STEVEN CALTABIANO VS. FRAN GRENIER (C-000012-17, SALEM COUNTY AND STATEWIDE) ( 2020 )

NOT FOR PUBLICATION WITHOUT THE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 limite d. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-0999-18T2
STEVEN CALTABIANO and
CHARLES HASSLER,
Plaintiffs-Respondents,
v.
FRAN GRENIER, in his
capacity as Chairman of the
Salem County Republican
Committee, JESSICA BISHOP,
in her capacity as Treasurer of
the Salem County Republican
Committee and SALEM COUNTY
REPUBLICAN COMMITTEE,
Defendants-Appellants.
_______________________________
Submitted March 3, 2020 - Decided September 16, 2020
Before Judges Accurso, Gilson and Rose.
On appeal from the Superior Court of New Jersey,
Chancery Division, Salem County, Docket No.
C-000012-17.
Michael M. Mulligan, attorney for appellants.
Brown & Connery, LLP, attorneys for respondents
(William M. Tambussi and Michael J. Miles, on the
brief).
PER CURIAM
In this summary action instituted pursuant to N.J.S.A. 19:44A-21,
defendants Salem County Republican Committee, its chairman, Fran Grenier,
and treasurer, Jessica Bishop, appeal from the entry of a final order of the
Chancery Division directing the Committee to return to the Estate of James X.
Farish all sums the Committee received from the Reagan Republican Club of
Penns Grove and the Reagan Republican Club of Penns Grove James X. Farish
Irrevocable Trust, as well as any income derived from those sums, because the
contributions to the Penns Grove Club from the Farish Estate exceeded
permitted contribution limits. Finding no error, we affirm.
The essential facts are undisputed. James Farish was an officer of the
Penns Grove Club, a municipal political party committee. The day before he
died in 2004, he executed a one-page will leaving ten percent of his Estate to
the Club. In accordance with the will, Farish's executor issued four checks
made payable to the Club. The first check in October 2005 was in the sum of
$38,656. The next check, in January 2007, was for $82,413. The third check
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followed in October 2007, for $36,071. The Estate tendered the final check for
$6000 in February 2009.
Frank Santucci, the founder of the Penns Grove Club and its president
throughout its existence, was aware of the $7200 annual limit on individual
contributions to municipal political party committees, N.J.S.A. 19:44A-
11.4(c), and knew that the first three checks from the Farish Estate exceeded
those limits. Although the Penns Grove Club made regular filings with the
New Jersey Election Law Enforcement Commission (ELEC), none of the
Estate's contributions was ever reported.
When Santucci learned of the Farish bequest, shortly after Farish's death,
he decided to create a trust to maintain the principal and produce as much
income as possible to fund the Club's operations. Santucci testified at
deposition that the contribution limits did not factor into his thinking, and
"what was in [his] heart and soul was that he wanted to have a sustained
income for the republican party." Santucci, who is not a lawyer, and didn’t
consult with one, drafted the trust instrument, and it was executed by the
trustees, Santucci, Mike Wistar, Mike Bercute, Janet Bercute and Gilda Gill,
all officers of the Penns Grove Club, shortly after the Estate tendered the first
check in October 2005.
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The two-page trust instrument, which variously refers to both the Reagan
Republican Club of Penns Grove James X. Farish Irrevocable Trust Fund and
"the decedent James X. Farish" as the grantor, and identifies the Reagan
Republican Club of Penns Grove as the "Grantee and/or Trustee," provides that
"the Grantee/Trustee Executive Committee officers . . . shall hold, manage,
invest and reinvest the Trust Estate Fund as necessary to produce and collect
an income for the Reagan Republican Club of Penns Grove." The instrument
further provides the trustees "can only spend the income from the [t]rust and
[could] not spend, devest, borrow from or place a lien against the principal
investments." Finally, the instrument provides the "Salem County Republican
Organization" would become the successor trustee with all the associated
"rights, duties, and benefits" in the event the Club disbanded. Santucci
testified during his deposition, that while the Farish trust was "a separate legal
entity" from the Club, he and the other trustees, the executive officers of the
Club, "had the power to amend" the trust instrument and "control" income
distributions from the trust.
The Club invested $150,000 of the Farish bequest, leaving in excess of
$7000 in the Club's "holding account" for emergencies, and used the income
and dividends to fund the Club's operations and make contributions to
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republican candidates and committees. In 2017, the Club disbanded. Santucci
testified that after he turned eighty-years-old, he'd "had enough" and wanted to
"get out to enjoy [his] life," and "didn't want to be arguing or fighting with
people" and instead wanted to "make [his] wife's life more peaceful."
