CORPORATE REALTY SERVICES, LLC VS. KATHLEEN CROGHAN VS. JOSEPH CROGHAN (L-1433-15, SOMERSET COUNTY AND STATEWIDE) ( 2018 )

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court."
Although it is posted on the internet, this opinion is binding only on the
parties in the case and its use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-2772-15T1
CORPORATE REALTY SERVICES, LLC,
Plaintiff,
v.
KATHLEEN CROGHAN,
Defendant/Third-Party
Plaintiff-Respondent,
and
LISA GERSTMANN-BOYLE,
Defendant/Third-Party
Plaintiff,
v.
JOSEPH CROGHAN and KRONER
CONTRACTING, d/b/a KRONER C&C, LLC,
Third-Party Defendants-
Appellants,
and
STEVEN CRIVELLO,
Third-Party Defendant.
____________________________________
Submitted February 26, 2018 – Decided July 10, 2018
Before Judges Messano and Vernoia.
On appeal from Superior Court of New Jersey,
Law Division, Somerset County, Docket No.
L-1433-15.
Santo V. Artusa, Jr., attorney for appellants.
Judith L. Rosenthal, attorney for respondent.
PER CURIAM
Third-party defendant Joseph Croghan (Joseph)1 appeals from
a December 8, 2015 order suppressing his answer and affirmative
defenses to the third-party complaint pursuant to Rule 4:23-2(b),
and a February 5, 2016 final order entering judgment against him.
Because we are satisfied the court did not abuse its discretion
by suppressing Joseph's answer to the third-party complaint, we
affirm.
I.
Third-party plaintiff Kathleen Croghan (Kathleen) and Joseph
were married and then divorced years before the events giving rise
to the present litigation. In 2014, they were embroiled in an
Essex County post-judgment matrimonial action over Joseph's
obligation to contribute to their child's college expenses.
1
Because third-party plaintiff Kathleen Croghan and third-party
defendant Joseph Croghan share a surname, we refer to them by
their first names. We intend no disrespect in doing so.
2 A-2772-15T1
Kathleen and her friend Lisa Gerstmann-Boyle conducted Google
searches to determine if Joseph had assets or income he failed to
report in the matrimonial action. As a result of their Google
searches, they discovered checks totaling $127,246 that were
issued by Corporate Realty Services, LLC (CRS), a company owned
by Joseph's close friend Steven Crivello, to Kroner Contracting,
LLC (Kroner), a company Joseph owned. Kathleen submitted copies
of the checks to the court in the matrimonial action, arguing they
showed Joseph failed to fully disclose his actual income.
In September 2014, CRS filed a verified complaint alleging
Kathleen and Gerstmann-Boyle violated various federal and state
statutes and engaged in tortious conduct by hacking into CRS's
computer network. CRS sought temporary restraints barring
Kathleen and Gerstmann-Boyle from using or disclosing information
they obtained from their Google searches, but the court denied the
request.
Kathleen and Gerstmann-Boyle filed an answer to the
complaint. Kathleen filed a counterclaim against CRS, and a third-
party complaint against Joseph, Crivello and Kroner, alleging they
conspired to disguise and hide income earned by Joseph for the
purpose of preventing disclosure of the income in Kathleen and
Joseph's post-judgment matrimonial proceedings.
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CRS's claims against Kathleen and Gerstmann-Boyle were
subsequently dismissed pursuant to a settlement agreement. CRS
agreed to pay Kathleen and Gerstmann-Boyle $7500. Following the
settlement, only Kathleen's third-party claims against Joseph and
Kroner (hereinafter referred to collectively as third-party
defendants) remained.
Kathleen had served third-party defendants with
interrogatories and document demands, and attempted to take
Joseph's deposition. In April 2015, Kathleen first moved to compel
discovery, requesting an order directing that third-party
defendants provide full and complete responses to certain
interrogatories and document demands, and that Joseph appear for
a deposition. In a May 7, 2015 order, the court granted the motion
in part and denied it in part as to the responses to the
interrogatories and document demands, and also directed that
Joseph appear for a June 29, 2015 deposition.
