CHAPTER 7 ARTICLE - BANKRUPTCY ATTORNEY IN NEW JERSEY 07601 - (201) 646-3333

114 A.3d 742 (2015)221 N.J. 501

Robert D. GASKILL and Kathleen Gaskill, h/w, Plaintiffs-Appellants,
v.
CITI MORTGAGE, INC., f/k/a Citicorp Mortgage, Inc., Defendant-Respondent.A-51 September Term 2013, 071804Supreme Court of New Jersey.

Argued April 13, 2015.Decided May 28, 2015.

Joseph M. Pinto argued the cause for appellants (Polino and Pinto, attorneys).

Mary Lynn McCaffrey argued the cause for respondent (Isabel L. Becker, attorney).

PER CURIAM.

This appeal arises from plaintiffs' complaint to cancel and discharge a creditor's judgment lien held by defendant Citi Mortgage, Inc. (Citi), following the conclusion of bankruptcy proceedings conducted pursuant to Chapter 7 of the United States Bankruptcy Code (Chapter 7), 11 U.S.C.A. §§ 701-784. In 1997, the Superior Court entered a default judgment in favor of Citi against plaintiffs, and by virtue of its docketing of that judgment, Citi obtained a lien on all of plaintiffs' real property in New Jersey. Four years later, plaintiffs instituted a Chapter 7 bankruptcy proceeding in the United States Bankruptcy Court. Because plaintiffs listed the law firm that had represented Citi, rather than Citi itself, in their Chapter 7 petition, the bankruptcy court did not provide notice of the proceeding to Citi. After the bankruptcy trustee abandoned two of plaintiffs' New Jersey properties, the bankruptcy court discharged plaintiffs' debt and closed their Chapter 7 case. Citi did not attempt to levy on plaintiffs' property at any time prior to the bankruptcy filing and did not seek to enforce its lien in the wake of plaintiffs' bankruptcy discharge.

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More than three years after the bankruptcy discharge, plaintiffs filed this action under N.J.S.A. 2A:16-49.1. That statute permits a debtor, whose debts have been discharged in bankruptcy, to apply to the state court that has entered a judgment against the debtor, or has docketed the judgment, for an order directing the judgment 743 to be canceled and discharged. N.J.S.A. 2A:16-49.1. The statute requires the debtor to wait at least a year following his or her bankruptcy discharge before seeking the cancellation and discharge of the judgment lien. Ibid. Pursuant to N.J.S.A. 2A:16-49.1, plaintiffs sought an order cancelling Citi's judgment lien on the two properties.

The trial court granted Citi's motion for summary judgment and dismissed plaintiffs' claim. The court acknowledged that a judgment creditor, such as Citi, who has not levied on the debtor's property prior to the debtor's filing of a bankruptcy petition, may enforce its valid lien following the bankruptcy discharge, but must do so within the year following the discharge. The court explained that if Citi did not enforce its lien within that period, its lien could be canceled pursuant to N.J.S.A. 2A:16-49.1. The trial court found, however, that Citi had not received notice of plaintiffs' Chapter 7 bankruptcy proceeding. It accordingly ruled that due process principles would be violated if Citi's judgment lien was canceled prior to the expiration of a year following the date upon which Citi belatedly learned of the bankruptcy proceedings and plaintiffs' attempt to cancel its lien. Consequently, the trial court equitably tolled the one-year period prescribed by the statute.

In a published opinion, the Appellate Division affirmed the determination of the trial court. Gaskill v. Citi Mortg., Inc., 428 N.J.Super. 234, 237, 52 A.3d 192 (App. Div.2012). The panel concluded that the Citi judgment lien was subject to discharge or release in plaintiffs' bankruptcy proceedings and was consequently subject to cancellation pursuant to N.J.S.A. 2A:16-49.1. Id. at 242-43, 52 A.3d 192. The panel agreed with the trial court that Citi had not received the required actual notice of the bankruptcy petition or the bankruptcy discharge obtained by plaintiffs. Id. at 245-46, 52 A.3d 192. It held that N.J.S.A. 2A:16-49.1 was drafted on the assumption that any creditor subject to its terms had received notice of the bankruptcy proceeding. Ibid. The panel ruled that the trial court's remedy of equitable tolling of the one-year waiting period prescribed by N.J.S.A. 2A:16-49.1 was proper. Id. at 245, 52 A.3d 192. We granted certification. 217 N.J. 52, 84 A.3d 601 (2014).

