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Laridian Consulting, Inc. v. Bolanos

A-1886-10T4 (N.J. Super. App. Div. 2011) (Unpublished)

LOANS; JOINT ACCOUNTS — If a debtor can prove that the money in a joint account was contributed entirely by a non-debtor, then the judgment creditor is not entitled to those funds; otherwise, the judgment creditor is entitled to recover the debtor’s half of the funds.

An assignee of a debtor’s unpaid credit card debt sought to collect the amount due on the account. It filed suit in 2003. The debtor failed to answer and the assignee moved for entry of a default judgment, which the lower court entered. Initially, the debtor denied being served with the complaint. He later abandoned this argument. The assignee then sought to execute upon the default judgment and sent the debtor an information subpoena. The debtor asked for documentation concerning the basis for the default judgment. For six years, the assignee failed to take any further action and the debtor did not move to vacate. In 2010, the assignee filed a motion for a turnover of funds in a joint savings account held by the debtor held and his wife. The debtor responded by filing a motion to vacate the default judgment, arguing that the assignee failed to submit sufficient documentation for the lower court to support the entry of the default judgment. The lower court denied the debtor’s motion to vacate the default judgment and granted the assignee’s motion for a turnover order. The debtor subsequently appealed both decisions.

The Appellate Division first rejected the debtor’s claim that the default judgment had to be vacated because it was entered without the assignee presenting prima facie proof that he was liable for the alleged debt. The debtor’s argument did not implicate the kind of truly exceptional circumstances required to grant relief six years after entry of a judgment and the assignee had not been prejudiced by the debtor’s delay. The debtor had knowledge of the judgment in 2004. Therefore, the lower court did not abuse its discretion in denying his motion.

However, the Court held that the debtor was entitled to an evidentiary hearing on his claim that the money in the joint account was contributed by his wife and, therefore, the assignee would not entitled to a turnover order. Even if he could not provide proof as to the origins of that money, the amount the assignee is entitled to recover would be governed by N.J.S.A. 17:16I-4(a). This provided that joint amounts belong in equal shares to all parties having a right of withdrawal. Therefore, the matter was remanded for further proceedings.

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