The Club reported to ELEC in February 2017 that it terminated
operations the prior month, and that its expenditures for the year would not
exceed $5500. In late February, defendants Grenier and Bishop opened an
account at Pennsville National Bank on behalf of the Salem County
Republican Committee to receive the income generated by the Farish trust.
Santucci issued three checks to the Committee totaling $13,739.04, which the
Committee deposited into the Pennsville account. The Committee opened an
investment account for receipt of the invested principal of the Farish bequest
and ownership of the account was transferred from the Club to the Committee,
which issued a resolution designating Grenier and Bishop as the persons
authorized to make decisions and act on behalf of the Committee with respect
to the investment account. Grenier and Bishop were also responsible for
directing contributions from the income and dividends from the Farish
invested funds to republican candidates and committees.
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In its second quarter 2017 report to ELEC, the Committee reported
contributions of $13,739.04 and $189,042.30 from the Reagan Republican
Club of Penns Grove - James X. Farish Irrevocable Trust. The Committee also
reported $6,895.65 in dividends, interest and other income from the Farish
trust. Noting the unusually large contributions, plaintiff Caltabiano, the
chairman of the Salem County Democratic Committee, filed a complaint with
ELEC requesting an immediate investigation into the contribution and the
conduct of the Committee, Grenier and Bishop.
Bishop wrote to ELEC advising that she and Grenier had been made
trustees of the Farish trust and associated accounts, and that the trust was a
separate and distinct legal entity from the Committee, representations she and
Grenier have since conceded were not true or correct. Both now admit the
Farish trust is owned and controlled by the Committee, through them. Based
on advice Bishop claims to have received from ELEC in response to her letter,
the Committee amended its second quarter report to remove all references to
the contribution from the Club and the Farish trust.
The amended filing prompted a second complaint to ELEC by
Caltabiano, noting the removal of the "illegal campaign contributions"
previously complained of without any explanation and repeating his call for an
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immediate investigation. A week later, Caltabiano and Charles Hassler, a
candidate for Salem County freeholder, filed this action for declaratory and
injunctive relief pursuant to N.J.S.A. 19:44A-22.1, alleging the facts recounted
above, and asserting that defendants used the club as a conduit to funnel
$189,042.30 in illegal contributions to the Republican County Committee.
Plaintiffs further alleged the Committee made expenditures benefiting
Grenier's campaign for the New Jersey Senate after its receipt of the Farish
funds from the Club, and that the Farish contribution had been used in
opposition to plaintiff Hassler's candidacy for Salem county Freeholder. The
complaint recounted plaintiffs' two complaints to ELEC, and that ELEC had
not acted on either. Plaintiffs asked the court to declare the $198,042.30
contribution violated the New Jersey Campaign Contribution and Expenditure
Reporting Act, N.J.S.A. 19:44A-1 to -47; to enjoin defendants from using the
contribution and any proceeds and to account for same; and awarding them
their attorney's fees.
The court entered an order enjoining defendants from spending any of
the challenged funds pending further order of the court, directing them to
provide an accounting, and to make a full and accurate report to ELEC. The
court also referred the matter to ELEC for "administrative proceedings,"
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ordering the injunction would remain in effect and the court would retain
jurisdiction pending completion of those proceedings. The Committee
thereafter filed a second amended second-quarter report with ELEC re-stating
its original reporting of the contributions from the Club and the Farish trust.
Defendants answered the verified complaint, and shortly thereafter
moved for summary judgment dismissing the complaint, which motion was
denied without prejudice. While that motion was pending, however, counsel
for ELEC wrote to the court advising the Commission had reviewed the matter
and determined that of the four "alleged contributions," three were made more
than ten years before, precluding the Commission from taking any action with
respect to them based on the statute of limitations. As to the fourth, while it
was made within the ten-year period, it did not qualify as an excessive
contribution. Counsel advised the court that "[f]or those reasons, there is no
longer any administrative action" pending before ELEC.
In that letter, counsel for ELEC also noted he had reviewed defendants'
pending motion for summary judgment and rejected as "not accurate,"
defendants' argument that contribution limits are unconstitutional. He
expressed the Commission's belief that the court could "resolve the issues in
this matter without the need to address the constitutionality of contribution
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limits under New Jersey's statutes" and respectfully conveyed ELEC's request
that the court "abstain from addressing this issue."
