CREDITORS’ AND DEBTORS’ RIGHTS
15-2-5720 Automotive Innovations Inc. v. J.P. Morgan Chase Bank N.A., App. Div. (per curiam) (11 pp.) Third-party defendant Elegant USA, LLC secured a loan from the Bank of New York that was then purchased by General Electric Capital Corp., which thereby became a priority secured lender under the Uniform Commercial Code. Defendants/third-party plaintiffs Kabile Ltd. and Danny M. Kordova later obtained a $825,112 judgment against Elegant in New York that they domesticated in New Jersey. Seffi Janowski purchased GECC’s security interest through his businesses, third-party defendant Bergen Investments and Holdings, LLC. Bergen foreclosed and sold Elegant’s collateral at public auction, where Bergen was the sole bidder. Bergen then sold the assets it had acquired to plaintiff, which was owned by Janowski. Plaintiff then sought to restrain defendants from levying upon Elegant’s bank accounts then held by J.P. Morgan Chase. Defendants filed, inter alia, third-party complaint seeking to hold plaintiff and Bergen liable for the domesticated New York judgment against Elegant. The judge concluded that plaintiff was a successor entity to Elegant and therefore responsible for the amount due on the domesticated New York judgment but that defendants could not levy on any of Elegant’s assets that had been purchased by Bergen at public auction. The panel concluded that because defendants’ judgment was not a subordinate interest in Elegant’s collateral, it was not extinguished by the UCC sale, and because the court entered a judgment in favor of defendants against plaintiff based on successor liability, defendants were entitled to execute their judgment on any of plaintiff’s assets. It therefore reversed that portion of the judgment that ordered defendants could not execute against the assets of Elegant acquired by Bergen at the foreclosure sale. The panel rejected defendants’ claim that instead of applying pre-judgment interest at a rate provided by New Jersey court rules, because the litigation involved a domesticated New York judgment, the full faith and credit clause obligated the judge to apply New York’s higher post-judgment interest rate as the rate for pre-judgment interest in the order for judgment, finding that N.J.S.A. 2A:49A-27 provided that a foreign judgment docketed in New Jersey “has the same effect and is subject to the same procedures, defenses and proceedings for reopening, vacating, or staying as a judgment of the Superior Court of this State and may be enforced in the same manner” and that once the New York judgment was domesticated, it became enforceable in New Jersey in the manner provided by New Jersey law. Thus, the trial judge’s entry of judgment that incorporated pre-judgment interest in accordance with Rule 4:42-11(a) was proper.
