Court Opinion

ID: 4472551
Source: CourtListenerOpinion
Date Created: 2020-01-14 15:07:11.755388+00
Date Added: 2024-06-11T09:50:33.266629
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NOT FOR PUBLICATION WITHOUT THE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-5524-17T2

EUGENE GAETA and
MEGAN GAETA,

          Plaintiffs-Respondents,

v.

RUDI HENDEL, CATHERINE
LIN-HENDEL, LIN-HENDEL,
C.G. HENDEL, and RUDI TRUST,

          Defendants-Appellants.

                   Submitted November 14, 2019 – Decided January 14, 2020

                   Before Judges Alvarez, Nugent and Suter.

                   On appeal from the Superior Court of New Jersey, Law
                   Division, Union County, Docket No. L-3484-13.

                   Kasuri Byck LLC, attorneys for appellants (Harrison
                   Ross Byck, on the brief).

                   Bourne Noll & Kenyon, and White and Williams LLP,
                   attorneys for respondents (Michael D. Mezzacca,
                   Michael Oliver Kassak, Edward Michael Koch, and
                   Jared K. Levy, on the briefs).
PER CURIAM

      This appeal challenges an award of counsel fees to plaintiffs Eugene Gaeta

and Megan Gaeta, pursuant to the frivolous litigation statute, N.J.S.A.

2A:15-59.1(a)(1), payable by defendants Rudi Hendel, Catherine Lin-Hendel,

and the Rudi Hendel Revocable Trust. The obligation was imposed before Rudi

Hendel and Catherine Lin-Hendel filed a Chapter 11 bankruptcy petition. After

the action was filed, the Law Division judge calculated the actual fee amount

and entered an order accordingly. The order setting the amount was voided by

the bankruptcy court because it violated the bankruptcy code's automatic stay

provision, 11 U.S.C. § 362(a)(2). The bankruptcy petition was then dismissed

on April 25, 2018. On July 2, 2018, having been informed of the dismissal, the

judge sua sponte reinstated the counsel fee order. Defendants appeal, and we

affirm, concluding that once the bankruptcy action was dismissed, precedent

allows reinstatement of the obligation.

      The procedural history in this matter is unclear. The July 2, 2018 order

reinstating the $90,848.65 attorney's fee award was entered by the judge without

a hearing upon being advised by letter from plaintiffs' counsel that the

bankruptcy petition was dismissed. No attack is being made on the merits of the

initial pre-bankruptcy decision granting fees to plaintiffs, made when the judge

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dismissed defendants' eleven-count, 105-paragraph counterclaim alleging,

among other things, trespass, tortious interference with prospective economic

advantage, defamation, and intentional infliction of emotional distress. From

what we can discern from the limited record on appeal, this is a dispute between

neighbors, stemming from the invasion of bamboo into plaintiffs' yard,

defendants' partial removal of plaintiffs' fence, and similar conflicts. Final

judgment appears to have been entered.

      Defendants raise an issue before us never argued to the trial judge.1 They

contend that the July 2, 2018 order was void ab initio, and thus, pursuant to Rule

4:50-1(d), is unenforceable:

            POINT I
            THE TRIAL COURT ERRED IN THE JULY 02, 2018
            ORDER BY DIRECTLY REINSTATING THE
            NOVEMBER 02, 2016 ORDER WHICH IS
            RENDERED VOID AB INITIO AS IT WAS
            ENTERED IN VIOLATION OF THE AUTOMATIC

1
     The judge reinstated the appealed-from order without a hearing, and
defendants are entitled to appeal because it is final. Ordinarily, we do not
address arguments not made to the trial court. In this case, defendants had no
opportunity to object to the reinstatement of the order before issuance. See State
v. Witt, 223 N.J. 409, 419 (2015) (quoting State v. Robinson, 200 N.J. 1, 20
(2009)) ("For sound jurisprudential reasons, with few exceptions, 'our appellate
courts will decline to consider questions or issues not properly presented to the
trial court when an opportunity for such a presentation is available.'").
Additionally, the issue raises a question of law, which we always review de
novo. Smith v. Millville Rescue Squad, 225 N.J. 373, 387 (2016). Thus, it is
procedurally proper for us to proceed.
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            STAY PURSUANT TO SECTION 362 OF THE U.S.
            BANKRUPTCY CODE, THEREFORE THE JULY 02,
            2018 ORDER MUST BE VACATED UNDER RULE
            4:50-1(D) AS [ITS] SOLE PURPOSE IS TO
            REINSTATE THE VOID AB INITIO NOVEMBER
            02, 2016 ORDER.

      Judge Pressler addressed a factually similar scenario in Bascom

Corporation v. Chase Manhattan Bank, 363 N.J. Super. 334 (App. Div. 2003).

Bascom sought to foreclose a tax sale certificate on property upon which Chase

Manhattan Bank held a mortgage. Id. at 337. The property owner, Fannie

Askew, was the borrower. Ibid. A tax foreclosure judgment was issued to

Bascom while Askew's bankruptcy proceeding was pending. Ibid.

