CITY OF UNION CITY VS. 2210-2212 KERRIGAN AVE. (C-000122-12, HUDSON 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NOT FOR PUBLICATION WITHOUT THE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-4126-15T1
CITY OF UNION CITY,
Plaintiff-Appellant,
v.
2210-2212 KERRIGAN AVE., LLC,
SUN NATIONAL BANK, SPF 2011
OWNER, LLC, TRIMONT REAL
ESTATE ADVISORS, INC.,
GARRISON LOAN AGENCY
SERVICES, INC. d/b/a
GARRISON INVESTMENT GROUP,
and BOARD OF EDUCATION
CITY OF UNION CITY,
Defendants,
and
ABEL HERNANDEZ,
Defendant-Respondent.
__________________________________
Submitted October 11, 2017 – Decided August 27, 2018
Before Judges Yannotti and Leone.
On appeal from Superior Court of New Jersey,
Chancery Division, Hudson County, Docket No.
C-000122-12.
William Z. Shulman, attorney for appellant.
Gilberto M. Garcia, attorney for respondent.
PER CURIAM
Plaintiff, the City of Union City, appeals an April 4, 2016
order which denied its motion to reconsider a February 10, 2016
order denying its request to enter judgment against defendant Abel
Hernandez. We affirm.
I.
This appeal concerns 2210-2212 Kerrigan Avenue (Property) in
Union City. In 2010, plaintiff filed a summary proceeding against
Hernandez, 2210-2212 Kerrigan Ave., LLC (the LLC), and other
defendants. The complaint alleged that the LLC was the owner of
the Property, that its ability to do business has been revoked,
and that it had defaulted on its mortgage and foreclosure had been
filed. The complaint also alleged, and Hernandez admitted, that
Hernandez was "the sole principal and shareholder of the LLC."
The complaint alleged that a notice and order of penalty had
been issued to defendants for failing to obtain a certificate of
occupancy (CO), and that the Property was being occupied without
a CO. The complaint requested an order imposing an injunction and
statutory penalties upon defendants. An amended complaint was
filed repeating those allegations.
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On August 13, 2014, the LLC filed a bankruptcy petition. On
August 20, 2014, an "Agreement and Release Settlement Agreement"
(Agreement) was entered into "between [plaintiff] and [the LLC],
whose corporate status is now revoked and Abel Hernandez [address
deleted] (hereafter 'Owner')." The Agreement described the LLC
as the owner of the Property, and Hernandez as "the sole member
of [the LLC]." The Agreement stated "the parties have reached an
agreement that will resolve all issues in regard to the [CO]
violation and in furtherance thereof will settle the pending
litigation." It was agreed "Property owner shall submit the
application for the issuance of the Final Certificate of
Occupancy," and "Owner shall pay the City the sum of $50,000 in
the next 30 days." Hernandez signed the Agreement under the LLC's
name and above the signature line "Abel Hernandez, Owner."
Defendants applied for the permanent CO, which was issued.
The $50,000 was not paid. The LLC's bankruptcy petition was
dismissed on April 9, 2015.
On April 22, 2015, plaintiff moved to reduce the Agreement
to judgment. On May 13, 2015, the trial court ordered that
judgment for $50,000 be entered against the LLC. The judge refused
to enter judgment against Hernandez, finding that he signed the
Agreement on behalf of the LLC and did not assume any personal
liability in the Agreement.
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On October 5, 2015, plaintiff moved under Rule 4:50-1(b),
(c), and (f) for an order entering judgment against Hernandez. On
February 10, 2016, the trial court denied the motion.
On February 29, 2016, plaintiff moved for reconsideration.
The trial court denied the motion on April 4, 2016.
II.
Plaintiff failed to appeal the May 13, 2015 order entering
judgment, so the validity of that order is not directly before us.
Plaintiff now concedes the Agreement only obligated the LLC to pay
the $50,000 and that Hernandez only signed as owner of the LLC.
Instead, plaintiff appeals the April 4, 2016 denial of his
motion for reconsideration. "In civil actions the notice of appeal
. . . shall designate the judgment, decision, action or rule, or
part thereof appealed from[.]" R. 2:5-1(f)(3)(A). "[I]t is clear
that it is only the judgments or orders or parts thereof designated
in the notice of appeal which are subject to the appeal process
and review." Fusco v. Bd. of Educ. of Newark, 349 N.J. Super.
