GALE GARGIULO VS. LOUIS GARGIULO(FM-07-230-10, ESSEX COUNTY AND STATEWIDE) ( 2017 )

NOT FOR PUBLICATION WITHOUT THE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-1989-15T4
GALE GARGIULO,
Plaintiff-Respondent,
v.
LOUIS GARGIULO,
Defendant-Appellant,
and
199-201 SUMMIT AVENUE, LLC and
LOUPET REALTY, LLC,
Defendants/Intervenors-
Appellants.
____________________________________
Submitted March 21, 2017 – Decided August 7, 2017
Before Judges Koblitz and Sumners.
On appeal from Superior Court of New Jersey,
Chancery Division, Family Part, Essex County,
Docket No. FM-07-230-10.
Genova Burns LLC, attorneys for appellants
(Kathleen Barnett Einhorn, of counsel and on
the brief; Charles J. Messina and Michael C.
McQueeny, on the brief).
Gale Gargiulo, respondent pro se.
PER CURIAM
In this post-judgment divorce matter, defendant Louis
Gargiulo appeals the trial court's order finding him in contempt
for not paying IRS tax liens against real estate owned by
intervenor 199-201 Summit Avenue L.L.C. (Summit). In addition,
defendant and Summit appeal the court's order allowing plaintiff
Gale Garguilo to obtain discovery from Summit and intervenor Loupet
Realty, LLC (Loupet Realty) to determine if the entities made
distributions to defendant for his membership shares therein. For
the reasons that follow, we reverse the order of contempt, and
reverse and remand the discovery order to allow for oral argument.
The final judgment of divorce (FJOD) along with a written
decision was entered on December 12, 2013, detailing the equitable
distribution of the parties' marital assets, and the
responsibility for marital debts and counsel fees. Relevant to
this appeal, the FJOD provided that IRS liens totaling $257,094.22
on marital property were defendant's sole responsibility subject
to final disposition of his liability by the United States Tax
Court. The Tax Court granted plaintiff's application for innocent
spouse status seeking non-responsibility for the IRS liens but
defendant's appeal of that determination was pending at the time
the FJOD was entered.
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The FJOD also provided that defendant retain his fifty percent
share of properties and businesses he owns with his brother,
including Summit and Loupet Realty. His interest in Summit,
however, could not be transferred, encumbered, or altered in any
way without the permission of plaintiff or the court. This
restriction was set in place because plaintiff's equitable share
of the marital estate was secured through a recorded lien of three
separate judgments against defendant's share of Summit.
On December 4, 2015, the same trial court that issued the
FJOD, entered an order granting plaintiff's motion to hold
defendant in contempt due to his failure to satisfy the IRS liens.
The court did not render a written or oral decision. The order
merely stated: "Defendant is in contempt for his failure to pay
the IRS liens. Defendant shall immediately begin paying the IRS
debt or a bench warrant will be issued for his arrest." The order
made no mention of defendant's contention that his Tax Court appeal
remained pending and that he did not have an ability to pay the
IRS liens.
The same order also granted plaintiff's request for
comprehensive discovery from non-parties Summit and Loupet, "and
any other company that [defendant] owns." Subject to a consent
protective order of confidentiality to be submitted by the parties,
the order allowed plaintiff to subpoena records and documents
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covering the last two years' distributions made to defendant,
QuickBooks records, leases agreements, ledgers, bank accounts,
money transfers, rent rolls, and tax returns. The order stated
that plaintiff was entitled to discovery "as a judgment creditor
and due to the defendant's lack of veracity observed by this court
during pre-trial and trial proceedings in this case." There was
no recitation of facts supporting that finding. The order stated
that the court "addressed future discovery attempts" at oral
argument on the parties' earlier motions on January 16, 2015.
Lastly, the order denied plaintiff's request for appointment of a
receiver over Summit and Loupet in accordance with Crowe v. DeGoia1
and Rule 4:53-1.
In a separate order of the same date, the court denied
intervenors' cross-motion for a protective order pursuant to Rule
4:10-3, with the exception of a consent protective order of
confidentiality as set forth in the order granting plaintiff's
discovery motion. Defendant's and intervenors' request for oral
argument on the motion, and cross-motion was not granted and no
explanation was given by the court.
Before us , defendant contends that the court's order finding
him in contempt was contrary to the FJOD, which provided that the
1
90 N.J. 126 (1982).
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liability for the IRS liens will depend on defendant's Tax Court
appeal, which is still pending. Defendant also argues that prior
litigation in state and federal court absolved him of the
responsibility of satisfying the liens at this time.
Here, "a proceeding to enforce litigants' rights under Rule
1:10-3 'is essentially a civil proceeding to coerce the defendant
into compliance with the court's order for the benefit of the
private litigant[.]'" Pasqua v. Council, 186 N.J. 127, 140 (2006)
(quoting Essex Cty. Welfare Bd. v. Perkins, 133 N.J. Super. 189,
195 (App. Div.), certif. denied, 68 N.J. 161 (1975)).
Accordingly, "[r]elief under [Rule] 1:10-3, whether it be the
imposition of incarceration or a sanction, is not for the purpose
of punishment, but as a coercive measure to facilitate the
enforcement of the court order." Ridley v. Dennison, 298 N.J.
Super. 373, 381 (App. Div. 1997).
