CALISTO BERTIN VS. MANHAR PATELÂ (L-2464-13, BERGEN COUNTY AND STATEWIDE)

NOT FOR PUBLICATION WITHOUT THE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-0308-16T4
CALISTO BERTIN and BERTIN
ENGINEERING ASSOCIATES, INC.,
Plaintiffs-Respondents,
v.
MANHAR PATEL, GREENTREE
DEVELOPERS, LLC, BZ CLEANERS
CORP, and SHIRIJI DEVELOPERS,
LLC,
Defendants,
and
MANTRIB CORP,
Defendant-Appellant.
_____________________________________________________________
Submitted October 12, 2017 – Decided November 6, 2017
Before Judges Alvarez and Currier.
On appeal from the Superior Court of New
Jersey, Law Division, Bergen County, Docket
No. L-2464-13.
Thomas D. Williamson, attorney for appellant.
Law Offices of Jae Y. Lee, LLC, attorneys for
respondent (Crew Schielke, on the brief).
PER CURIAM
Defendant Mantrib Corporation appeals an August 12, 2016
order denying a Rule 4:50-1(f) motion to vacate a final judgment.
Because we conclude that the Law Division judge did not abuse his
discretion, we affirm.
Plaintiffs provided architectural and/or engineering
services, as well as loaned money, to defendant Manhar Patel.
Patel is a half-owner of the corporate stock of Mantrib, as well
as its vice-president and secretary. Patel's brother, Tribhuvan1,
is the president of the corporation, and owns the remaining half
of the stock.
It is unnecessary to detail the varied transactions that
resulted in the indebtedness, other than to note that it is
undisputed that Tribhuvan was unaware of them. Eventually, because
the sums due the plaintiffs went unpaid, plaintiffs filed a
complaint against Patel and all of his known corporate interests,
including Mantrib. Only Mantrib appeals the entry of summary
judgment in plaintiffs' favor. Only Tribhuvan, on behalf of the
corporation, is pursuing the appeal.
1
We refer to him by his first name for the sake of clarity.
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The March 28, 2013 complaint triggered an answer filed by
Mantrib's first attorney, retained only by Patel2, on behalf of
all defendants, including Mantrib. Plaintiffs then moved on
February 14, 2014, to strike defendants' answer for failure to
comply with discovery demands. On March 3, 2014, plaintiffs were
awarded $126,375 in arbitration. See R. 4:21A. On March 19,
2014, the court entered an order striking defendants' answer for
failure to comply with discovery. Apparently unaware that the
answer was stricken, defendants demanded a trial de novo, which
request was denied on March 28, 2014, because the answer had been
suppressed. To further add to the confusion, on April 24, 2014,
the court sua sponte dismissed the complaint because plaintiffs
had not confirmed the arbitration award as required by the rules.
Once they learned of the dismissal, plaintiffs on June 5,
2014, filed a motion seeking to reinstate the complaint and confirm
the arbitration award. Plaintiffs alleged that they were unaware
that defendants' demand for a trial de novo had been denied and
their answer suppressed, and that they therefore did not proceed
on the arbitration award as they assumed defendants' demand for a
trial de novo would be granted. Defendants opposed the motion to
reinstate the complaint and confirm the arbitration award. On
2
We draw the inference from correspondence included in the
parties' appendices.
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June 26, 2016, Judge Robert L. Polifroni reinstated the complaint,
but granted defendants thirty days in which to file a separate
motion to vacate suppression of the answer.
On August 12, 2014, plaintiffs moved for summary judgment.
As a separate ground, plaintiffs argued that despite Judge
Polifroni's June order, defendants had not sought to vacate
suppression of the answer or taken other steps to address their
default status. On September 19, 2014, the judge granted summary
judgment, which was unopposed.
The judge said in that decision, "[d]efendants lack of concern
or attention to this matter is chronic and inexcusable. The
contentions set forth by [plaintiffs] are uncontradicted." A few
days later, on October 21, 2014, judgment was entered in the amount
of $179,461.49.
On May 12, 2016, the same attorney who had previously
represented all the defendants in the proceedings, filed a motion
to vacate the judgment. Current counsel, retained by Tribhuvan,
filed a separate motion to set aside the judgment exclusively on
behalf of Mantrib. In the application, Tribhuvan alleged he had
no knowledge of any of the underlying transactions, or the legal
proceedings which resulted in entry of the judgment, and that he
learned about the judgment only when Mantrib sold its real estate
holdings and he was informed of a lien against the property. Some
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$220,000 from sale proceeds remains in escrow because of the
disputed judgment. Both motions, filed by separate counsel, were
denied. This appeal is taken from the motion denial rendered on
Mantrib's application, not the order issued as to all defendants.
Judge Polifroni began his decision by reference to R. 4:50-
1(f)'s requirement that a movant's circumstances be exceptional,
and enforcement of the judgment "unjust, oppressive, or
inequitable." He concluded such circumstances were not present
in the case.
The judge noted that the motion for summary judgment was
granted on September 19, 2014. Because the two-year old judgment
entered by way of summary judgment, and not by way of default, the
application did not need to be viewed with "great liberality."