We affirm, substantially for the reasons stated by the Appellate Division. We add only brief comments with respect to the decision of the United States Court of Appeals for the Third Circuit in Judd v. Wolfe, 78 F.3d 110 (3d Cir.1996), upon which plaintiffs substantially rely in their argument before this Court. For the reasons that follow, we consider Judd to address a procedural question of federal bankruptcy law that is distinct from the issue raised by this appeal and accordingly find that it does not support plaintiffs' argument.

In Judd, the Third Circuit did not consider the issue raised by this case: the effect of a debtor's failure to provide notice to a creditor of a Chapter 7 bankruptcy petition on the debtor's right to cancel a judgment lien under state statutory law. Instead, the court considered the procedural requirements imposed by federal bankruptcy law, following the closing of the bankruptcy case, on a debtor who has failed to list a claim on the schedule of creditors submitted in a Chapter 7 no-asset case in which no bar date has been set. Id. at 111. The Third Circuit held that such a debtor is not required to file a motion to reopen the bankruptcy case, pursuant to 11 U.S.C.A. § 350(b), in order to discharge the debt that had been omitted from the schedule, unless one or more 744 of the statutory exceptions to discharge applied. Ibid.^[1]

In support of its holding, the Third Circuit pointed to the text of 11 U.S.C.A. § 727(b), which provides that "[e]xcept as provided in section 523 of this title, a discharge . . . discharges the debtor from all debts that arose before the date of the order for relief under this chapter." 11 U.S.C.A. § 727(b); Judd, supra, 78 F.3d at 113-14. The court explained that 11 U.S.C.A. § 523 provides that the only situation in which a debt is not discharged is if it was "`[n]either listed nor scheduled ... in time to permit ... timely filing of a proof of claim.'" Judd, supra, 78 F.3d at 114 (quoting 11 U.S.C.A. § 523(a)(3)(A)). The Third Circuit further noted that "[b]ecause [the case before it] is a `no-asset' Chapter 7 case, the time for filing a claim has not, and never will, expire unless some exempt assets are discovered; thus, section 523(a)(3)(A) cannot be applied" to prevent the discharge of an unlisted debt in a no-asset case. Ibid. The court held that such an unscheduled debt is discharged even if that discharge may disadvantage or prejudice the unlisted creditor. See id. at 113 n. 6, 115, 116 n. 13. "In a case where there are no assets to distribute," the creditor's "right to file a proof of claim is a hollow one," because "[a]n omitted creditor who would not have received anything even if he had been originally scheduled, [is] not ... harmed by omission from the bankrupt's schedules and the lack of notice to file a proof of claim." Id. at 115. Accordingly, the Third Circuit reasoned, the failure to give notice to the creditor in the bankruptcy proceeding could not affect that creditor's position, because there were no assets in any event. Ibid.

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The Third Circuit acknowledged, however, that in a bankruptcy case that involves assets, the debt of an unnoticed creditor is not discharged unless that creditor received notice in time to file a proof of claim. See id. at 114-15. Moreover, any intentional tort debt is not discharged unless the creditor received notice in time to file a complaint pursuant to 11 U.S.C.A. § 523(c). See id. at 114 n. 9.

The circumstances of this case stand in contrast to the no-asset setting of Judd, in which action taken by the creditor in the bankruptcy proceedings would have been futile even if it had received timely notice of the bankruptcy petition and the subsequent discharge. As noted by the trial court and the Appellate Division, had Citi received notice of the bankruptcy petition and discharge in this case, it would have been in a position to enforce its lien during the year following the bankruptcy discharge, as permitted by N.J.S.A. 2A:16-49.1. Gaskill, supra, 428 N.J.Super. at 243-44, 52 A.3d 192. The notice that was omitted in this case would not have been meaningless, as it was in the no-asset, no-bar date setting of Judd. Instead, timely notice would have enabled the creditor to take action within the time limitation of N.J.S.A. 2A:16-49.1 to protect its interest in the real property at issue.

Accordingly, the Third Circuit's holding in Judd does not address the due process argument that was raised by the debtor in this case: whether notice to a creditor of a 745 Chapter 7 bankruptcy proceeding and discharge constitutes a prerequisite to the cancellation and discharge of a judgment under N.J.S.A. 2A:16-49.1. We concur with the Appellate Division's conclusion that such notice is required before a debtor may invoke the protection of N.J.S.A. 2A:16-49.1, and that equitable tolling was an appropriate remedy in the circumstances of this case.

The judgment of the Appellate Division is affirmed.

For affirmance—Chief Justice RABNER and Justices LaVECCHIA, PATTERSON, FERNANDEZ-VINA and Judge FUENTES (temporarily assigned)—5.