Following the end of discovery, the parties cross-moved for summary
judgment. Plaintiff argued the action was timely because the first report to
ELEC of the existence of these monies was in spring 2017, precluding an
earlier challenge. Plaintiffs argued that defendants conceded the contributions
from the Farish Estate to the Club were illegal, and that permitting defendants
to benefit from them based on the Club's failure to report them to ELEC as
required would pervert the election laws and reward misfeasance. Plaintiffs
contended the funds were tainted by illegality and should be ordered returned
to the Farish Estate, and if that were no longer possible due to the passage of
time, that the funds should escheat to the State.
Defendants argued that there was no contribution in 2017, as the
Committee simply succeeded to the Club as trustee under the terms of the
Farish trust, and that the contributions to the Club after Farish's death
constituted, at most, a technical violation of the contribution laws, and were, in
any event, time-barred. Defendants emphasized that the Club spent only the
trust income, making the expenditures limited ones. They also argued that
they were entitled to judgment dismissing the complaint as plaintiffs were
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obligated to appeal ELEC's decision that the matter was barred by the statute
of limitations to this court, and the trial court lacked jurisdiction over the
proceedings. Defendants further argued the matter was time-barred and the
individual contribution limits are unconstitutional as applied because it is not
reasonable to assume that Farish was attempting to obtain a quid pro quo by a
posthumous contribution.
The Chancery judge heard argument and entered summary judgment in
favor of plaintiffs. The judge had no hesitation finding she had jurisdiction to
decide the matter. She found the contribution limits and the reporting
requirements clear, and that plaintiffs could not have been aware earlier than
the filing of the Committee's 2017 second quarter report to ELEC of the
violation of either, making application of the discovery rule appropriate. The
judge found on the undisputed facts that the contributions from the Farish
Estate to the Penns Grove Club were improper and exceeded applicable
contribution limits. The judge also determined that the "after-the-fact creation
of the trust," even if it could theoretically erase the taint of the illegal
contributions, did not do so here as appointment of the officers of the club as
trustees made clear the two were not separate entities. The judge dismissed
defendants' constitutional argument, noting the United States Supreme Court in
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Citizens United 1 did not disturb the holding of Buckley v. Valeo, 424 U.S. 1,
26-27 (1976), affirming the validity of statutes limiting direct campaign
contributions by individuals to candidates and political parties.
Defendants appeal, arguing the Chancery judge erred in determining she
had jurisdiction over this controversy; in ignoring ELEC's determination that
the claim was barred by the statute of limitations; in concluding the Farish
monies constituted an illegal contribution to the Penns Grove Club; and in
failing to find New Jersey's Campaign Contribution and Expenditure Reporting
Act is unconstitutional as applied because Farish's bequest presented no risk of
political corruption or quid pro quo motive. We find no merit in any of
defendants' arguments.
We review summary judgment using the same standard that governs the
trial court. Templo Fuente De Vida Corp. v. Nat'l Union Fire Ins. Co. of
Pittsburgh, 224 N.J. 189, 199 (2016). As the parties agreed on the material
facts for purposes of the motion, our task is limited to determining whether the
trial court's ruling on the law was correct. Manalapan Realty, L.P. v. Twp.
Comm. of Manalapan, 140 N.J. 366, 378 (1995).
1
Citizens United v. FEC, 558 U.S. 310 (2010).
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There is no question but that "ELEC has primary jurisdiction over excess
contribution claims under the Reporting Act." Nordstrom v. Lyon, 424 N.J.
Super. 80, 97 (App. Div. 2012). But that jurisdiction is not exclusive. In re
Contest of the Democratic Primary Election of June 3, 2003 for Office of
Assembly of Thirty-First Legislative Dist., 367 N.J. Super. 261, 285-86 (App.
Div. 2004). Here, the court decided the application for preliminary injunctive
relief and appropriately transferred the matter to ELEC for its consideration.
See id. at 289 (concluding the judge should have transferred the case to ELEC
to allow it to exercise its primary jurisdiction).
ELEC reported back to the court that defendants provided complete and
accurate reporting of the Farish contribution to the Commission as ordered.
More important, counsel reported that ELEC would not assume jurisdiction
over plaintiffs' claim that the Farish Estate's contributions violated the
Reporting Act, because "[w]ithout addressing the issue of whether or not these
[were] contributions," the statute of limitations precluded ELEC "from taking
any action with respect to them." The Chancery court only acted after ELEC
declined jurisdiction.
There was no error in the Chancery court's assumption of jurisdiction in
light of ELEC's determination that it could not do so in light of the time that
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had passed since the Estate issued checks to the Club. See id. at 289
(observing ELEC's declination of jurisdiction would be a significant factor in a
primary jurisdiction analysis weighing in favor of a court's jurisdiction).
