PARKE BANK VS. 2820 MT. EPHRAIM AVENUE, LLC (L-3553-14, CAMDEN COUNTY AND STATEWIDE)(CONSOLIDATED) ( 2019 )

NOT FOR PUBLICATION WITHOUT THE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 NOS. A-5432-17T2
A-0943-18T2
PARKE BANK,
Plaintiff-Respondent,
v.
2820 MT. EPHRAIM AVENUE,
LLC, JOHN A. CALZARETTO,
and KEITH LUDWICK,
Defendants-Appellants,
and
HADDON FARMERS MARKET,
LLC, LSQ BEVERAGE CO., INC.,
ANTHONY CALZARETTO,
WILLIAM EPP, and JOHN DINASO,
Defendants.
______________________________
PARKE BANK,
Plaintiff-Respondent,
v.
2820 MT. EPHRAIM AVENUE,
LLC, HADDON FARMERS
MARKET, LLC, LSQ BEVERAGE
CO., INC., ANTHONY CALZARETTO,
WILLIAM EPP, JOHN DINASO
and KEITH LUDWICK,
Defendants,
and
JOHN A. CALZARETTO,
Defendant-Appellant.
_________________________________
Submitted April 3, 2019 – Decided May 3, 2019
Before Judges Nugent and Reisner.
On appeal from Superior Court of New Jersey, Law
Division, Camden County, Docket No. L-3553-14.
Mark S. Cherry, attorney for appellants 2820 Mt.
Ephraim Avenue and Keith Ludwick in A-5432-17.
John A. Calzaretto, appellant pro se in A-5432-17 and
in A-0943-18.
Dembo, Brown & Burns, LLP, attorneys for respondent
(Michael E. Brown, of counsel and on the briefs in A-
5432-17; Kyle F. Eingorn, of counsel and on the briefs
in A-0943-18).
PER CURIAM
These two appeals, which we have consolidated for purposes of this
opinion, arise from plaintiff Parke Bank's efforts to collect on a Law Division
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judgment, entered after the borrower defaulted on a commercial real estate loan.
In A-5432-17, defendants 2820 Mt. Ephraim Avenue, LLC (Mt. Ephraim), John
Calzaretto, and Keith Ludwick (collectively, defendants) appeal from a June 18,
2018 order denying their motion to mark the Law Division judgment against
them as satisfied, discharged, or released. In A-0943-18, John Calzaretto
(Calzaretto) appeals from a September 17, 2018 order for payment out of
income, requiring him to pay $5,254.05 per month to Parke Bank (the bank) to
satisfy the remaining balance of the Law Division judgment. We affirm the
orders on appeal in both cases.
I. A-5432-17
As noted, in A-5432-17, defendants appeal from a June 18, 2018 order
entered by the Law Division, denying their motion to mark the judgment
satisfied.1 The tortured history of the litigation is set forth in detail in Judge
Daniel A. Bernardin's oral opinion issued June 18, 2018. A brief summary will
suffice here.
1
Defendants' brief identifies several prior orders, going back to December 19,
2014, as being involved in the appeal. However, those orders are not listed in
the notice of appeal, and an appeal from those prior orders is not properly before
us. See R. 2:5-1(e)(3)(i).
A-5432-17T2
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There is no dispute that the bank gave Mt. Ephraim a loan secured by a
mortgage on commercial property. Calzaretto personally guaranteed the loan.
After the borrower defaulted on the loan, the bank filed a collection action in
the Law Division and a foreclosure action in the Chancery Division. In the
foreclosure action, the Chancery Division appointed a receiver in 2014. On June
10, 2016, the Chancery Division entered an order authorizing the receiver to sell
the property, over defendants' objections. The Chancery Division subsequently
entered an amended order in 2017, permitting the receiver to sell the property
for an adjusted sale price. Defendants once again objected; the court rejected
their arguments and later denied their reconsideration motion.
Meanwhile, the Law Division entered judgment against defendants by
default on January 9, 2015. Defendants did not appeal from that final judgment.
In October 2015, they filed an order to show cause seeking to vacate the
judgment and seeking to assert a counterclaim against the bank and the receiver.
The Law Division denied that application and denied defendant's motion to
reconsider the denial. Defendants did not appeal from any of those orders.
Instead, as noted above, they filed motions in the Chancery Division, seeking to
attack the order permitting the sale. The Chancery Division denied those
applications.
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After filing a bankruptcy petition in June 2017, defendants also attacked
the judgment in the bankruptcy court, presenting the same arguments they
previously raised in the Law Division and Chancery Division. The bankruptcy
judge nonetheless granted plaintiff's motion to lift the automatic stay. Instead
of challenging that order in federal court, defendants dismissed the bankruptcy
petition. The Chancery-appointed receiver completed the sale of the property
on August 29, 2017.
