GL Trinity Holdings, LLC v. Emachah

• Decision Date: 22 November 2022
• Docket Number: A-0121-21
• Parties: GL TRINITY HOLDINGS, LLC, Plaintiff-Respondent, v. SHATHA EMACHAH, a/k/a SHATHA SAAB, an individual, and as a manager/owner of INSURED ADVISOR LLC, Defendant-Appellant.
• Court: New Jersey Superior Court — Appellate Division

GL TRINITY HOLDINGS, LLC, Plaintiff-Respondent, v. SHATHA EMACHAH, a/k/a SHATHA SAAB, an individual, and as a manager/owner of INSURED ADVISOR LLC, Defendant-Appellant.

No. A-0121-21

Superior Court of New Jersey, Appellate Division

November 22, 2022

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.

Submitted November 10, 2022

On appeal from the Superior Court of New Jersey, Law Division Middlesex County, Docket No. L-2354-19.

David M. Shafkowitz, attorney for appellant.

Sarofiem &Antoun, and Damian Lawandi, LLP, attorneys for respondent (Mekhail E. Sarofiem and David C. Rosciszewski, on the brief).

Before Judges Gooden Brown and Mitterhoff.

PER CURIAM

Defendant Shatha Emachah, a/k/a Shatha Saab, appeals from an August 16, 2019 order denying her motion to vacate the entry of default judgment against her and extend the time for filing an answer. We affirm, substantially for the reasons set forth in Judge J. Randall Corman's well-reasoned written opinion.

We discern the following facts from the record. Plaintiff, GL Trinity Holdings, LLC is a New Jersey corporation in the business of real estate investments. Defendant is the sole owner, member, manager, and registered agent of Insured Advisor, LLC (Insured Advisor), d/b/a HomeOwner Advisor, another New Jersey corporation.

On or about June 3, 2018, plaintiff contacted Firas Emachah,^[1] defendant's husband, regarding home improvements on property owned by plaintiff. Firas allegedly presented himself as the owner of HomeOwner Advisor. Firas entered into an oral agreement to undertake home improvements on plaintiff's property.^[2] On or about June 7, 2018, Firas requested an advance to allegedly purchase products and materials necessary for the agreed upon improvements. Plaintiff provided Firas with $20,000 and secured a promissory note to be paid back in two weeks in the event Firas did not fulfil his obligation to plaintiff. Firas then provided a post-dated check for repayment and deposited plaintiff's check in an account owned by Insured Advisor and defendant. Defendant and her husband then put a stop payment on the repayment check. Plaintiff was never refunded the money, nor have the agreed upon home improvements been made.

On August 14, 2018, plaintiff filed the original complaint in this matter against: (1) Firas; (2) defendant, as an individual; and (3) Insured Advisor. As against Insured Advisor and Firas, plaintiff alleged: (count one) breach of contract; (count two) breach of the implied covenant of good faith and fair dealing; (count three) promissory estoppel; (count five) negligent and fraudulent misrepresentation; (count six) fraud; and (count seven) consumer fraud. As against Insured Advisor and defendant, plaintiff alleged: (count eight) negligent entrustment and (count nine) negligent supervision. The complaint further asserted (count four) unjust enrichment against Firas, defendant, and Insured Advisor.

On August 23, 2018, Firas and defendant were served with the original complaint; defendant was served both in her individual capacity and as Insured Advisor's registered agent. Despite being served, all named defendants failed to plead or otherwise defend the lawsuit. As a result, a default judgment was entered against Insured Advisor and Firas on November 28, 2018 in the amount of $25,215.02.^[3] The claims against defendant in her individual capacity were voluntarily dismissed by plaintiff at a proof hearing by way of a stipulation of dismissal.

On January 15, 2019, pursuant to the entry of judgment, plaintiff served defendant, in her capacity as corporation agent, with an information subpoena. To date, defendant has not responded. Also following the entry of judgment, Firas filed for personal protection under Chapter 7 of the United States Bankruptcy Code.

On March 22, 2019, plaintiff filed the instant complaint, naming only defendant in her personal capacity as the sole officer of Insured Advisor. In this ancillary lawsuit, plaintiff sought to pierce the corporate veil against defendant pursuant to N.J.S.A. 2A:17-75. Plaintiff further asserted (count three) conspiracy and reinstated the previously dismissed claims against defendant from the original complaint: (count two) unjust enrichment; (count four) negligent entrustment; and (count five) negligent supervision. On April 9. 2019, defendant was served, through personal service, by Guaranteed Subpoena Service on defendant's mother, Yosra Onasha, at defendant's residence. However, defendant once again failed to plead or otherwise defend the ancillary lawsuit.