Not participating—Justice ALBIN and SOLOMON—2.

Opposed—None.

[1] Subsections (a)(2), (a)(4), and (a)(6) of 11 U.S.C.A. § 523 exempt from discharge "debts incurred by false pretenses, false representation or actual fraud ... (523(a)(2)); debts incurred by fraud or defalcation while acting as a fiduciary ... (523(a)(4)); and debts for willful and malicious injury ... (523(a)(6))." Id. at 114 (internal quotation marks omitted). The Third Circuit explained that "[i]f the debt at issue is not a debt described under section 523(a)(2), (4) or (6), the debt has been discharged by virtue of section 727(b), whether or not it was listed. If, however, the debt is a debt that falls under sections 523(a)(2), (4) or (6), the debt is not discharged by virtue of section 523(a)(3)(B)." Id. at 115.

BANKRUPTCY ARTICLE - ATTORNEY IN HACKENSACK NEW JERSEY (201) 646-3333

 

MONEY ISLAND MARINA, LLC, Plaintiff-Appellant,
v.
ROGER MAURO and LOIS MAURO, their heirs, devisees, and personal representatives, and his, her, their, or any of their successors in right, title, and interest, Defendants-Respondents.

No. A-2950-14T3.

Superior Court of New Jersey, Appellate Division.

Submitted April 19, 2016.Decided April 25, 2016.

Terance J. Bennett, attorney for appellant.

The D'Elia Law Firm LLC, attorneys for respondents (Teresa M. Lentini, on the brief).

Before Judges Fisher and Espinosa.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

PER CURIAM.

In this appeal, plaintiff Money Island Marina, LLC (MIM) argues that the findings made by the trial judge in dismissing its claims at the conclusion of a bench trial were either based on erroneous legal rulings or were contrary to the weight of the evidence. Finding no error, we affirm.

The issues posed in this civil action are limited and discrete. MIM, a limited liability company ostensibly controlled by Tony Novak (Novak),^[1] seeks a declaration, by way of this quiet title action, that defendant Lois Mauro's mortgage on the property should be invalidated or have no further impact on its ownership rights. MIM argues, however, that the case should be considered in light of other circumstances, some of which have been resolved in other proceedings. That is, MIM contends that defendant Roger Mauro (Mauro) assaulted Novak by vehicle in 2006 and that this circumstance, and the resulting personal injury action he commenced, should have been more fully considered in the disposition of this quiet title action. We described the vehicular assault allegations in earlier opinions in a criminal matter commenced against Mauro.^[2] In or about 2008, Novak brought a personal injury action against Mauro.^[3]

Of greater relevance to the matter at hand is the fact that in 1995, Mauro purchased a marina in Downe Township and then, on December 12, 2008, sold the marina to Joseph Acosta for $425,000, receiving more than $100,000 in cash and a purchase money mortgage to secure repayment of a note payable to Mauro from Acosta of the principal amount of $313,000.

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Acosta filed a Chapter 7 bankruptcy proceeding on February 28, 2011, and, on April 2, 2012, Mauro assigned the Acosta mortgage to his mother, defendant Lois Mauro (Lois). Lois, as assignee of the mortgage, filed a proof of claim in the Acosta bankruptcy matter on October 16, 2012.

At a hearing in bankruptcy court on November 13, 2012, Novak bid $12,000 to purchase the marina. When the bankruptcy judge asked Novak if he understood the marina is "subject to the mortgage that's on the property," Novak responded, "Yes." An order entered by the bankruptcy court on November 26, 2012, confirmed the sale of the marina to Novak "or his assignee" for $12,000 "subject to all liens, mortgages and encumbrances on the real estate." The next day, the bankruptcy trustee executed a quitclaim deed in MIM's favor; the deed acknowledged that the grantor had made "no promises as to ownership or title, but simply transfers whatever interest the [g]rantor [i.e., the trustee] has to the [g]rantee [i.e., MIM]." This recitation is in accord with what it means to convey a property interest by quitclaim deed. See N.J.S.A. 46:5-3. The quitclaim deed was recorded on December 12, 2012. On May 16, 2013, the bankruptcy court granted the trustee's motion to expunge Lois's proof of claim in light of the fact that the mortgage remained attached to the property transferred to MIM.

On February 14, 2013, MIM, as the assignee of the marina purchased by Novak through the bankruptcy court, filed this quiet title action. A few months later, Novak's personal injury action against Mauro settled; Novak received $5000, and Mauro obtained a general, unconditional release of Novak's claims. Lois commenced an action seeking to foreclose her mortgage on the marina.

