen percent of total rents, with resulting damage to plaintiffs.

A sheriff is an agent of the law and a ministerial officer of the court. Ritter v. Castellini, 173 N.J. Super. 509, 513 (Law Div. 1980). "When . . . a sheriff takes possession of property pursuant to writ or court order, a constructive bailment is created and the sheriff becomes liable for his or her negligence in preserving the property." Voellinger v. Dow, 420 N.J. Super. 480, 485 (App. Div. 2011).

His [or her] duties are defined by statute and court rule in New Jersey. Pursuant to statute, attached personal property must remain in the safekeeping of the attaching officer to answer and abide the judgment of the court. N.J.S.A. 2A:26-12. There is no statute requiring the attaching officer to assume custody of attached real property, however. While the court may order the sheriff to take possession of attached real estate, to collect the rents, issues and profits thereof, and to manage the same, [see] R. 4:60-17(a), it is not required to do so.

[Ritter, supra, 173 N.J. Super. at 513.]

Under the facts alleged in plaintiffs' complaint, Voellinger and Ritter clearly set forth a basis for a claim upon which relief can be granted. Nevertheless, plaintiffs' complaint was subject to dismissal without prejudice because plaintiffs filed their complaint seeking damages against the Sheriff prematurely. N.J.S.A. 59:8-8 requires a tort claimant to file a notice of claim with the public entity within ninety days of accrual of a cause of action, and then wait six months before filing suit.

Plaintiffs assert that the requisite six-month waiting period should not apply here. We agree in part. N.J.S.A. 59:8-8 only applies to tort claims, and it did not preclude a plaintiff from seeking equitable relief (i.e., a stay of the sheriff's sale) before the waiting period in the statute expired. See N.J.S.A. 59:1-4 (indicating that "[n]othing in this act shall affect liability based on contract or the right to obtain relief other than damages against the public entity or one of its employees"). We further note that the OTSC judge did not dismiss plaintiffs' complaint seeking damages against the Sheriff, but merely denied plaintiffs' request for a stay of the sheriff's sale. Permitting a waiver of the six-month period in this case for plaintiffs' damage claims would frustrate two of the purposes behind this provision: permitting time for administrative review and "the opportunity to settle meritorious claims"; and, allowing the entity "to adequately investigate the facts and prepare a defense[.]" Beauchamp v. Amedio, 164 N.J. 111, 121-22 (2000) (citation and internal quotation marks omitted).

While we conclude plaintiffs' complaint against the Sheriff seeking damages was properly dismissed as premature, the record does not support a with-prejudice dismissal. Typically, a dismissal for filing a complaint prematurely under the Tort Claims Act is without prejudice. See Guerrero v. City of Newark, 216 N.J. Super. 66, 74 (App. Div. 1987) (indicating that "[o]rdinarily, plaintiff's non-compliance with the statutory waiting period would dictate granting a dismissal of the complaint without prejudice"). Here, the motion judge provided no reasons for departing from this general rule.

We also conclude plaintiffs' complaint against Agresta was properly dismissed, but again determine that the record does not support a with-prejudice dismissal. New Jersey courts are generally reluctant to permit a non-client to sue an adversary's attorney. LoBiondo v. Schwartz, 199 N.J. 62, 100 (2009). While there are limited circumstances where "attorneys may owe a duty of care to non-clients," Petrillo v. Bachenberg, 139 N.J. 472, 483-84 (1995), the record here does not indicate any such circumstances. Because we discern no basis for finding that Agresta owed a duty to plaintiffs, we conclude that this is one of those rare instances in which dismissal pursuant to Rule 4:6-2(e) is appropriate. See Lieberman v. Port Auth. of N.Y. and N.J., 132 N.J. 76, 79 (1993). While we conclude plaintiffs' complaint against Agresta was properly dismissed, the record does not support a with-prejudice dismissal. "A motion to dismiss pursuant to Rule 4:6-2(e) ordinarily is granted without prejudice." Hoffman v. Hampshire Labs, Inc., 405 N.J. Super. 105, 116 (App. Div. 2009) (citing Smith v. SBC Commc'ns., Inc., 178 N.J. 265, 282 (2004)). The motion judge provided no reasons for departing from this general rule.

We further conclude plaintiffs' complaint against ConnectOne should not have been dismissed. Despite the very limited record before us, we glean the fundament of a cause of action against ConnectOne from plaintiffs' complaint. Plaintiffs' complaint alleges that ConnectOne took control of plaintiffs' Union County property, assisted by the Sheriff, and thereafter negligently maintained the property and collected less than fifteen percent of total rents, with resulting damage to plaintiffs. When a mortgagee goes into possession of mortgaged property, the mortgagee "assumes responsibility for the management and preservation of the property." Essex Cleaning Contractors, Inc. v. Amato, 127 N.J. Super. 364, 366 (App. Div. 1974). "The duty of a mortgagee in possession is that of a provident owner." Ibid.

Thus, mortgagees in possession have long been held to "the duty of treating the property as a provident owner would treat it, . . . of using the same diligence to make it productive that a provident owner would use" and "to keep it in good ordinary repair." Shaeffer v. Chambers, 6 N.J. Eq. 548, 557 (Ch. 1847). Indeed, a mortgagee in possession is liable both for damages to the property while in possession, Zanzonico v. Zanzonico, 2 N.J. 309, 316, cert. denied, 338 U.S. 868, 70 S. Ct. 143, 94 L. Ed. 532 (1949), and in tort for injuries arising from "his actionable fault in utilizing the property or . . . his failure to perform duties imposed by law upon the owner of the land." Essex Cleaning, supra, 127 N.J. Super. at 367 (quoting Osborne, Law of Mortgages 283 (2d ed. 1970)); see also Scott v. Hoboken Bank for Sav., 126 N.J.L. 294, 298 (Sup. Ct. 1941), aff'd, 127 N.J.L. 564 (E. & A. 1942).

[Woodview Condominium Ass'n, Inc. v. Shanahan, 391 N.J. Super. 170, 176 (App. Div. 2007).]

Applying the legal principles of these cases, we conclude plaintiffs' complaint sets forth a claim upon which relief can be granted against ConnectOne. We therefore vacate the dismissal of plaintiffs' complaint against ConnectOne.

In summary, the dismissal of plaintiffs' complaint against both the Sheriff and Agresta are affirmed, but remanded for the entry of an amended order dismissing the claims without prejudice. The dismissal of plaintiffs' complaint against ConnectOne is reversed.

Affirmed in part, reversed in part, and remanded for further proceedings consistent with this opinion. We do not retain jurisdiction.

1 ConnectOne held a $1,290,000 mortgage on the property.

2 Because defendants had timely filed motions to dismiss, pursuant to Rule 4:6-2(e), which the court had yet to address, the request for entry of default was clearly premature.

3 In fairness to the motion judge, the parties did not present the transcript from the OTSC hearing to the motion judge.