      Neither Chase nor Askew responded to Bascom's preaction notice, or to

the tax foreclosure complaint. Ibid. Bascom obtained an order "fixing the

amount, time and place of redemption."       Ibid.   Neither Chase nor Askew

attempted to redeem. Ibid. The tax foreclosure judgment was entered October

24, 2001, and Bascom acquired the property at a sheriff's sale. Id. at 337-38.

      Chase, while foreclosing on the property, "missed Bascom's purchase of

the tax sale certificate." Id. at 338. Chase did not attempt to enforce the

judgment in the mortgage foreclosure until a year after entry of Bascom's final

tax foreclosure judgment. Ibid. On October 22, 2002, a sheriff's sale on the

mortgage foreclosure was conducted at which Chase was the highest bidder.

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Ibid. Adding to the confusion, Askew "filed a pro se motion in the mortgage

foreclosure action seeking to set aside Chase's" judgment, on the theory that the

property had already been sold. Ibid. In response, Chase filed a motion seeking

to set aside the tax foreclosure judgment under Rule 4:50-1(d). Ibid. The judge

granted Askew's motion and denied Chase's application. Ibid.

      Chase contended that the tax foreclosure judgment was void because the

redemption order was entered while the bankruptcy court's automatic stay was

in effect. Id. at 338-39. Bascom was unaware of the bankruptcy proceeding.

Id. at 339. The automatic stay was dissolved when the petition was dismissed

"two days after entry of the order fixing the terms of redemption." Ibid.

      Askew had actually filed three petitions in bankruptcy—the first

dismissed October 6, 2001, the second dismissed January 11, 2002, and the third

dismissed October 31, 2002. Ibid. The final judgment of tax foreclosure was

entered on October 24, 2001, in the hiatus between dismissal of the first petition

before the second was filed. Ibid. The trial judge decided Chase was not entitled

to relief because the time that had elapsed before the application was not

reasonable. Id. at 339-40.

      On appeal, Chase reiterated that the final tax foreclosure judgment was

void because of the automatic stay, and that the Chancery Division erred in

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denying it relief pursuant to Rule 4:50-1. Id. at 338-39. Judge Pressler began

her analysis from the premise that pursuant to state law, "[a] state court judgment

entered while the [bankruptcy code's] automatic stay is in place renders that

judgment void ab initio . . . ." Id. at 341 (citing Cho Hung Bank v. Ki Sung

Kim, et al, 361 N.J. Super. 331, 339 (App. Div. 2003)). The defect in such

judgments is not "waivable" because the lack of authority in the court to render

judgment is similar to a "non-waivable lack of subject matter jurisdiction." Ibid.

      But in Bascom, the final tax foreclosure judgment was entered after the

Chapter 13 petition was dismissed and no stay was in effect. Id. at 342. It was

not the final judgment that was void, only the earlier order fixing the terms of

redemption while the stay was in effect. Ibid. The interim redemption order

was void ab initio, which did not make the foreclosure judgment invalid. Ibid.

Federal bankruptcy law was not violated "when the final judgment itself is free

of the impediment of the automatic stay." Ibid. Thus, the final tax foreclosure

judgment was in no way impaired by the nullification of the interlocutory order

detailing the steps to redemption. Id. at 342-43.

      The similarity to this case is self-evident. The order requiring defendants

to pay fees was not entered while the bankruptcy petition was pending; it

preceded the filing of the bankruptcy petition and the automatic stay. That order

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is not even under attack—nor could it be, as the time for the filing of any appeal

has long since passed.

      The purpose of the automatic stay is to give debtors respite during

bankruptcy proceedings. Maritime Elec. Co. v. United Jersey Bank, 959 F.2d
1194, 1204 (3d Cir. 1991). That respite was achieved by the nullification of the

order specifying the amount of fees. Once the bankruptcy proceedings were

dismissed, however, defendants returned to the same legal footing as before the

bankruptcy petition was filed. Defendants faced the pre-existing obligation, and

the court was again obliged to fix the specific amount owed.

      Furthermore, defendants have not proffered any law or convincing

rationale that would bar reinstatement after dismissal of the petition. In fact,

"an automatic stay must plainly terminate upon dismissal of the petition giving

rise to it." In re Lomagno, 320 B.R. 473, 478 (B.A.P. 1st Cir. 2005) (citation

omitted). 11 U.S.C. § 349(b)(3) provides that the dismissal of a case revests the

property of the estate in the entity in which ownership reposed immediately

before the filing. Ibid. Congress's intent in enacting the law was to return the

parties to the same position, once a petition is dismissed, as they were befor e.

Ibid. Even if a bankruptcy petition is refiled after dismissal, the stay generally

does not apply retroactively to the earlier action. Id. at 481-82. No purpose

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intended by Congress in enacting the bankruptcy laws would be served by the

result defendants urge on appeal.

      Affirmed.

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