Motions for Reconsideration, and “Little Used” Statutes Protecting the Priority of Employees’ Wages Against Creditors of the Employer

The Pitney Bowes Bank, Inc. v. ABC Caging Fulfillment, 440 N.J. Super. 378 (App. Div. 2015).  There are not many published appellate opinions that discuss the rules for levying or executing on a judgment.  This opinion by Judge Hayden addresses one aspect of that area of the law.

In this breach of contract action, plaintiff (“Pitney Bowes”) obtained a default judgment against defendant (“ABC”) after the court struck ABC’s Amswer with prejudice for failure to respond to discovery requests.  Pitney Bowes sought an order for turnover of funds in ABC’s payroll bank account, on which the Sheriff had levied.  ABC argued that those funds were exempt as unpaid wages under N.J.S.A. 34:11-31 and -32, statutes that Judge Hayden described as “timeworn” (having been passed in 1877 and amended only in 1896) but “little used.”

The Law Division denied Pitney Bowes’s motion, but then granted reconsideration and ordered turnover.  ABC appealed, asserting that the Law Division was wrong to grant reconsideration, and that its decision to grant turnover was wrong.  The Appellate Division affirmed in part, holding that reconsideration was not an abuse of discretion, and that some (but not all) of the monies in the account could be turned over.

On the reconsideration issue, Judge Hayden stated that “reconsideration rests within the sound discretion of the trial court.”  The Law Division had not had the benefit of Pitney Bowes’s reply to ABC’s late-filed opposition to the turnover motion, which was why the judge in that court stated that reconsideration had been granted.  But even without that, the decision to reconsider was not an abuse of discretion, given the “little used statutes involved as well as the lack of judicial precedent or legislative history discussing” those statutes.

On the merits, however, the Law Division’s decision to order turnover was only partially correct.  N.J.S.A. 34:11-31 and -32 state that an execution cannot proceed unless employees are first paid wages “then owing” from the levied-upon entity.  Judge Hayden noted the purpose of these statutes “to ensure that employee wage claims take priority over other creditors.”  That legislative intent, and the plain language of the statutes, along with the principle that statutes that are part of a larger statutory regime “should be read in connection with the other parts to give meaning to the entire legislative scheme,” led to the conclusion that wages “then owing” at the time of the levy had to be paid to the employees and could not be turned over to Pitney Bowes.  But wages that became due after the levy occurred and funds were removed from ABC’s account did not receive that same protection.  The plain language of N.J.S.A. 34:11-32 made that clear.

There remained an issue as to “the exact amount of wages due on the date of the levy.”  Accordingly, the panel remanded the case so that question could be resolved.  But that would be the limit of what ABC could protect against levy.