We review a trial court's imposition of sanctions against a
litigant pursuant to Rule 1:10-3 under the abuse of discretion
standard. Barr v. Barr, 418 N.J. Super. 18, 46 (App. Div. 2011).
"An abuse of discretion 'arises when a decision is made without a
rational explanation, inexplicably departed from established
policies, or rested on an impermissible basis.'" Ibid. (quoting
Flagg v. Essex Cty. Prosecutor, 171 N.J. 561, 571 (2002)).
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Applying these principles, we are constrained to conclude
that the trial court mistakenly applied its discretion, and reverse
the order finding defendant in contempt. The clear terms of the
FJOD provided that final resolution of defendant's liability for
the IRS liens was contingent upon his Tax Court appeal of the
grant of plaintiff's innocent spouse status, which exempted her
from liability for the liens. Because the Tax Court matter
remained pending, there was no factual basis for the court to find
defendant in contempt for not paying the liens. In reaching this
conclusion, we need not address defendant's argument - which
essentially seeks to apply the law of the case doctrine - that the
issue has already been decided by state and federal courts. See
Lombardi v. Masso, 207 N.J. 517, 538 (2011) (quoting Lanzet v.
Greenberg, 126 N.J. 168, 192 (1991) ("[A] legal decision made in
a particular matter 'should be respected by all other lower or
equal courts during the pendency of that case.")
Turning to the court's discovery order, defendant and
intervenors contend that plaintiff, as a judgment creditor of
defendant, is not entitled to discovery from intervenors under the
Revised Uniform Limited Liability Company Act (LLC Act), N.J.S.A.
42:2C-1 to -94), because intervenors have provided affidavits that
distributions have not been made to defendant. We are mindful
that we "generally defer to a trial court's disposition of
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discovery matters[,]" and we will reverse only when "the court has
abused its discretion or its determination is based on a mistaken
understanding of the applicable law." Rivers v. LSC P'ship, 378
N.J. Super. 68, 80 (App. Div.) (citing Payton v. N.J. Tpk. Auth.,
148 N.J. 524, 559 (1997), certif. denied, 185 N.J. 296 (2005)).
However, based upon the record, we cannot discern whether the
court's order was proper.
Our court's ability to resolve an appeal is largely dependent
upon the trial court's compliance with its obligation to state
findings of fact and conclusions of law as required by Rule 1:7-
4. To comply, the court must articulate factual findings and
correlate them with the principles of law. Curtis v. Finneran,
83 N.J. 563, 570 (1980). When that is not done, this court's
review is impeded and a remand is necessary. Elrom v. Elrom, 439
N.J. Super. 424, 443 (App. Div. 2015).
Here, the trial court did not render a decision explaining
its order, which includes only a conclusory determination that
plaintiff is a judgment creditor and discovery was discussed at
argument for a previous motion in January 2015. However, our
review of the transcript of that proceeding reveals no factual or
legal findings relevant to the December 4 discovery order being
appealed, because there was no discovery sought from defendant and
intervenors in January 2015. Thus, we reverse the trial court's
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discovery order and remand to the court for specific factual
findings and conclusions of law as required by Rule 1:7-4. We
take no position as to whether the court should grant plaintiff's
request for discovery.
We further observe that the court's lack of findings may in
part be the product of its failure to grant defendant's and
intervenors' requests for oral argument. Requests for oral
argument in family actions are governed by Rule 1:6-2(d), except
as otherwise provided in Rule 5:5-4. Rule 1:6-2(d) provides in
pertinent part that "no motion shall be listed for oral argument
unless a party requests oral argument in the moving papers or in
timely-filed answering or reply papers, or unless the court
directs." Rule 5:5-4(a) states:
[I]n exercising its discretion as to the mode
and scheduling of disposition of motions, the
court shall ordinarily grant requests for oral
argument on substantive and non-routine
discovery motions and ordinarily deny requests
for oral argument on calendar and routine
discovery motions.
"This provision has generally been interpreted to require oral
argument 'when significant substantive issues are raised and
argument is requested.'" Palombi v. Palombi, 414 N.J. Super. 274,
285 (App. Div. 2010) (quoting Mackowski v. Mackowski, 317 N.J.
Super. 8, 14 (App. Div. 1998)). "The denial of oral argument when
a motion has properly presented a substantive issue to the court
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for decision 'deprives litigants of an opportunity to present
their case fully to a court.'" Ibid. (quoting Mackowski, supra,
317 N.J. Super. at 14). The court, however, retains discretion
to dispense with oral argument on substantive issues where the
record provides all that is necessary to make a decision on the
issue presented. Ibid.; see also, Raspantini v. Arocho, 364 N.J.
Super. 528, 531-32 (App. Div. 2003) (under Rule 1:6-2, requests
for argument may be denied where the court sets forth appropriate
reasons on the record).
Guided by these principles, we conclude that in light of the
substantive issues raised by defendant and intervenors concerning
a judgment creditor obtaining discovery from non-party entities
created under the LLC Act, the court mistakenly applied its
discretion in not granting oral argument. On remand, the trial
court must allow oral argument.
Reversed as to the order of contempt against defendant.
Reversed as to the order of discovery imposed on defendant and
intervenors. Remanded for further proceedings consistent with
this opinion. We do not retain jurisdiction.
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