ELEC itself expressed support for the court doing so by communicating its
belief that the court could "resolve the issues in the matter" without deciding
the constitutional issue defendants raised.
We also reject defendants' argument that counsel for ELEC's letter to the
court constituted final agency action, requiring plaintiffs appeal to this court in
the first instance pursuant to Rule 2:2-3(a)(2). Simply stated, a letter to the
court by counsel for an agency is plainly not final agency action. See In re
CAFRA Permit No. 87-0959-5, 152 N.J. 287, 299 (1997) (describing
requirements for final decisions of an agency). Defendants offer no case to the
contrary.
Defendants' argument that the Chancery judge erred by "disregarding
ELEC's . . . determination and substituting [her] judgment that relevant statutes
of limitation did not time bar plaintiffs' claims" requires but brief comment.
The Reporting Act does not specify a statute of limitations applicable to
claimed contribution limit violations. See N.J. Election Law Enforcement
Comm'n v. Brown, 206 N.J. Super. 206, 210 (App. Div. 1985). Although civil
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actions by the State must be commenced within ten years of the accrual of the
cause of action, N.J.S.A. 2A:14-1.2(a); N.J. Election Law Enforcement
Comm'n v. DiVincenzo, 445 N.J. Super. 187, 203 (App. Div. 2016), this action
was not commenced by the State.
Counsel for ELEC did not specify the statute of limitations to which he
referred in his letter. The parties, likewise, do not specify the statute of
limitations they believe applies, both referring only to the "applicable statutes
of limitations." Defendants' failure to identify the statute of limitations they
maintain controls this action prohibits any meaningful review of their
argument that the Chancery judge erred in finding that "that relevant statutes
of limitation did not time bar plaintiffs' claims." See Nextel of New York, Inc.
v. Borough of Englewood Cliffs Bd. of Adjustment, 361 N.J. Super. 22, 45
(App. Div. 2003) (noting "[w]here an issue is based on mere conclusory
statements by the brief writer, we will not consider it").
The contributions plaintiffs complained of were the Club's 2017
contributions of the Farish funds to the Committee. We are not aware of any
statute of limitations that would bar that claim. Plaintiffs' theory in this case
was that the 2017 contributions from the Club to the Committee were tainted
by the fact that they were grossly in excess of the $7200 annual limit on
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individual contributions to municipal political party committees, N.J.S.A.
19:44A-11.4(c), when made: a fact defendants admit.
Because the tainted funds remained clearly identifiable, we have no
hesitation in agreeing with the Chancery judge that the Committee's receipt of
those funds from a municipal political party committee – a transfer that would
not otherwise be subject to any contribution limit, N.J.A.C. 19:25-11.2 – is
rendered unlawful by virtue of the Club's receipt of those funds in violation of
the Act's contribution limits. Interpreting the Act to permit the Committee's
receipt and expenditure of those funds would undermine its "broad remedial
purpose." See N.J. Election Law Enforcement Comm'n v. Citizens to Make
Mayor-Council Gov't Work, 107 N.J. 380, 392 (1987). Accordingly, we find
the judge properly enjoined the Committee's use of the Farish funds, including
the identifiable income derived therefrom, and appropriately ordered the
Committee to return the funds to the Farish Estate pursuant to N.J.A.C. 19:25-
11.8(a).
Defendants' as-applied challenge to the constitutionality of the Reporting
Act is without sufficient merit to warrant discussion in a written opinion. R.
2:11-3(e)(1)(E). The United States Supreme Court has repeatedly affirmed the
validity of statutes limiting direct campaign contributions by individuals to
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candidates and political parties. See Citizens United, 558 U.S. at 357;
McConnell v. FEC, 540 U.S. 93, 144 (2003); Buckley, 424 U.S. at 26-27.
Defendants' argument that there could be no quid pro quo corruption because
Farish was deceased at the time of the contribution, ignores one of the
principal justifications for campaign contribution limits, i.e., preventing the
appearance of public corruption. Buckley, 424 U.S. at 27 ("Of almost equal
concern as the danger of actual quid pro quo arrangement is the impact of the
appearance of corruption stemming from public awareness of the opportunities
for abuse inherent in a regime of large individual financial contributions.").
Because we are satisfied Judge McDonnell appropriately decided this
case on the merits after ELEC declined jurisdiction, that her reasoning was
sound and her decision in keeping with the broad remedial purposes of the
Reporting Act and the State's election laws, we affirm.
Affirmed.
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