Kathleen subsequently served Joseph with a notice of
deposition for June 29, 2015, with an attached notice to produce
documents. Third-party defendants did not provide supplemental
responses to the outstanding interrogatories, did not produce any
documents in response to the notice to produce that was attached
to the deposition notice, and unilaterally adjourned the court-
ordered June 29, 2015 deposition. Kathleen again moved to compel
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third-party defendants' provision of full and complete responses
to the outstanding interrogatories and document demands, and
Joseph's attendance at a deposition. Kathleen also sought an
award of attorney's fees.
In a July 10, 2015 order, the court directed that third-party
defendants provide answers to the outstanding interrogatories and
document demands. The court also directed that third-party
defendants pay Kathleen's counsel fees "representing sanctions
for" their "violation of the May 7, 2015 [o]rder, including legal
fees incurred in having to file repeated motions to obtain
discovery." The court instructed the parties to confer and agree
on a date for Joseph's deposition.
The deposition was scheduled for July 23, 2015, but neither
Joseph nor his counsel appeared or informed Kathleen's counsel
they would not attend. On or about July 27, 2015, Kathleen filed
her third motion to compel discovery, seeking an order directing
third-party defendants to provide answers to interrogatories and
responses to the document demands as directed in the May 7 and
July 10, 2015 orders, and that Joseph appear for his deposition.
Kathleen also requested an award of attorney's fees.
The judge who heard Kathleen's first two discovery motions
retired, and her third motion to compel discovery was assigned to
Judge Yolanda Ciccone. In August 2015, Judge Ciccone issued a
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preliminary decision prior to the motion's return date, but the
parties did not accept the decision and requested oral argument.
The motion was subsequently assigned to Judge Margaret Goodzeit
for argument and disposition.
While the motion was pending, Kathleen served third-party
defendants with a second set of interrogatories and document
demands. The record shows that third-party defendants never
provided responses to either.
Judge Goodzeit heard argument on Kathleen's third motion to
compel discovery, reviewed the transcript from the hearing on
Kathleen's first motion, and determined third-party defendants
failed to comply with the court's prior orders compelling responses
to certain interrogatories and document demands, and failed to
advise counsel that neither Joseph nor his counsel would attend
the July 23, 2015 deposition. The judge entered an October 15,
2015 order finding Joseph "in violation of litigant's rights for
failure to comply with the May 7, 2015 and July 2015 orders." The
judge ordered that Joseph provide fully responsive answers to
designated interrogatories and documents in response to designated
document demands, and directed that Joseph appear for his
deposition on October 29, 2015, with all of the documents requested
in the notice to produce attached to the deposition notice. The
court further ordered that if Joseph failed to comply with the
6 A-2772-15T1
foregoing directives, Kathleen could file a motion on short notice
requesting that third-party defendants' answer be stricken. The
court also granted Kathleen's request for attorney's fees.
The parties subsequently agreed to reschedule Joseph's
deposition for November 3, 2015. Joseph opted to appear and
testify without his counsel. The record shows the deposition was
contentious, with Joseph providing evasive answers to many of the
questions, and offering commentary concerning Kathleen's counsel's
questions and the merits of Kathleen's claims. Joseph insulted
Kathleen, calling her a "crook," "skunk," and "that thing," and
made derogatory references about Kathleen's counsel, including
describing her as "scatterbrain[ed]," "stupid," "brainless,"
"dumb," and "the rear end of a dog." Shortly after a lunch break,
he announced he was leaving the deposition at 4:00 p.m. because
he had forgotten to take his heart medication that morning. A few
minutes past 4:00 p.m., he left the deposition in the middle of
counsel's questioning.
Kathleen subsequently filed a motion on short notice
requesting the suppression of third-party defendants' answer with
prejudice. After hearing argument, Judge Goodzeit issued a
comprehensive written statement of reasons detailing Kathleen's
attempts to obtain third-party defendants' discovery responses,
and third-party defendants' provision of incomplete and non-
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responsive answers to certain discovery requests and complete
failure to provide responses to others in violation of the rules
and the court's prior orders. The judge also described third-
party defendants' failure to pay certain court-ordered sanctions
and the gamesmanship they employed in their attempts to pay others.