455, 461-62 (App. Div. 2002) (quoting Pressler, Current N.J. Court
Rules, cmt. 6 on R. 2:5-1(f)(3)(i) (2002)). "Consequently, if the
notice designates only the order entered on a motion for
reconsideration, it is only that proceeding and not the order that
generated the reconsideration motion that may be reviewed."
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Pressler & Verniero, Current N.J. Court Rules, cmt. 6.1 on R. 2:5-
1 (2018); see, e.g., Fusco, 349 N.J. Super. at 462.
Nonetheless, plaintiff's case information statement (CIS)
indicates it sought to appeal not only the April 4 order but also
the February 10, 2016 order denying plaintiff's motion under Rule
4:50-1. If "a motion for reconsideration . . . implicate[s] the
substantive issues in the" order sought to be reconsidered, and
if "the basis for the motion judge's ruling on [that order] and
[the] reconsideration motion[ is] the same," then "an appeal solely
from . . . the denial of reconsideration may be sufficient for an
appellate review of the [earlier order], particularly where those
issues are raised in the CIS." Fusco, 349 N.J. Super. at 461. In
such an instance, we may "choose to exercise our discretion" to
review the earlier order. Potomac Aviation, LLC v. Port Auth. of
N.Y. & N.J., 413 N.J. Super. 212, 222 (App. Div. 2010). We choose
to exercise our discretion to review the February 10 order denying
relief under Rule 4:50-1, because "the basis for the motion judge's
ruling on [that order] and the reconsideration motion[] was the
same." Ibid. (quoting Fusco, 349 N.J. Super. at 461).
Under Rule 4:50-1, "[r]elief is granted sparingly. The
decision whether to vacate a judgment on one of the six specified
grounds is a determination left to the sound discretion of the
trial court, guided by principles of equity." F.B. v. A.L.G., 176
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N.J. 201, 207 (2003). "The trial court's determination under the
rule warrants substantial deference, and should not be reversed
unless it results in a clear abuse of discretion." US Bank Nat'l
Ass'n v. Guillaume, 209 N.J. 449, 467 (2012). We must hew to that
standard of review.1
Plaintiff invokes Rule 4:50-1(b), (c), and (f), which state:
[U]pon such terms as are just, the court may
relieve a party or the party's legal
representative from a final judgment or order
for the following reasons: . . . (b) newly
discovered evidence which would probably alter
the judgment or order and which by due
diligence could not have been discovered in
time to move for a new trial under R. 4:49;
(c) fraud (whether heretofore denominated
intrinsic or extrinsic), misrepresentation,
or other misconduct of an adverse party; . . .
or (f) any other reason justifying relief from
the operation of the judgment or order."
A.
Under Rule 4:50-1(b), "[t]o obtain relief from a judgment
based on newly discovered evidence, the party seeking relief must
demonstrate 'that the evidence would probably have changed the
result, that it was unobtainable by the exercise of due diligence
for use at the trial, and that the evidence was not merely
1
Similarly, "a trial court's reconsideration decision will be
left undisturbed unless it represents a clear abuse of discretion."
Pitney Bowes Bank, Inc. v. ABC Caging Fulfillment, 440 N.J. Super.
378, 382 (App. Div. 2015) (citing Hous. Auth. of Morristown v.
Little, 135 N.J. 274, 283 (1994)).
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cumulative.'" DEG, LLC v. Twp. of Fairfield, 198 N.J. 242, 264
(2009) (citation omitted).
Plaintiff alleged that after the May 13, 2015 order, it
requested and received discovery showing that the LLC constructed
the building on the Property under an oral agreement, maintained
no business records, checkbooks, or bank accounts, and had no
other assets than the Property. Plaintiff also learned that
Hernandez let his partner sign for him and take the lead role in
the construction and its financing, that his partner converted one
rent payment, that Hernandez paid some LLC expenses personally,
and similar information. Plaintiff argued this evidence showed
the LLC was a sham corporation, and would have enabled it to pierce
the corporate veil and obtain a judgment against Hernandez.
As the trial court found, plaintiff knew there were legal and
factual avenues to pursue a claim against defendant. Plaintiff's
complaint named him as an individual defendant. It also alleged
that "Hernandez is liable to the City" either "[t]o the extent
. . . the LLC ceases to exist," or "[t]o the extent that the LLC's
ability to do business in the State of New Jersey has been
revoked." "[P]ersons who carry on the business of a corporation
. . . after the charter has expired, or after dissolution, become
personally liable[.]'" Lancellotti v. Md. Cas. Co., 260 N.J.
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Super. 579, 583 (App. Div. 1992) (quoting Leventhal v. Atl. Rainbow
Painting Co., 68 N.J. Super. 406, 413 (App. Div. 1961)).