Defendants then filed a motion in the Law Division for an order declaring
plaintiff's money judgment satisfied. In a lengthy oral opinion, Judge Bernardin
concluded that defendants' arguments had been previously raised and rejected in
the foreclosure case and in prior Law Division motions, and the arguments were
barred by the doctrines of res judicata, collateral estoppel, and law of the case.
Judge Bernardin denied the motion by order dated June 18, 2018, and this appeal
followed.
On this appeal, defendants present the following points of argument:
I. LEGAL ARGUMENT – STANDARD OF
REVIEW
II. THE LOWER COURT'S JUNE 18, 2018
DECISION FAILS TO APPLY THE DOCTRINE OF
MITIGATION OF DAMAGES TO THE FACTS
SURROUNDING RESPONDENT'S MARCH 2014
FAILURE AND REFUSAL TO MITIGATE ITS
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DAMAGES BY REJECTING PETITIONER'S OFFER
TO FULLY PAY OFF RESPONDENT'S LOAN AT
THE TIME OF THE INITIAL DEFAULT.
III. THE LOWER COURT'S JUNE 18, 2018
DECISION FAILS TO APPLY THE DOCTRINE OF
MITIGATION OF DAMAGES TO THE FACTS
SURROUNDING RESPONDENT'S APRIL 2016
FAILURE AND REFUSAL TO MITIGATE ITS
DAMAGES BY REJECTING A LOAN AND
JUDGMENT PURCHASE IN THE NET AMOUNT OF
$3,900,000 AND INSTEAD INTENTIONALLY,
WILLFULLY, AND M[A]LICIOUSLY DEFAMING
PETITIONER JOHN CALZARETTO, CPA, JD AND
TORTIOUSLY INTERFERING WITH THE
PETITIONER BORROWER'S CONTRA[C]TUAL
RELATIONSHIP WITH ITS LENDER.
IV. THE LOWER COURT'S JUNE 18, 2018
DECISION FAILS TO APPLY THE DOCTRINE OF
MITIGATION OF DAMAGES TO THE FACTS
SURROUNDING RESPONDENT'S APRIL 2016
FAILURE AND REFUSAL TO MITIGATE ITS
DAMAGES IGNORING A $5,700,000 EXECUTED
CONTRACT OF SALE GIVEN BY MOSAIC
DEVELOPMENT PARTNERS LLC; FAILING AND
REFUSING TO EVEN CONTACT THE CONTRACT
PURCHASER.
V. THE LOWER COURT'S JUNE 18, 2018
DECISION FAILS TO APPLY THE DOCTRINE OF
MITIGATION OF DAMAGES TO THE FACTS
SURROUNDING RESPONDENT'S APRIL OF 2017
FAILURE AND REFUSAL TO MITIGATE ITS
DAMAGES BY ONCE AGAIN FAILING AND
REFUSING TO ACCEPT PAYMENT IN THE NET
AMOUNT THAT REACHED $4,000,000 OFFERED
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BY THE PETITIONERS' RELATED PARTY BUYER,
BLACK HORSE PLAZA ASSOCIATES LLC.
VI. THE LOWER COURT'S JUNE 18, 2018
DECISION FAILS TO APPLY THE DOCTRINE OF
MITIGATION OF DAMAGES TO THE FACTS
SURROUNDING RESPONDENT'S SUPPORT OF
RECEIVER'S AND THEIR JOINT ATTORNEYS'
FAILURE AND REFUSAL TO MITIGATE ITS
DAMAGES BY FAILING AND REFUSING TO ACT
AS A REASONABLY PRUDENT OWNER.
VII. THE COMPUTATION
As previously noted, the only issue properly before us on this appeal is
the validity of the June 18, 2018 Law Division order, as that was the only order
listed in defendants' notice of appeal. See R. 2:5-1(e)(3)(i); 1266 Apartment
Corp. v. New Horizon Deli, Inc., 368 N.J. Super. 456, 459 (App. Div. 2004).
We agree with Judge Bernardin that defendants' attacks on the underlying
judgment, and on plaintiff's right to collect it, were barred by the doctrines of
res judicata, collateral estoppel, and law of the case. As a result, the judge
properly denied defendants' application for an order declaring the judgment
satisfied. Defendants' appellate arguments are without sufficient merit to
warrant further discussion in a written opinion. R. 2:11-3(e)(1)(E). We affirm
substantially for the reasons stated in Judge Bernardin's thorough opinion.
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II. A-0943-18
In A-0943-18, defendant John Calzaretto appeals from a September 17,
2018 Law Division order for payments out of his income, in the monthly amount
of $5,254.05. See N.J.S.A. 2A:17-64 (authorizing the court to direct a judgment
debtor to pay the judgment in installments out of his or her income). As
previously noted, Calzaretto personally guaranteed the commercial loan
involved in the companion appeal. The issue on this appeal is whether the court
erred in enforcing the judgment against Calzaretto by including, in the monthly
payment amount, ten percent of the gross monthly income of his solely-owned
accounting firm, Calzaretto & Company, LLC (the LLC).