MIM's quiet title action and Lois's foreclosure action were both the subject of a single bench trial conducted over the course of two days. The trial judge rightfully expressed in her written opinion that "[t]here is something very odd about this litigation and the manner in which the parties have pursued or defended against claims." For example, MIM claimed that Novak's settlement of the personal injury action somehow provided MIM with ownership of the marina free of the mortgage; however, as the judge observed, the release that memorialized the settlement contains no such condition or agreement, and the judge found no other evidence to support MIM's contention.^[4] And, while Novak may have thought, as the judge stated, that he had "outwitt[ed] the Mauros by outbidding them at the bankruptcy hearing" for the marina, the bankruptcy record clearly demonstrates that the interest in the marina which Novak purchased was taken subject to Lois's mortgage. The judge's findings also demonstrate that Roger's assignment of the mortgage to Lois was supported by adequate consideration; she noted that Mauro's financial circumstances had long been troubled by Acosta's failure to make the monthly payments required by the note and mortgage, as well as his many other legal matters, including those involving Novak, resulting in Lois providing Mauro with $200,000 for his support, for which she was compensated by assignment of the mortgage. The judge's findings, based upon what is both clearly demonstrated by the various documents and transcripts emanating from the bankruptcy proceeding and the personal injury settlement, as well as by the judge's careful assessment of the credibility of the many witnesses, are entitled to our deference. Rova Farms Resort Co. v. Inv'rs Ins. Co. of Am., 65 N.J. 474, 483-84 (1974); Stephenson v. Spiegle, 429 N.J. Super. 378, 382 (App. Div. 2013).

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Accordingly, with these few comments, we affirm the dismissal of the quiet title action substantially for the reasons set forth by Judge Anne McDonnell in her well-reasoned written decision.^[5]

Affirmed.

[1] To add to some of the confusion about the underlying circumstances, the actual owner of MIM has not been adequately disclosed. At his deposition, Novak asserted he is MIM's "authorized representative," but he denied knowledge about the identity of the owners, saying: "[w]e are trying to figure it out. We do have a dispute and I do not know." Upon further questioning, he identified one of the disputed owners as his stepson and disclosed without clarity that other members "have since abandoned" ownership or otherwise "disavow[ed] and resign[ed]."

[2] On February 21, 2013, we reversed the trial court's dismissal of the criminal prosecution, finding no violation of Mauro's speedy trial rights. State v. Mauro, No. A-4950-11 (App. Div. Feb. 21, 2013). The Supreme Court later remanded for our reconsideration in light of State v. Cahill, 213 N.J. 253 (2013), but we again came to the same conclusion. State v. Mauro, No. A-4950-11 (App. Div. June 10, 2014).

[3] The date the personal injury complaint was filed is not disclosed in the record on appeal. The filing date, however, is not particularly relevant; we assume the complaint was filed in 2008 because of its docket number.

[4] Indeed, Mauro was no longer the owner of the mortgage; it had been assigned to Lois well before Novak and Mauro settled the personal injury action. The mortgage was not something available to Mauro to negotiate with.

[5] By way of the same written decision, the judge determined that the answer and counterclaim filed by Novak and MIM in Lois's foreclosure action were non-contesting. Consequently, the judge referred the matter to the Office of Foreclosure for entry of final judgment, subject to any dispute about the amount of the judgment or MIM's right to a fair market credit or other equitable relief. MIM does not present an argument here regarding the judge's disposition of the foreclosure issues; indeed, MIM correctly recognizes that, until entry of final judgment in the foreclosure action, it has no right to file a notice of appeal in that regard.

FORECLOSURE ARTICLE - ATTORNEY IN BERGEN COUNTY NEW JERSEY (201) 646-3333

 53 A.3d 673 (2012)

428 N.J. Super. 315

DEUTSCHE BANK TRUST COMPANY AMERICAS, f/k/a Banker's Trust Company, as Trustee, Plaintiff-Respondent,

v.

Yony R. ANGELES, Defendant-Appellant.

No. A-2522-11T1.

Superior Court of New Jersey, Appellate Division.

Argued September 12, 2012.Decided October 11, 2012.

674*674 Gary D. Grant, Florham Park, argued the cause for appellant.

Robert D. Bailey, Vineland, argued the cause for respondent (Zucker, Goldberg & Ackerman, L.L.C., attorneys; Mr. Bailey, of counsel and on the brief).

Before Judges KOBLITZ, ACCURSO and LISA.

