Court Opinion

ID: 4428845
Source: CourtListenerOpinion
Date Created: 2019-08-20 19:13:43.193844+00
Date Added: 2024-06-11T14:50:50.138072
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE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-3235-17T3

THE CHURCH INSURANCE
COMPANY OF VERMONT,

           Plaintiff-Appellant/
           Cross-Respondent,

v.

THEOPHILUS EJIM,

           Defendant-Respondent/
           Cross-Appellant,

and

GRACE CHURCH USA,

     Defendant-Respondent.
_____________________________

                    Argued March 27, 2019 – Decided April 10, 2019

                    Before Judges Alvarez and Nugent.

                    On appeal from Superior Court of New Jersey, Law
                    Division, Mercer County, Docket No. L-2274-16.
             James P. Manahan argued the cause for appellant/cross-
             respondent (Bernstein & Manahan, LLC, attorneys;
             James P. Manahan on the briefs).

             Robert P. Casey argued the cause for respondent/cross-
             appellant (Lenox Law Firm, LLC, attorneys; Robert P.
             Casey, on the brief).

PER CURIAM

      Plaintiff, The Church Insurance Company of Vermont, appeals from a

$9185 judgment entered against it as a sanction for pursuing a frivolous claim

against defendant, Theophilus Ejim. Ejim cross-appeals from the same order,

contending the judgment was inadequate. Because the judgment was final, and

because the Law Division judge who entered it did not make adequate findings

of fact and conclusions of law as required by Rule 1:7-4, we vacate the order

and remand for further proceedings.

      To provide context for the issues raised on this appeal, we briefly

summarize the facts of a Chancery Division action – between plaintiff's insured

and Ejim – from which no appeal has been taken. Ejim had been a founder and

long-term member of IGBO Community Church U.S.A., Inc. (IGBO), when he

left as the result of a factional split within the church. In a series of transactions

that pre-dated and post-dated Ejim's departure from IGBO, Ejim transferred

approximately $250,000 from IGBO bank accounts to a bank account in the

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name of Grace Church, USA.        Although Ejim incorporated this entity, he

acknowledged during court proceedings that no church is associated with it.

      IGBO filed a chancery action and obtained interim relief restraining the

bank from disbursing any funds from the Grace Church account. The Chancery

Division action concluded after the court entered summary judgment for IGBO,

finding Ejim had committed the tort of conversion and breached his fiduciary

duty to IGBO. The court dismissed Ejim's counterclaim seeking involuntary

dissolution of IGBO or, alternatively, indemnification. The Chancery Division

judge also rejected Ejim's defense of unclean hands. The judge granted IGBO's

summary judgment motion on November 14, 2017.

      That brings us to the Law Division action that is now before us. Plaintiff

issued a Fidelity Bond to IGBO to cover, among other losses, "theft and

conversion of assets including bank funds by a member or employee." When

IGBO asserted a claim against the Bond based on Ejim's conversion of the funds

in the IGBO accounts, plaintiff paid IGBO the $100,000 limits of its Fidelity

Bond, but required IGBO to file a criminal complaint against Ejim.             In

November 2016, a year before the pending Chancery Division action concluded,

plaintiff filed this subrogation action against Ejim and Grace Church USA.

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      Ejim and Grace Church filed an answer, affirmative defenses, and a

counterclaim. The counterclaim's first count stated in relevant part:

            1.    On information and belief, the Plaintiff, in
            processing a claim by its insured, [IGBO], required its
            insured to file a Criminal Complaint against the
            Defendant Ejim knowing that the funds which were
            allegedly misappropriated or converted were being held
            in a bank account under Court Order.

            2.    Such conduct on behalf of the plaintiff
            constituted a frivolous action that directly and
            proximately has caused the Defendant Ejim to suffer
            damages.

The second count of the counterclaim stated in pertinent part:

            2.    In Paragraph [three] of its Complaint, the
            Plaintiff alleges that its insured submitted a claim, the
            date of which pre-dated its coverage.

            3.     In Paragraph [five] of its Complaint, the Plaintiff
            states that it paid that claim to its insured in the amount
            of One Hundred Thousand Dollars ($100,000.00)
            knowing that the funds that were allegedly converted
            and/or misappropriated were being held in a bank
            account under Court Order.

            4.   Such action by the Plaintiff constitutes frivolous
            conduct that directly and proximately has caused the
            Defendants to sustain damages.

      One month after the Chancery Division judge entered summary judgment

in favor of IGBO for Ejim's conversion of IGBO funds, the same judge decided

and granted Ejim's motion for summary judgment in this, the Law Division

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action. In a statement of reasons appended to the order granting Ejim and Grace

Church USA summary judgment, the judge noted that the motion had been

unopposed. In granting the motion, the court explained: "The court has resolved

the Chancery Division matter and, as part of its determination, has ordered the

funds to be returned to IGBO. . . . Based on the court's decision in the chancery

matter, plaintiff no longer has a subrogation claim against Theophilus Ejim and

Grace Church U.S.A."

      Following the summary judgment dismissal of plaintiff's Law Division

complaint, Ejim filed a motion seeking attorney's fees and costs from plaintiff

as a sanction for plaintiff filing a frivolous complaint. Ejim supported the

motion with his attorney's certification.