We previously remanded this case for a statement of reasons, because the
original motion judge (not Judge Bernardin) did not make sufficient findings of
fact to support his decision as to the amount of the monthly payment. Parke
Bank v. 2820 Mt. Ephraim Avenue, LLC, No. A-4164-15 (App. Div. Oct. 12,
2017). On remand, the matter was reassigned to Judge Bernardin, who directed
plaintiff to refile its motion. The parties agreed he could decide the amount of
the monthly payment without a plenary hearing, based solely on financial
documents and other materials they had submitted.
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Based on the evidence, including an unfiled version of defendant's 2014
tax return 2, Judge Bernardin found that the firm's gross income was almost half
a million dollars a year. But Calzaretto argued that the judge should base the
monthly payment amount on the firm's "net profits," which he claimed were
zero. In his September 17, 2018 oral opinion, Judge Bernardin rejected that
argument. The judge found that defendant admitted intentionally structuring his
finances so as to render himself judgment-proof, putting all of his assets in his
wife's name and causing his various LLCs to pay the wife "a monthly
management fee." The judge further found evidence that defendant had abused
the corporate form. The judge concluded that the calculation should be based
on the LLCs gross income, not its alleged net income. However, the judge
limited the monthly payments to ten percent of Calzaretto's total gross income,
pursuant to the wage execution statute, N.J.S.A. 2A:17-56. See Zavodnick v.
Leven, 340 N.J. Super. 94 (App. Div. 2001).
Noting that defendant was still liable for the $1.6 million judgment, the
judge rejected defendant's argument that our remand somehow entitled him to a
refund of amounts he had previously paid.
2
At his deposition, defendant admitted that he prepared the document for
purposes of this litigation and had not filed it with the Internal Revenue Service.
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On this appeal, defendant presents the following points of argument:
I. LEGAL ARGUMENT – STANDARD OF
REVIEW.
II. THE TRIAL COURT'S SEPTEMBER 17, 2018
ORDER IGNORES, DENIES AND VIOLATED THE
DEFENDANT/PETITION[ER]'S RIGHTS UNDER
NEW JERSEY STATE LAW AT N.J.S.A. 42:2C-1 ET
SEQ., ZAVODNICK V. LEVEN, 340 N.J. SUPER. 94,
773 A.2D 1170 AS APPLIED TO N.J.S.A. 2A:17-56
AND, AS MAY BE APPLICABLE, FEDERAL LAW
AT 15 U.S.C.A. Sec. 1573.
III. DUE TO THE APPE[LLA]TE COURT[']S
OCTOBER 12, 2017 REVERSAL OF THE LOWER
COURT[']S APRIL 15, 2016 ORDER PAYMENTS
MADE BY DEFEN[D]ANT MUST BE RETURNED
TO THE DEFENDANT.
We affirm substantially for the reasons stated in Judge Bernardin's
opinion. Defendant's arguments are without sufficient merit to warrant
discussion here, beyond the following brief comments. R. 2:11-3(e)(1)(E).
Judge Bernardin calculated defendant's total personal income, based on
defendant's reported income from other sources plus the gross income of the
LLC, which the judge deemed to be defendant's income. The judge used the
total figure to calculate the ten-percent of income on which N.J.S.A. 2A:17-56
permits a judgment creditor to execute. On this record, we find no error in that
calculation.
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Defendant, who exercised sole control of the LLC, which was his
accounting firm, argued that his income should have been based on the firm's
net profit, which he claimed was zero, although he admitted that its gross income
was almost half a million dollars. The judge rejected that argument. The judge
did not accept defendant's claim that the LLC made no profit, in light of evidence
that defendant disregarded the corporate form, charged his personal expenses to
the LLC, and admittedly structured his finances so as to appear judgment-proof.
Defendant's appellate brief-in-chief does not deny, or even address, any of those
factors, and his reply brief makes factual assertions without citations to the
record. Contrary to defendant's argument, the judge did not permit plaintiff to
interfere with the LLC's management in violation of N.J.S.A. 42:2C-43. Rather,
the judge ordered defendant to pay the judgment out of his income.
Defendant's reliance on Zavodnick v. Leven, 340 N.J. Super. 94 (App.
Div. 2001), is misplaced. Zavodnick does not address the treatment of income
from a solely-owed LLC, nor does it address whether a wage execution is limited
to the debtor's share of an LLC's net profits as opposed to gross profits.
Zavodnick addressed a collection action directed at the defendant-attorney's
share of net profits from a multi-attorney partnership. Analogizing an attorney's
profit distribution to employee wages, the court held that absent a statutory
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exception, a creditor could only collect ten percent of the attorney's profit
distribution, pursuant to N.J.S.A. 2A:17-56. Unlike this case, there was also no
dispute in Zavodnick about the amounts the defendant was receiving from the
partnership.
Affirmed.
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