Moreover, before deciding to settle, plaintiff knew the LLC's
right to conduct business in New Jersey had been revoked, its
corporate status had been revoked, it had defaulted on its mortgage
on the Property against which foreclosure had been filed, and it
had filed for bankruptcy. Nonetheless, plaintiff entered into the
Agreement, which it concedes made only the LLC responsible to pay.
Given the information plaintiff knew before settling, plaintiff
did not show the additional information plaintiff now cites would
probably have changed the result.
The trial court also found the information plaintiff learned
in post-judgment discovery could have been learned through
discovery in the original litigation before plaintiff decided to
settle. We agree that, by the exercise of due diligence, plaintiff
could have obtained discovery to determine if the LLC was a sham
corporation and thus to support plaintiff's cause of action against
Hernandez individually. Such discovery would have relevant "to
the claim" by plaintiff against Hernandez, and to the "defense"
of Hernandez that he was protected by the LLC's corporate veil.
See R. 4:10-2(a).
Plaintiff argues it was barred from seeking discovery of
financial information under Herman v. Sunshine Chem. Specialties,
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133 N.J. 329 (1993). However, Herman dealt with discovery of
confidential financial information which had no relevance absent
a valid claim for punitive damages. Id. at 342-46. Much of the
evidence plaintiff now cites is not confidential financial
information. See id. at 345. Moreover, Herman recognizes that
"[j]udicial review of applications for discovery" and protective
orders can "alleviate concerns about abusive or burdensome
discovery" of confidential financial information. Id. at 344-45.
It was not a clear abuse of discretion to deny relief under
Rule 4:50-1(b) given those findings. We need not examine the
trial court's other findings on that issue.
B.
Plaintiff's motion also raised Rule 4:50-1(c). Plaintiff
asserts the trial court did not address that claim, but plaintiff's
motion brief did not address it either.2 In any event, plaintiff's
claim is meritless.
Rule 4:50-1(c) permits relief for "fraud (whether heretofore
denominated intrinsic or extrinsic), misrepresentation, or other
2
Instead, plaintiff's brief discussed Rule 4:50-1(e), which
addresses when "the judgment or order has been satisfied, released
or discharged, or a prior judgment or order upon which it is based
has been reversed or otherwise vacated, or it is no longer
equitable that the judgment or order should have prospective
application." Plaintiff shows no basis for relief under that
subsection. See DEG, 198 N.J. at 265-67.
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misconduct of an adverse party." Ibid. Where it is claimed that
"a settlement [wa]s obtained by fraud," "our courts require 'clear
and convincing proof' that the agreement should be vacated." Nolan
v. Lee Ho, 120 N.J. 465, 472 (1990).
Plaintiff presented no proof at all. Rather, plaintiff merely
argued in its briefs that at the time of settlement "it was
represented" that the LLC had found a purchaser for the Property
and that the LLC would be able to pay plaintiff $50,000 from the
sale proceeds. Such assertions of fact in briefs are "not
evidential and will not be considered." Albrecht v. Corr. Med.
Servs., 422 N.J. Super. 265, 267 n.1 (App. Div. 2011). "If a
motion is based on facts not appearing of record or not judicially
noticeable," a party must submit "affidavits made on personal
knowledge, setting forth only facts which are admissible in
evidence to which the affiant is competent to testify[.]" R. 1:6-
6. Plaintiff's certifications made no mention of such a
representation, let alone prove it was fraudulent.
C.
Plaintiff lastly cites Rule 4:50-1(f), "the so-called catch-
all, [which] provides relief for 'any other reason.'" DEG, 198
N.J. at 269. "[B]ecause of the importance that we attach to the
finality of judgments, relief under Rule 4:50-1(f) is available
only when 'truly exceptional circumstances are present.' . . .
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The rule is limited to 'situations in which, were it not applied,
a grave injustice would occur.'" Guillaume, 209 N.J. at 484(quoting Little, 135 N.J. at 286, 289).
"This case presents no such circumstances." See ibid. Absent
proof of fraud, "[t]his case involves a reasoned decision by
municipal officials, acting in good faith, to settle a problem
case - no more and no less." See DEG, 198 N.J. at 270-71. "Rule
4:50-1 is not an opportunity for parties to a consent judgment to
change their minds; nor is it a pathway to reopen litigation
because a party either views his settlement as less advantageous
than it had previously appeared, or rethinks the effectiveness of
his original legal strategy." Id. at 261.
Affirmed.
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