The opinion of the court was delivered by

KOBLITZ, J.A.D.

In this residential foreclosure case, Yony R. Angeles appeals from a November 6, 2009 final judgment in favor of Deutsche Bank Trust Company Americas (Deutsche) and a subsequent December 16, 2011 oral order, dismissing his application to vacate the judgment or dismiss the complaint. Angeles argues that because the mortgage on his property was not assigned to Deutsche until two weeks after Deutsche filed the original foreclosure complaint, Deutsche lacked standing and the judgment should be dismissed. Because Angeles did not raise the standing issue, or contest the foreclosure in any way, until two years after default judgment was entered and three-and-one-half years after the complaint was filed, we affirm the decision of the Chancery judge.

On January 10, 2007, Angeles executed a note for the sum of $454,400 with First Equity Financial Corporation (First Equity). To secure payment of the note, Angeles executed a mortgage that same day to Mortgage Electronic Registration Systems, Inc. (MERS), as nominee for First Equity.^[1]

Angeles made the first ten contractual payments on the note, but failed to make the installment payment due on February 1, 2008 or any time thereafter. On May 29, 2008, Deutsche filed a foreclosure complaint, two weeks prior to the June 12, 2008, assignment of the mortgage by MERS to Deutsche. The complaint states that "[o]n or before the date the within complaint was drafted, the plaintiff herein became the owner of the note and mortgage being foreclosed herein."

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675*675 On July 23, 2008, Deutsche filed an amended complaint. Angeles was served with the summons and amended complaint on July 26, 2008. He failed to file a responsive pleading and a default was entered on September 11, 2008. Final judgment of foreclosure was entered more than a year later on November 6, 2009.

On February 25, 2010, the court stayed the sheriff's sale scheduled for the following day until May 28, 2010, and ordered the parties to participate in the court-sponsored mediation program.^[2] Mediation apparently failed, as Deutsche purchased the property at a sheriff's sale on August 20, 2010. Angeles did not object to the sale at that time. See R. 4:65-5 (requiring any objection to be made within ten days after the sheriff's sale or any time prior to the delivery of the deed). The deed was delivered by the sheriff to Deutsche and recorded on September 16, 2010.

The court granted Angeles' May 16, 2011 hardship application to stay the eviction so that his children could complete the school year. Deutsche subsequently stayed the eviction further in an attempt to negotiate a short sale of the property back to Angeles.

After negotiations failed, Angeles filed an order to show cause on November 16, 2011, seeking to: (1) vacate the sheriff's sale; (2) enjoin Deutsche from conveying title; and (3) permit Angeles to either file an answer to Deutsche's foreclosure complaint or, alternatively, dismiss the complaint for lack of standing. After this application was denied, the eviction and lock-out were completed on January 3, 2012.^[3]

In his appeal, Angeles relies on our recently decided case of Deutsche Bank National Trust Co. v. Mitchell, 422 N.J.Super. 214, 27 A.3d 1229 (App.Div. 2011), asserting that the facts are similar. In Mitchell, we held that either possession of the note or an assignment of the mortgage that predated the original complaint conferred standing. Id. at 216, 225, 27 A.3d 1229. We determined that an amended complaint can not cure an initial lack of standing. Ibid.

In Mitchell, however, the defendant actively engaged in the litigation, filing an answer and counterclaims in response to the plaintiff's foreclosure complaint. Id. at 220, 27 A.3d 1229. The defendant also contested the plaintiff's standing to file the foreclosure complaint long before the end of the litigation. Id. at 220-21, 27 A.3d 1229.

Rule 4:50-1 governs an applicant's motion for relief from default when the case has proceeded to judgment. U.S. Bank Nat'l Assoc. v. Guillaume, 209 N.J. 449, 466, 38 A.3d 570 (2012). The Guillaume Court explained that "[t]he rule is `designed to reconcile the strong interests in finality of judgments and judicial efficiency with the equitable notion that courts should have authority to avoid an unjust result in any given case.'" Id. at 467, 38 A.3d 570 (quoting Mancini v. EDS, 132 N.J. 330, 334, 625 A.2d 484 (1993)).

A reviewing court must accord "substantial deference" to a trial court's 676*676 determination under the rule and its decisions will be left undisturbed "unless [they] result[] in a clear abuse of discretion." Ibid. (citing DEG, LLC v. Twp. of Fairfield, 198 N.J. 242, 261, 966 A.2d 1036 (2009)). "[A]n abuse of discretion occurs when a decision is `made without a rational explanation, inexplicably departed from established policies, or rested on an impermissible basis.'" Id. at 467-68, 38 A.3d 570 (quoting Iliadis v. Wal-Mart Stores, Inc., 191 N.J. 88, 123, 922 A.2d 710 (2007)).