The judge also determined that during Joseph's November 3,
2015 deposition he failed to provide any of the documents that had
been requested and which the court previously ordered he produce,
and he "instead cho[se] to insult Kathleen and her counsel and
provid[e] evasive responses to relevant questions." The court
found Joseph "unilaterally terminated his deposition prior to
completion, relying on his purported health issues, which, to
date, he has failed to provide any evidence of whatsoever." The
court found Joseph failed to produce "a scintilla of evidence
tending to prove that he ha[d] any medical issues, or that he even
takes medication," and observed that Joseph testified he
"[s]ometimes" works "24-hour days," "six days [a week]" but claimed
he needed to terminate the deposition because of his purported
medical condition. The court observed that if Joseph had provided
discovery responses as directed by the court and provided
responsive answers, there is a strong likelihood his deposition
would have ended more quickly.
8 A-2772-15T1
The court concluded the sanction of striking third-party
defendants' answer was required because: the discovery Joseph
continuously failed to provide went to the foundation of Kathleen's
claims; Joseph's refusal to comply with the court's prior orders
was "deliberate and contumacious;" no lesser sanction would
suffice because the outstanding discovery may have been destroyed
and a second deposition is unlikely to produce any probative
evidence; and Joseph, rather than his counsel, is responsible for
the violations and the failure to maintain documents requested in
the discovery demands. The court determined Joseph failed to
demonstrate that his violations of the court's orders was
justified. The court entered a December 8, 2015 order suppressing
third-party defendants' answer with prejudice and awarding counsel
fees related to Kathleen's counsel's attendance at the deposition
and the suppression motion.
Joseph filed a motion for reconsideration. After hearing
argument, Judge Goodzeit entered a January 11, 2016 order denying
the request. In a detailed written statement of reasons, Judge
Goodzeit found that Joseph's motion was supported by information
that was available prior to the entry of the December 8, 2015
order, but which Joseph failed to provide to the court at that
time. The judge also rejected Joseph's claims that the evidence
9 A-2772-15T1
had not shown that he willfully violated the court's October 15,
2015 order compelling discovery.
A different judge subsequently conducted a proof hearing on
Kathleen's third-party claims. Kathleen testified and presented
documentary evidence. The court entered a February 5, 2016 final
judgment against Joseph awarding Kathleen $22,154.80 as damages.
This appeal followed.
On appeal, Joseph presents the following arguments for our
consideration.
Point I: The Trial Court Erred in Striking
of [Joseph's] Answer[.]
A. THE COURT'S DISMISSAL WAS IMPROPER AS IT
WAS BASED ON A VAGUE COURT ORDER AND
TRANSCRIPT.
B. THE COURT'S DISMISSAL WITH PREJUDICE WAS
IMPROPER PURSUANT TO COURT RULE[.]
Point II[:] Joseph Croghan Suffered
Irreparable Harm When [N]ot Permitted to
Review the Documents Presented During the
Proof Hearing[.]
Point III[:] DISQUALIFICATION PURSUANT TO R.
1:12-1 – THE CASE SHOULD HAVE BEEN TRANSFERRED
AS SOON AS PRESIDING JUDGE MILLER LEARNED OF
THIRD PARTY DEFENDANT JOSEPH CROGHAN'S
INVOLVEMENT IN THE LITIGATION[.]
II.
Rule 4:23-2(b)(3) permits a court to enter an "order striking
out pleadings or parts thereof . . . with or without prejudice,
10 A-2772-15T1
or rendering a judgment by default against the disobedient party"
who "fails to obey an order to provide or permit discovery." In
its consideration of the ultimate sanction of striking a pleading,
a judge must weigh the delinquent party's right to an adjudication
on the merits with the other party's right to expect compliance
with the discovery rules and orders. Zaccardi v. Becker, 88 N.J.