The court then scheduled a proof hearing for June 11, 2019. Defendant was put on notice of the scheduled proof hearing by certified mail. Ultimately, defendant did not appear for the proof hearing and the judge entered final judgment by default against her^[4] for a total of $85,194.99.

On August 16, 2019, the court denied defendant's motion to vacate the entry of default and to extend the time for filing an answer to plaintiff's complaint. On December 8, 2020, we vacated the June 11, 2019 judgment and remanded the matter to the trial court to issue findings of fact and conclusions of law, pursuant to Rule 1:7-4.^[5] GL Trinity Holdings, LLC v. Emachah, No. A- 0376-19 (App. Div. Dec. 8, 2020) (slip op. at 4). We did not address the merits of defendant's claims.

On August 6, 2021, the trial court issued a written opinion outlining the court's reasoning for choosing not to vacate default judgment in this matter. After a detailed summation of the facts, the court addressed each of defendant's arguments in turn:

The[d]efendant's claim that the judgment should be vacated because she was not properly served is without merit because the [p]laintiff has presented proof that the summons and complaint were personally served by Guaranteed Subpoena Service on [d]efendant's mother, Yosra Onasha, at [d]efendant['s] . . . residence, on April 9, 2019. Pursuant to [Rule] 4:4-4, this constitutes valid service of process.

The[d] efendant's argument to vacate the judgment under [Rule] 4:50-1(c) is equally unavailing. The [d]efendant alleges that the [p]laintiff's attorney misrepresented that he would allow [d]efendant time to retain an attorney before moving forward with the proof hearing and request for default judgment. However, Plaintiff's counsel vehemently denies ever making such an agreement with the [d]efendant and the [d]efendant offers no proof of such an agreement. Furthermore, the defendant's lack of credibility with regard to this bald assertion is highlighted by the fact that the letter from [d]efendant's counsel requesting an adjournment for the proof hearing makes no claim that he has consent of the [p]laintiff's counsel and the denial of the adjournment request by the [c]ourt specifically states that [d]efendant's counsel does not have the consent of his adversary for an adjournment.

The[d] efendant also argues the judgment should be vacated because she was deemed not liable in the underlying action (MID-L-4884-18), presumably claiming grounds to vacate under [Rule] 4:50-1(e). Similarly, the defendant seeks to vacate pursuant to [Rule] 4:50-1(f)[,] claiming the entire controversy doctrine bars the present matter because a prior action on the same facts resulted in a dismissal against the [d]efendant. However, [d]efendant . . . was dismissed in the underlying lawsuit by stipulation of dismissal and her liability in the matter was not decided on [the] merits. The instant lawsuit was filed after [d]efendant Insured Advisor, LLC and its officers refused to comply with subpoena requests addressing the outstanding judgment obtained under L-4884-18. N.J.S.A. 2A:17-75 allows a judgment creditor to pursue any agent or officer of a corporation who neglects or refuses to comply with the provisions of this section and constitutes a new and separate cause of action from those litigated in L-4884-18. This [c]ourt notes that [] nowhere in the [d]efendant's certification or elsewhere in her pleadings does she claim that she did comply with the information subpoena, which would constitute a meritorious defense to the [p]laintiff's claims under N.J.S.A. 2A:17-75.

It is not until after a corporation's refusal to satisfy an outstanding judgment that its officers may be sought out personally to satisfy the judgment if they fail to comply with N.J.S.A. 2A:17-75. If the [d]efendant's view of N.J.S.A.:17-75 were to prevail, any corporate officer who was dismissed from a case for lack of individual liability, where the case resulted in a judgment against the corporation, would then have free rein to actively impede efforts to execute upon the judgment without fear of consequence, thus eviscerating the purpose of the statute.

On September 15, 2021,^[6] defendant filed this appeal. On appeal, defendant raises the following argument:

LEGAL ARGUMENT

I. THE TRIAL COURT ERRED IN ITS APPLICATION OF N.J. RULE 4:50-1, IN DENYING THE DEFENDANT'S MOTION TO VACATE THE DEFAULT JUDGMENT AND EXTEND TIME TO FILE AND ANSWER DESPITE DEFENDANT'S SATISFACTION OF THE REQUIREMENTS OF RULE 4:50-1.

We find insufficient merit in defendant's contentions to warrant extended discussion in a written opinion. Rule 2:11-3(e)(1)(A). We write only to add the following comments.

Rule 4:50-1 sets forth the various circumstances in which a party may obtain relief from a final judgment or order, including "(a) mistake, inadvertence, surprise, or excusable neglect; . . . or (f) any other reason justifying relief from the operation of the judgment or order."^[7] "The rule is 'designed to reconcile the strong interests...