January 24, 2007
BARBARA E. HAUG, AS EXECUTRIX FOR THE ESTATE OF GEORGE F. HAUG, AND BARBARA E. HAUG, AS EXECUTRIX AD PROSEQUENDUM ON BEHALF OF THE HEIRS OF GEORGE F. HAUG, AND BARBARA E. HAUG, INDIVIDUALLY, PLAINTIFF-RESPONDENT,
BRIDGESTONE FIRESTONE NORTH AMERICAN TIRE, LLC; FORD MOTOR COMPANY; TASC DEVELOPMENT CORP., T/A BJ'S WHOLESALE CLUB (IMPROPERLY PLEADED AS BJ'S TIRE SERVICE CENTER); TUFFY ASSOCIATES CORPORATION, INC.; AC AUTOMOTIVE SHOP; LARICK'S TOWING, INC., DEFENDANTS, AND COBRA AUTO WRECKERS, DEFENDANT-APPELLANT.
On appeal from Superior Court of New Jersey, Law Division, Morris County, No. MOR-L-1711-04.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted December 20, 2006
Before Judges Wefing and C.S. Fisher.
Defendant Cobra Auto Wreckers appeals from two orders entered by the trial court; the first denied Cobra's motion to set aside the default previously entered against it, while the second confirmed an arbitration award and entered judgment in plaintiff's favor and against Cobra for $150,000. After reviewing the record in light of the contentions advanced on appeal, we reverse both orders and remand for further proceedings.
Plaintiff commenced the underlying action by filing a fourteen-count complaint in June 2004, seeking damages in connection with the death of her husband in a motor vehicle accident in June 2002. Cobra was only named as a defendant in the twelfth count, denominated as negligent spoliation of evidence. Plaintiff alleged that Cobra improperly destroyed the van that her husband had been driving, and its tires, thus prejudicing her product liability action against other named defendants.
According to the certification of Joseph Rocco, Cobra's principal, he retained an attorney immediately after Cobra was served, and the attorney advised him that he would promptly file an answer on Cobra's behalf. The attorney, however, unbeknownst to Rocco, failed to do so, and default was entered against Cobra in December 2004. When Rocco learned that the attorney had not filed an answer, he retained Cobra's present attorney who contacted the court to learn the status of the matter. He was informed that plaintiff was no longer represented by counsel and that the matter had been ultimately dismissed. The latter statement turned out to be incorrect.
An arbitration hearing was conducted at which plaintiff appeared. Cobra, having had no notice of the hearing, did not participate, and it was found to be fifty percent at fault. Plaintiff's total damages were set at three hundred thousand dollars.
Plaintiff thereafter retained new counsel who filed a motion to confirm the arbitration award and served Cobra with the motion. Plaintiff's attorney noted that by the time the arbitration was held, only two defendants had not been dismissed: Cobra and AC Automotive Shop. The arbitrator found no liability on the part of AC Automotive.
Cobra's attorney then filed a motion to set aside the previously-entered default. Cobra supported its motion with a certification from Rocco, in which he recited the history to which we have referred but also noted that Cobra had purchased the vehicle from Larick's Towing and when it did so, it received from Larick's the title to the vehicle which plaintiff had delivered to Larick's.
Neither party requested oral argument, and the trial court decided both motions on the papers, granting plaintiff's and denying Cobra's. It appended the following to the order denying Cobra's motion:
Denied as defendant has failed to show good cause as to why default entered in Dec. 2004 should be vacated now. Plaintiff's claim against defendant Cobra has been pending since June, 2004 and defendant has not answered, appeared or participated in lawsuit up to present. Its neglect is inexcusable and to now allow it to participate after arbitration was conducted would be prejudicial to plaintiff's interests.
A defendant seeking to reopen a default judgment must generally show excusable neglect in failing to answer and the existence of a meritorious defense. Marder v. Realty Construction Co., 84 N.J. Super. 313, 318 (App. Div.), aff'd., 43 N.J. 508 (1964). Applications to reopen default judgments "should be viewed with great liberality, and every reasonable ground for indulgence is tolerated to the end that a just result is reached." Id. at 319. In our judgment, defendant satisfied both prongs.
As to a meritorious defense, Rocco's certification submitted in support of Cobra's motion clearly stated that when he received the subject vehicle, he also received the title, executed by plaintiff. Proof that plaintiff surrendered title to the vehicle would provide a defense to a claim of spoliation.
Examination of case authority persuades us also that Cobra presented a sufficient showing of excusable neglect. Thus, in Arrow Mfg. Co. v. Levinson, 231 N.J. Super. 527 (App. Div. 1989), we reversed the trial court's refusal to set aside a default judgment against defendant Levinson even though we recognized that he had engaged in a deliberate evasion of service of process. There is no hint of such improper conduct by Cobra.
In Court Invest. Co. v. Perillo, 48 N.J. 334 (1966), the Supreme Court set aside a default judgment entered when that relief was not even sought until more than fifteen years after that judgment was entered. The Court noted that defendants had retained an attorney to represent them but that he failed to do so, resulting in the default judgment. Here, of course, Cobra retained new counsel when it learned in six months that its original attorney had not answered. In our judgment, it cannot fairly be said that Cobra "slumbered on [its] rights." Harrison Park Owners, Inc. v. Dixon, 254 N.J. Super. 605, 610 (App. Div. 1992) (holding that unit owner who engaged in settlement discussions upon being sued for moneys owed, was entitled to be relieved of default judgment entered against him).
These cases, moreover, involved applications to set aside a default judgment. Here, judgment had not been entered when Cobra filed its motion that sought to set aside the default previously entered against it. "It is generally recognized that the requirements for setting aside a default judgment under R. 4:50-1 are more stringent than the 'good cause' standard for setting aside an entry of default under R. 4:43-3." Bernhardt v. Alden Café, 374 N.J. Super. 271, 277 (App. Div. 2005). The orders under review are reversed, and the matter is remanded to the trial court for further proceedings. We do not retain jurisdiction.
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