Defendants had at one time actually filed an answer, and were
granted the opportunity to reinstate their answer and participate
in the litigation. Almost by definition, that meant, contrary to
current counsel's arguments on behalf of Mantrib, that the
corporation could not assert any impropriety in service. There
was no legal basis for barring Patel from obligating the
corporation, or requiring plaintiffs to engage in some other steps
in order to acquire a valid lien against Mantrib's assets. That
Tribhuvan, the registered agent for Mantrib, was not served with
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the complaint was not dispositive, since an answer was filed on
behalf of the corporation.
With regard to Mantrib's argument that N.J.S.A. 14A:3-3,
which addresses relief from actions engaged in by "rogue
shareholders," required that the judgment be set aside, the judge
found the second section of the statute controlling. Although the
"rogue officer" protection embodied in the first section gave the
president of the corporation an additional basis to pursue the
vice-president, as between the corporation and a creditor, it
afforded Mantrib no relief. The judge opined that the intent of
the statute was to protect third-party creditors "who should not
be victimized by the actions of purportedly rogue shareholders
acting in their own self-interest." Since he found the judgment
issued properly, there were no exceptional circumstances which
warranted setting it aside. Enforcement would not be unjust,
oppressive or inequitable. Both motions to vacate were denied.
On appeal, Mantrib contends that the judge exercised his
discretion inappropriately because the situation was exceptional;
an innocent party should not be forced to satisfy an unknown
judgment; service was defective; and N.J.S.A. 14A:3-3(1) was
intended to provide relief in these circumstances. Mantrib also
urges us to consider that had plaintiffs engaged in "due
diligence," they would have served Tribhuvan, Mantrib's registered
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agent, and thereby given him notice in a timely fashion. Tribhuvan
would have been able to protect both the corporation, which
allegedly did not benefit from plaintiffs' work, as well as his
own interests. Finally, the corporation argues that Rule 4:50-
1(f) entitles Mantrib to relief in light of equitable
considerations.
Our scope of review of a trial court's decision on a Rule
4:50-1(f) motion is limited. Such decisions are within the sound
discretion of the trial court, guided by principles of equity.
Hous. Auth. of Town of Morristown v. Little, 135 N.J. 274, 283
(1994)(citations omitted). We afford substantial deference to the
trial court's exercise of discretion, and do not disturb it unless
it represents a "clear abuse[.]" U.S. Bank Natl Ass'n v.
Guillaume, 209 N.J. 449, 467 (2012)(citations omitted).
We do not find an abuse of discretion unless it can be
demonstrated that "the discretionary act was not premised upon
consideration of all relevant factors, was based upon
consideration of irrelevant or inappropriate factors, or amounts
to a clear error in judgment." Masone v. Levine, 382 N.J. Super.
181, 193 (App. Div. 2005)(citing Flagg v. Essex Cty. Prosecutor,
171 N.J. 561, 571 (2002)). With regard to Rule 4:50-1(f)
specifically, our Supreme Court has emphasized that the provision
applies "only when truly exceptional circumstances are present[,]"
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Little, supra, 135 N.J. at 286 (internal quotation marks and
citation omitted), and when "such relief is necessary to achieve
a fair and just result." Manning Eng'g, Inc. v. Hudson Cty. Park
Comm'n, 74 N.J. 113, 122 (1977). No such abuse of discretion
occurred here.
As the judge clearly explained in his decision, Mantrib had
not one, but two opportunities to timely defend the action. The
first arose when it filed the answer ultimately stricken for
failure to comply with discovery. The second arose when it was
granted time in which to reinstate an answer. Neither opportunity
was taken.
Mantrib's argument that plaintiffs should have engaged in
some "due diligence" before undertaking work, lending money, or
filing suit lacks merit. Patel owned half the corporate stock and
was the Vice-President. Mantrib identifies no authority in support
of the assertion that plaintiffs should have done more than rely
on Patel's representations.
The statutory argument is similarly without merit. As Judge
Polifroni correctly stated, the purpose of the statute is not to
cripple routine commerce because of disputes between shareholders,
but to enable them to sue a rogue shareholder while protecting
creditors.
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Additionally, the conduct of Mantrib's allegedly rogue
shareholder does not constitute exceptional circumstances that
provide a basis for relief from the judgment. N.J.S.A. 14A:3-3(2)
is designed and intended to protect creditors when it states in
the plainest of words: "Nothing in subsection 14A:3-3(1) shall
be deemed to diminish the rights, if any, of the corporation's
creditors." No exceptional circumstances which afford Tribhuvan
relief are created by the statute.
Indeed, to find exceptional circumstances here would diminish
the rights of Mantrib's creditors. The dispute is between the
shareholders of the corporation, not as between a creditor and the
corporation.
We will not disturb the trial court's findings that Mantrib
had sufficient opportunities to respond and defend, and chose not
to do so. The circumstances are not so exceptional and do not
warrant Rule 4:50-1(f) relief.
Affirmed.
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