In the context of a foreclosure case, the Guillaume Court reiterated the grounds on which a party may seek to vacate a default judgment pursuant to Rule 4:50-1. The grounds are:

(a) mistake, inadvertence, surprise, or excusable neglect; (b) newly discovered evidence which would probably alter the judgment or order and for 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; (d) the judgment or order is void; (e) 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; or (f) any other reason justifying relief from the operation of the judgment or order.

[Id. at 467, 38 A.3d 570 (quoting R. 4:50-1).]

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Motions made under any Rule 4:50-1 subsection "must be filed within a reasonable time." See Orner v. Liu, 419 N.J.Super. 431, 437, 17 A.3d 266 (App.Div.), certif. denied, 208 N.J. 369, 29 A.3d 741 (2011) (citing Bascom Corp. v. Chase Manhattan Bank, 363 N.J.Super. 334, 340, 832 A.2d 956 (App.Div.2003)). In addition, Rule 4:50-2 bars relief outright to "motions based on Rule 4:50-1(a), (b) and (c)" when filed "`more than one year after the judgment, order or proceeding was entered or taken.'" Id. at 436-37, 17 A.3d 266 (quoting R. 4:50-2).

Angeles argues under Rule 4:50-1(d) that the final judgment is void for lack of standing. Although he has raised a valid concern, since the complaint was filed prior to the assignment of mortgage, he has not definitively demonstrated a lack of standing. Deutsche may well have had possession of the note, conferring standing, at the time it filed the original complaint.^[4] We remanded the matter in Mitchell in order for the trial court to determine whether the plaintiff had possession of the note or another basis to achieve standing when the original foreclosure complaint was filed. Mitchell, supra, 422 N.J.Super. at 225, 27 A.3d 1229; see also N.J.S.A. 12A:3-101 to -605.

In foreclosure matters, equity must be applied to plaintiffs as well as defendants. Defendant did not raise the issue of standing until he had the advantage of many years of delay. Some delay stemmed from the New Jersey foreclosure system, other delay was afforded him through the equitable powers of the court, and additional delay resulted from plaintiff's attempt to amicably resolve the matter. Defendant at no time denied his responsibility for the debt incurred nor can he reasonably argue that Deutsche is not the party legitimately in possession of the property. Rather, when all hope of further delay expired, after his home was sold and he was evicted, he made a last-ditch effort to relitigate the case. The trial court did not abuse its discretion in determining that defendant 677*677 was not equitably entitled to vacate the judgment.

Affirmed.

[1] Angeles also executed a second mortgage on the property to MERS, as nominee for First Equity, in the amount of $113,600.

[2] The New Jersey Judiciary Foreclosure Mediation Program was implemented to handle the increased number of foreclosure proceedings. Press Release, New Jersey Office of the Attorney General, Statewide Mortgage Foreclosure Mediation Program Launched (Jan. 9, 2009), available at http://www.nj.gov/oag/newsreleases09/pr20090109a.html.

[3] On January 26, 2012, we denied Angeles' emergent application for a stay of the then-pending sale of the property to a third party. For other reasons, that sale was not completed.

[4] As we stated, the original complaint alleged that plaintiff had possession of the note at the time of filing. Defendant has never challenged that assertion.

BANKRUPTCY ARTICLE - BANKRUPTCY ATTORNEY IN HACKENSACK NJ (201) 646-3333

 

CHARLES W. STRUNCK, III, Plaintiff-Appellant,
v.
CARMEN M. FIGUEROA, Defendant-Respondent.No. A-1224-14T4.Superior Court of New Jersey, Appellate Division.

Submitted October 20, 2015.Decided May 3, 2016.

Begelman, Orlow & Melletz, attorneys for appellant (Marc M. Orlow and Daniel S. Orlow, on the briefs).

The Micklin Law Group, attorneys for respondent (Brad M. Micklin and Richard M. Muglia, on the brief).

Before Judges Fisher and Espinosa.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

PER CURIAM.

Plaintiff Charles W. Strunck, III, appeals from an order that denied his motion to enforce litigant's rights. We affirm.

