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Morales v. Santiago

Decided: May 18, 1987.

LUIS PHILLIPE MORALES AND MARIA MORALES, HIS WIFE, PLAINTIFFS-RESPONDENTS,
v.
JOSE S. SANTIAGO AND MARINA SANTIAGO, HIS WIFE, DEFENDANTS-APPELLANTS



On appeal from Superior Court of New Jersey, Chancery Division, Bergen County.

Antell and Brody. The opinion of the court was delivered by Brody, J.A.D.

Brody

Defendants Jose and Marina Santiago (sellers) appeal from an order denying their motion to vacate a default judgment entered against them in the amount of $36,050. Plaintiffs (buyers) contended in this action that sellers broke a written contract to sell them their home for $75,000. There was evidence at the default judgment hearing (proof hearing) that sellers refused to convey the property unless buyers paid an additional $10,000. The trial judge heard the testimony of the broker as to value and considered the fact that sellers relisted the property a year later for $132,500. He found that the property was worth $110,000 and that sellers must pay $1,050 interest for the 14 months that their attorney retained the $7,500 deposit. We reverse and vacate the default judgment.

Sellers' litigation attorney made the motion to vacate the default judgment the month following its entry, immediately after sellers learned of the judgment in the course of applying for a mortgage loan on the property. The notice of motion did not state the grounds upon which it was made as required by R. 1:6-2(a), it was not accompanied by a brief as required by R. 4:50-1, and it was decided without a plenary hearing or oral argument, none having been requested. The motion was supported by the affidavits of Marina Santiago and Jorge Gonzales, the attorney who represented sellers in connection with the sale.

Marina Santiago stated the following in her affidavit. She denied having been served with the summons and complaint. She first learned of this action when she received a letter dated May 12, 1986, from Joseph Meyers, an associate in the office of buyers' attorney, Harvey Anger, advising his clients that the

proof hearing was scheduled for May 30. Meyers had inadvertently addressed the letter to sellers' home. She took the letter to Gonzales who assured her that "he would take care of it." Later Gonzales told her that Anger would postpone the hearing to enable her to obtain a litigation attorney. As to the merits of the case, Marina Santiago stated in her affidavit that "a binder may have been signed, but was never signed by Jose S. Santiago, my ex-husband, and a Contract was never signed."

Gonzales stated the following in his affidavit. He first learned of the complaint when Marina Santiago "brought a letter to me concerning a Proof Hearing in May." He telephoned Anger and tried to settle the matter with him. When sellers declined to settle, Gonzales told Anger "that since there was the possibility that I would be a witness in this case, that Marina Santiago should seek counsel elsewhere." Anger consented to postpone the proof hearing and "advised me that his office staff would handle the postponement." As to the merits of the case, Gonzales stated only, "I feel that the defendants definitely have a meritorious defense to this claim."

In opposition to the motion, buyers filed a letter brief and the affidavit of Joseph Meyers with exhibits attached. Meyers' affidavit presents the following fuller picture. Buyers and Marina Santiago signed a broker-prepared "Offer & Acceptance" (binder), dated January 25, 1985, that was made "subject to Attorney approval." The binder lacked certain basic terms of a contract for the sale of real estate such as the date of closing, the kind of deed to be given, buyers' deadline for obtaining the mortgage and the duration of the mortgage to be obtained. Buyers gave the broker $500 as a partial deposit. The binder provided that an additional $7,000 deposit be made "on signing of contract." Thereafter Gonzales prepared a form of contract and mailed unsigned copies to Anger with a letter dated February 15, 1985, in which he asked for the return of the copies signed by buyers and for the remaining $7,000 deposit. A month later Anger returned signed copies of the contract together with buyers' check in the amount of $7,000.

Sellers never signed the form of contract. By letter dated April 29, 1985, Anger expressed his clients' displeasure because Gonzales had not returned a contract signed by sellers and because Marina Santiago had refused to permit buyers' mortgage bank representative to examine the house. Anger threatened suit on "the contract." By letter dated May 20, 1985, Gonzales notified Anger "that since we had been unable to reach an agreement regarding paragraph 28 of the Contract, which was [initially] unacceptable to your clients and essential to my clients' acceptance of the offer made herein, please accept this letter as our formal cancellation of the aforesaid transaction." Paragraph 28, an important term of the form of contract Gonzales prepared, had no counterpart in the binder. It permitted either party to cancel the contract if sellers were unable within 45 days of the date of contract to purchase another residential property.

A sheriff's return recites that sellers were served on February 20, 1986, by leaving copies of the summons and complaint with their daughter at their home. Buyers had commenced this action after Anger had received a letter from Gonzales dated January 29, 1986, in which he stated, "I have tried, with no success to have Mr. and Mrs. Santiago come in to discuss the return of the deposit monies in this matter. . . ." Less than a week after sellers were allegedly served with process, Gonzales returned the deposit to Anger. Anger sent Gonzales a letter dated February 27, 1986, acknowledging return of the deposit. Accompanying the letter was a copy of the summons and complaint, which Anger asked Gonzales to acknowledge as service upon sellers. Meyers stated in his affidavit that he, not Anger, had handled the default proceedings. He further stated that he had spoken to Gonzales over the telephone about the proof hearing but denied that he had agreed to postpone it.

A party may be relieved from a final judgment or order on various grounds specified in R. 4:50-1 including:

(a) . . . excusable neglect


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