245, 256-58 (1982). The sanction of dismissal should be used
"sparingly," id. at 253, in only "those cases where the order for
discovery goes to the very foundation of the cause of action, or
where the refusal to comply is deliberate and contumacious," Abtrax
Pharm., Inc. v. Elkins-Sinn, Inc., 139 N.J. 499, 514 (1995)
(citation omitted); see also Gonzalez v. Safe & Sound Sec. Corp.,
185 N.J. 100, 115-16 (2005).
We review a court's dismissal of a pleading pursuant to Rule
4:23-2(b)(3) for an abuse of discretion. Abtrax, 139 N.J. at 517;
see also Allegro v. Afton Vill. Corp., 9 N.J. 156, 161 (1952)
(recognizing "[i]t is peculiarly within the sound discretion of
the trial court" to determine the sanction imposed for a discovery
breach). An abuse of discretion occurs "when a decision is 'made
without a rational explanation, inexplicably departed from
established policies, or rested on an impermissible basis.'" U.S.
Bank Nat'l Ass'n v. Guillaume, 209 N.J. 449, 467-68 (2012) (quoting
Iliadis v. Wal-Mart Stores, Inc., 191 N.J. 88, 123 (2007)).
11 A-2772-15T1
Measured against these standards, we are satisfied Judge
Goodzeit did not abuse her discretion by striking Joseph's answer
with prejudice, and we affirm substantially for the reasons set
forth in the judge's well-reasoned December 8, 2015 written
statement of reasons. The record supports her determination that
Joseph violated the October 15, 2015 order compelling discovery
by failing to provide responses to the written discovery demands
designated in the order, and by being evasive during his court-
ordered deposition and unilaterally terminating the deposition
prior to its conclusion without justification or applying for a
protective order.
We reject Joseph's contention the October 15, 2015 order was
entered in error because the May 7, 2015 order was vague and Judge
Goodzeit improperly relied on the transcript of the proceedings
before the judge who issued the May 7, 2015 order. Joseph ignores
the court's July 10, 2015 order, which he does not challenge on
appeal, directing that he provide responses to Kathleen's
interrogatories and document demands and imposed sanctions for
violating the May 7, 2015 order. Moreover, on October 15, 2015,
Judge Goodzeit again ordered that Joseph provide responses to
particular interrogatories and document demands. Joseph does not
challenge the October 15, 2015 order on appeal, and he never
provided the responses as required. Thus, any purported confusion
12 A-2772-15T1
over the alleged vagaries of the May 7, 2015 order provides no
justification for Joseph's failure to respond to the discovery
demands in response to either the July 10 or October 15, 2015
orders.
Joseph also contends the court erred because he attended his
deposition on November 3, 2015, and terminated the deposition
because of his purported medical condition. As Judge Goodzeit
correctly observed, however, Joseph did not produce any evidence
beyond his bald assertion that a medical condition precluded his
continued participation at his deposition. On his motion for
reconsideration, Joseph attempted to revive his contention that a
medical condition prevented the continuation of his deposition,
but failed to provide any competent evidence from a medical
professional supporting his claim. See R. 1:6-6 (requiring that
motions based on facts not appearing of record must be supported
by affidavits made on personal knowledge setting forth "facts
which are admissible in evidence to which the affiant is competent
to testify").
In addition, Joseph's abusive conduct toward Kathleen's
counsel and evasive answers to her questions throughout the
deposition support Judge Goodzeit's conclusion that an order
directing the continuation of the deposition would have been
useless. He argues the court erred in striking his answer because
13 A-2772-15T1
he attended his deposition, but his words and conduct during the
deposition constituted a clear and unequivocal declaration – he
will answer only those questions he chooses to answer.
"A litigant that deliberately obstructs full discovery
corrupts one of the fundamental precepts of our trial practice –
the assumption by the litigants and the court that all parties
have made full disclosure of all relevant evidence in compliance
with the discovery rules." Abtrax, 139 N.J. at 521. The record
supports Judge Goodzeit's finding Joseph deliberately and
contumaciously breached that precept and the court's prior orders
here. See id. at 514.