On August 31, 2011, plaintiff and defendant Carmen M. Figueroa were granted a divorce by the Court of Common Pleas in Pennsylvania. The divorce decree awarded plaintiff the sum of $23,369 to be transferred from defendant's "Fidelity account" by way of a qualified domestic relations order (QDRO). The divorce decree directed that plaintiff be responsible for the preparation and cost for the QDRO. However, defendant withdrew all funds from the Fidelity account before the divorce decree was entered and filed a Chapter 7 bankruptcy petition on December 6, 2011.

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Schedule F (Creditors Holding Unsecured Nonpriority Claims) of defendant's bankruptcy petition lists plaintiff as a creditor, states the $23,269 claim was incurred in August 2011 and provides the following description: "Matrimonial judgment — This judgment is not a domestic support obligation under Section 523(a)(5) of the Code." Plaintiff does not dispute that he received notice of the bankruptcy petition and the inclusion of the $23,369 as an unsecured claim in that petition.

Plaintiff states he consulted with a bankruptcy attorney who advised him that, "as a practical matter, [he] was better off not pursuing legal action against the Defendant for her failure to comply with the terms of the [divorce decree]."

Pursuant to the Federal Rules of Bankruptcy Procedure, a creditor may contest the dischargeability of a debt by filing "a complaint . . . objecting to the debtor's discharge . . . no later than 60 days after the first date set for the meeting of creditors under § 341(a)," or as extended by the court. Fed. R. Bankr. P. 4004(b).

Plaintiff did not file an adversary complaint to challenge the dischargeability of the $23,369 claim. See Fed. R. Bankr. P. 4007(a). Defendant was granted a discharge of this and all other debts listed on her petition in March 2012. See 11 U.S.C.A. § 727.

Plaintiff elected to pursue an alternative course to attempt to recover the $23,369 due to him pursuant to the divorce decree. In July 2013, more than one year after defendant's discharge, he filed a complaint against defendant in the Law Division, alleging conversion. After this complaint was dismissed without prejudice, plaintiff docketed the Pennsylvania divorce decree in New Jersey. Thereafter, more than two years after defendant's discharge, plaintiff filed a motion to enforce litigant's rights based on that divorce decree, seeking to compel defendant to pay him $23,369. He contended that defendant had falsely stated in her bankruptcy petition that she was not holding the property of another, i.e., the funds taken from the Fidelity account, and that, as a result, the debt was not dischargeable. After this motion was denied without prejudice in June 2014, plaintiff filed a second motion to enforce litigant's rights seeking the same relief on the same grounds.^[1] That motion was denied by order dated September 26, 2014.

In his appeal, plaintiff presents the following issues for our consideration:

POINT I

THE PLAINTIFF DID NOT COMMIT LACHES, ESTOPPEL, OR AN IMPLICIT WAIVER OF HIS RIGHTS TO ENFORCE THE PENNSYLVANIA DECREE.

POINT II

THE BANKRUPTCY DISCHARGE RECEIVED BY THE DEFENDANT HAS NO LEGAL BEARING ON THE DEFENDANT'S OBLIGATIONS UNDER THE DECREE OF DIVORCE.

POINT III

SOUND PUBLIC POLICY AND PRECENDENT WEIGH IN FAVOR OF REVERSING THE TRIAL COURT'S RULING.

After reviewing these arguments in light of the record and applicable legal principles, we conclude that all lack sufficient merit to warrant discussion in a written opinion, R. 2:11-3(e)(1)(E), beyond the following brief comments.

Pursuant to 11 U.S.C.A. § 727, "[t]he court shall grant the debtor a discharge" unless one of the enumerated exceptions applies. Plaintiff does not argue that any of these exceptions apply. Rather, he contends the discharge "has no legal bearing" on the obligation created by the divorce decree. He asserts the divorce decree created a statutory interest in the $23,369 prior to the filing of the bankruptcy petition that must be honored by the bankruptcy court, a position he never advanced in the bankruptcy court. Plaintiff's argument rests upon the flawed premise that he could utterly ignore the bankruptcy proceeding and pursue the funds awarded to him in the divorce decree through enforcement proceedings in family court.

It is undisputed that plaintiff had notice that defendant's obligation under the divorce decree was included in her bankruptcy petition. Even when the argument against dischargeability is that the claim is based upon an intentional tort, the general rule is that

a creditor . . . must initiate a proceeding in the bankruptcy court to determine the dischargeability of its claim within a specific time period. If the creditor fails to file a complaint within the time limit, the claim will be discharged. This procedure effectively grants the bankruptcy court exclusive jurisdiction to determine the dischargeability of an intentional tort debt. [In re Strano, 248 B.R. 493, 495 (Bankr. D.N.J. 2000) (citations omitted).]