      The attorney cited Ejim's answer, affirmative defenses, and counterclaim,

in which Ejim made the following allegations. First, plaintiff stated it was

authorized to transact business in New Jersey, but it had never been so

authorized. Second, IGBO's loss had not occurred within the policy period.

Third, the funds IGBO allegedly lost "were secured in a bank account, under

[c]ourt [o]rder." Ejim contended that based on these facts plaintiff's subrogation

claim was frivolous. Ejim claimed he had so informed plaintiff in his cover

letter serving his answer, affirmative defenses, and counterclaim. The cover

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letter contained this statement: "[a]dditionally, please note that this

correspondence is also intended to provide [twenty-eight]-Day Notice to you

pursuant to Rule 1:5-2 to withdraw the Complaint."

      In response to Ejim's motion for sanctions, plaintiff sent him a letter

asserting that his motion was frivolous. Plaintiff asserted Ejim's motion for

sanctions was frivolous because the Chancery Division judge had not

determined that plaintiff's complaint was frivolous. Plaintiff also asserted Ejim

had incurred no fees or costs following the grant of summary judgment to Ejim

"that would be cause for any award or remedy against [p]laintiff." When Ejim

refused to dismiss his motion, plaintiff filed a cross-motion seeking counsel fees

and costs for having to respond to Ejim's allegedly frivolous motion.

      The motion and cross-motion were decided by a Law Division judge.

Following oral argument, the judge declined to address Ejim's argument that

plaintiff was not authorized to do business in New Jersey and thus had no

standing to bring its subrogation action. The judge found plaintiff's subrogation

claim was no longer viable after the Chancery Division judge granted summary

judgment to Ejim on December 14, 2017. The judge found, however, that

plaintiff should have known its complaint had no merit as of November 14,

2017, when the Chancery Division entered summary judgment in the underlying

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action in favor of IGBO. The judge denied plaintiff's cross-motion, permitted

the parties to supplement the record regarding Ejim's counsel fees through the

date of oral argument, and entered the $9185 order of judgment for Ejim,

"representing sanctions pursuant to N.J.S.A. 2A:15-59.1."         These appeals

followed.

      On appeal, plaintiff argues the Law Division judge failed to make required

findings of fact and conclusions of law. Plaintiff notes the judge did not explain

the basis for the $9185 judgment. Ejim counters that he proved plaintiff's

conduct was frivolous and the Law Division judge acted appropriately in so

finding. He claims the documentation he submitted to the court amply supported

the final judgment. In support of his cross-appeal, he argues that plaintiff's

subrogation complaint was frivolous from its inception; consequently, the court

should have awarded him the attorney's fees he incurred from the action's

inception through its conclusion. Plaintiff responds that Ejim's cross-appeal is

devoid of factual support and unsupported by legal precedent. He insists his

matter should be remanded and the trial court directed to make appropriate

findings of fact and conclusions of law.

      We begin our analysis by noting that the Law Division's order of judgment

awarding Ejim fees was final for purposes of appeal. An order is generally

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considered a final judgment appealable as of right if it "dispose[s] of all issues

as to all parties." Scalza v. Shop Rite Supermarkets, Inc., 304 N.J. Super. 636,

638 (App. Div. 1997) (citing Hudson v. Hudson, 36 N.J. 549, 553 (1962)).

      Because the order here was final, it was appealable as of right. R. 2:2–

3(a)(1).   When issuing orders appealable as of right, trial courts must issue

opinions. Rule 1:7–4 mandates that a trial court, "by an opinion or memorandum

decision, either written or oral, find the facts and state its conclusions of law

thereon . . . on every motion decided by a written order that is appealable as of

right." The trial court must clearly state its factual findings and correlate them

with relevant legal conclusions so the parties and appellate courts may be

informed of the rationale underlying the decision. Monte v. Monte, 212 N.J.

Super. 557, 565 (App. Div. 1986). "In the absence of reasons, we are left to

conjecture as to what the judge may have had in mind." Salch v. Salch, 240 N.J.

Super. 441, 443 (App. Div. 1990). Furthermore, such an omission "imparts to

the process an air of capriciousness which does little to foster confidence in the

judicial system." Twp. of Parsippany-Troy Hills v. Lisbon Contractors, Inc.,

303 N.J. Super. 362, 367 (App. Div. 1997).

      Here, the Law Division judge who disposed of the final motion and cross-

motion merely made several conclusory statements. The judge provided no

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                                        8
analysis of the parties' arguments, made no findings of fact with explanations

supported by the motion record, and stated no conclusions of law supported by

precedent. For that reason, we vacate the order and remand for the Law Division

judge to make findings of fact and conclusions of law.

      On remand, the judge shall address all arguments of all parties, including

Ejim's claim that plaintiff had no standing to file its subrogation claim because

it was not registered to do business in New Jersey.    Plaintiff does not dispute

that it was doing business in the State without registering. The judge shall also

make findings of fact and conclusions of law concerning the reasonableness of

any fee award. Packard-Bamberger & Co., Inc. v. Collier, 167 N.J. 427 (2001).

      The Law Division judge's order of judgment for Ejim is vacated and this

matter is remanded for further proceedings consistent with this opinion. We do

not retain jurisdiction.

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