KARL HALLIGAN VS. JOHN O'CONNORÂ (C-55-12, HUDSON COUNTY AND STATEWIDE), A-3058-15T1

Background

Plaintiff Karl Halligan and defendants John O'Connor and Barry Hodkinson were members of H&H Real Estate Investments LLC (H&H) and formed a separate manager LLC for operating a bar/restaurant; disputes led to litigation and a 2013 judgment in Halligan's favor that was later corrected to add the LLCs as parties.
On May 8, 2015 the Chancery judge entered an order (naming the three individuals) restraining the parties from selling, encumbering, or otherwise disposing of H&H's property "subject to further order of the court"; H&H itself was not a named party at that time.
H&H later engaged counsel and listed the property for sale; a contract or agreement of sale appeared to exist but the record lacked a signed contract and did not clarify who signed it (the LLC or the individual members).
Halligan moved under R. 1:10-3 (civil contempt) to hold O'Connor and Hodkinson in contempt for violating the May 8 order and sought monetary sanctions and counsel fees; the court entered sanctions against each individual ($250) and awarded counsel fees ($1,580).
Defendants appealed; when they did not immediately pay, Halligan moved again and the court imposed additional sanctions and fees; the Appellate Division reversed all three contempt/sanctions orders for insufficient factual findings and abuse of discretion.

Issues

Issue	Halligan's Argument	O'Connor/Hodkinson's Argument	Held
Whether the individuals violated the May 8, 2015 restraining order by executing a contract to sell H&H property	The individuals (O'Connor/Hodkinson) caused or authorized the sale/contract and therefore violated the order	The LLC (H&H), represented by its own counsel, owned the property and any sale was by the entity; record did not show individuals signed or willfully violated the order	Reversed: record lacked evidence attributing the contract/ sale to the individuals and judge failed to resolve material factual disputes
Whether monetary sanctions and counsel fees under R.1:10-3 were properly awarded for the alleged contempt	Sanctions and fees were appropriate to coerce compliance and compensate for motion practice	Because plaintiffs never sought an injunction and the proceeding lacked findings of willfulness and causation, sanctions were unsupported	Reversed: sanctions improper where contempt and willfulness weren't established and orders were not coercive to enforce the restraining order
Whether additional sanctions for failing to pay earlier awards were proper	Nonpayment was contempt; additional monetary penalties were warranted	Defendants appealed and sought stay; delay in payment was not willful contempt under these circumstances	Reversed: trial court made no factual findings about willfulness and relied on parties' submissions without explicit adoption; inadequate factfinding
Whether trial court complied with standards for decision-making when adopting party submissions	Halligan argued the court's brief statement was sufficient	Defendants argued the judge must make explicit findings and not merely adopt party briefs	Reversed: court must explicitly state reliance on party-submitted findings and provide its own summary of findings per precedent

Key Cases Cited

Pasqua v. Council, 186 N.J. 127 (2006) (distinguishes civil contempts under R.1:10-3 from criminal contempt and explains R.1:10-3 is a civil, coercive remedy)
Essex County Welfare Bd. v. Perkins, 133 N.J. Super. 189 (App. Div.) (1975) (treats R.1:10-3 enforcement as civil/coercive)
Ridley v. Dennison, 298 N.J. Super. 373 (App. Div. 1997) (R.1:10-3 relief is coercive, not punitive)
Flagg v. Essex County Prosecutor, 171 N.J. 561 (2002) (defines abuse-of-discretion standard)
Barr v. Barr, 418 N.J. Super. 18 (App. Div.) (2011) (appellate standard for reviewing sanction orders under R.1:10-3)
In re Trust Created by Agreement Dated Dec. 20, 1961, 399 N.J. Super. 237 (App. Div. 2006) (trial judge may rely on party-submitted findings only if judge explicitly states reliance and summarizes findings)