The bankruptcy court's decision to grant defendant a discharge was a final order that could be appealed either to a district court or to a bankruptcy appellate panel. In re Hill, 562 F.3d 29, 32 (1st Cir. 2009) (citing 28 U.S.C.A. § 158).

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The arguments plaintiff makes regarding the dischargeability of the $23,369 claim could have and should have been made in an adversary proceeding filed in bankruptcy court. If his challenge failed, he could pursue review pursuant to federal statute. He did not do so.

As it stands, the discharge is a final order that:

(1) voids any judgment at any time obtained . . .

(2) operates as an injunction against the commencement or continuation of an action . . . to collect, recover or offset any such debt as a personal liability of the debtor, whether or not discharge of such debt is waived; and

(3) operates as an injunction against the commencement or continuation of an action . . . to collect [from community property held by the debtor and spouse] . . . that is acquired after the commencement of the case. . . .

[11 U.S.C.A. § 524(a).]

Plaintiff was, therefore, enjoined from pursuing the enforcement actions he commenced to collect the discharged $23,369 claim and not entitled to the relief he sought.

Affirmed.

[1] In the certification plaintiff submitted in support of this second enforcement motion, he asserts he filed a pro se motion to enforce the terms of the divorce decree in Pennsylvania in December 2011 and that he was successful in that motion. He has not provided any proof to support that assertion.

BANKRUPTCY ARTICLE - ATTORNEY IN HACKENSACK NJ - (201) 646-3333

 27 N.J. Tax 185 (2013)

GLENN B. SLATER, Plaintiff-Appellant,
v.
DIRECTOR, DIVISION OF TAXATION, Defendant-Respondent.No. A-4579-11T4.Superior Court of New Jersey, Appellate Division.Argued January 22, 2013.Decided February 15, 2013.

186*186 Glenn B. Slater, appellant, argued the cause pro se.

Heather Lynn Anderson, Deputy Attorney General, argued the cause for respondent (Jeffrey S. Chiesa, Attorney General, attorney; Lewis A. Scheindlin, Assistant Attorney General, of counsel; Ms. Anderson, on the brief).

Before Judges ESPINOSA and GUADAGNO.

PER CURIAM.

Plaintiff appeals from a decision of the Tax Court that denied his motion seeking a refund of Sales and Use tax ("S & U") and 187*187 granted the motion filed by defendant, Director, Division of Taxation (the Director), to dismiss his complaint with prejudice for lack of subject matter jurisdiction. The facts and issues raised by this appeal are set forth in the Tax Court's published opinion, 26 N.J.Tax 322 (2012), and need not be repeated at length here.

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In February 1997, the Director sent plaintiff a Notice of Finding of Responsible Person Status, holding him liable for S & U taxes due and owing from his business, S.S. Clinton, Inc. Plaintiff filed no administrative protests or appeals from that Notice. In September 1999, plaintiff filed a petition for Chapter 11 bankruptcy in the United States Bankruptcy Court for the District of New Jersey. The Director filed proof of claims for an aggregate amount of $218,722.35 in August 2000. The Director's claims were expunged as untimely because they were filed beyond the 180-day period for the filing of such claims provided by 11 U.S.C.A. § 502(b)(9). No order was entered in Bankruptcy Court that determined the Director's claims were discharged or dischargeable.

Plaintiff's bankruptcy petition was dismissed over plaintiff's objection in April 2002 without him receiving a discharge as to any of the debts identified in the bankruptcy proceeding.

In October 2008, plaintiff filed the instant complaint in the Tax Court, seeking a refund of S & U tax from the Director. The Director moved to dismiss the complaint because it was not brought within the ninety-day period set forth in N.J.S.A. 54:49-18(a). Plaintiff argued that the Division of Taxation should be barred from pursuing its claim because the Director's claims had been expunged in the bankruptcy proceeding. In addition, he asked the Tax Court to order that the Director return $535,000 to him.

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We affirm, substantially for the reasons set forth by Judge Bianco in his well-reasoned opinion. The Director's claims against plaintiff were not discharged or deemed dischargeable in the bankruptcy proceeding and, because plaintiff's petition was dismissed, the order expunging the Director's claims was vacated as a matter of law. See 11 U.S.C.A. § 349. Plaintiff was therefore 

188*188 mistaken in his belief that the Director's claims were disposed of in the bankruptcy proceeding and, because he did not file his claim for a refund on a timely basis, it was properly dismissed. Plaintiff has also argued that he was not provided with discovery he requested from the Director. We agree with Judge Bianco that his request is now moot.

Affirmed.