The discovery Kathleen sought in the interrogatories, demands
for documents and during Joseph's deposition was at the center of
her claim Joseph conspired with CRS and Crivello to hide income
he and Kroner earned for work performed for CRS. The requested
information related directly to Kroner's receipt of the payments
from CRS and the manner in which the payments were paid and
deposited into accounts in which either Joseph or Kroner had an
interest. Joseph, however, consistently refused to provide that
information even when ordered to do so by the court. See ibid.
at 514 (finding that striking a pleading is appropriate where the
discovery violation goes to the foundation of a claim).
14 A-2772-15T1
In sum, Joseph fails to demonstrate that Judge Goodzeit's
decision was made without a rational explanation, departed from
established principles or rested on an impermissible basis. See
Guillaume, 209 N.J. at 467-68. Finding no abuse in the exercise
of her discretion, we affirm the December 8, 2015 order striking
third-party defendants' answer with prejudice.2
We are not persuaded by Joseph's claim that he suffered
prejudice when he was not permitted to review documents presented
by Kathleen during the proof hearing. The record contradicts the
contention. At the outset of the proof hearing, Kathleen's counsel
provided binders to Joseph and the court that included documents
which had been marked as potential trial exhibits. It was
represented at the proof hearing that the exhibits had been
supplied both during discovery and prior to the hearing, Joseph's
counsel did not argue to the contrary, and there is no evidence
showing otherwise. Thus, Joseph had the opportunity to review all
of the exhibits prior to hearing as they were assembled in the
binder and presented at the hearing.
2
Joseph does not argue the court erred by denying his
reconsideration motion. We therefore do not address the January
11, 2016 order denying the motion. An issued not briefed on appeal
is deemed waived. Jefferson Loan Co. v. Session, 397 N.J. Super.
520, 525 n.4 (App. Div. 2008); Zavodnick v. Leven, 340 N.J. Super.
94, 103 (App. Div. 2001).
15 A-2772-15T1
In addition, the court admitted only three of the exhibits,
and Joseph concedes he was provided with copies of those exhibits.
The remaining exhibits in the binders were collected without
objection because they contained confidential financial
information, and Joseph's counsel expressly advised the court he
did not need any exhibits that were not admitted in evidence.
Joseph's counsel did not seek to admit any of the exhibits into
evidence or question Kathleen, the only witness at the hearing,
about them. Thus, Joseph's claim he was either deprived of the
documents, suffered prejudice because he did not receive them
prior to the hearing, or suffered prejudice because the exhibits
were not admitted in evidence is without merit.
Joseph also argues he is entitled to a reversal because the
Presiding Judge of the Civil Division had a conflict of interest.
He contends the judge represented Joseph in a matter prior to
becoming a Superior Court judge. We find the contention lacks
sufficient merit to warrant discussion in a written opinion, R.
2:11-3(e)(1)(E), noting that the Presiding Judge had no
involvement in the matter and, after Joseph raised the issue in a
motion that was heard in April 2016, Judge Ciccone transferred
venue of the case to Ocean County.
We do not address the merits of any argument raised for the
first time in Joseph's reply brief, including those related to the
16 A-2772-15T1
sufficiency of the evidence supporting the court's final
judgement. It is improper for a party to use a reply brief to
raise an issue for the first time or enlarge the main argument.
State v. Smith, 55 N.J. 476, 488 (1970); L.J. Zucca, Inc. v. Allen
Bros. Wholesale Distribs. Inc., 434 N.J. Super. 60, 87 (App. Div.
2014); N.J. Citizens Underwriting Reciprocal Exch. v. Kieran
Collins, D.C., LLC, 399 N.J. Super. 40, 50 (App. Div. 2008).
Accordingly, an issue that is not addressed in a party's initial
merits brief is deemed waived. See Drinker Biddle & Reath LLP v.
N.J. Dept. of Law & Pub. Safety, 421 N.J. Super. 489, 496 n.5
(App. Div. 2011); Liebling v. Garden State Indem., 337 N.J. Super.
447, 465-66 (App. Div. 2001).
Affirmed.
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