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Palisades Collection, LLC v. Lieber

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


August 9, 2007

PALISADES COLLECTION, LLC, PLAINTIFF-RESPONDENT,
v.
KEN D. LIEBER, DEFENDANT, AND ELLEN J. LIEBER, DEFENDANT-APPELLANT.

On appeal from the Superior Court of New Jersey, Law Division, Bergen County, Docket No. DC-003537-05.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Submitted July 31, 2007

Before Judges Yannotti and Miniman.

Defendant Ellen J. Lieber (Ellen) appeals from an order entered on August 24, 2006, which denied her motion to vacate a default judgment that had been entered against her. For the reasons that follow, we reverse.

Plaintiff filed a complaint in the Special Civil Part against Ellen and Ken D. Lieber (Ken) seeking a judgment for monies allegedly due on a Bank One credit card account. On March 3, 2005, the complaint was served by ordinary and certified mail upon Ellen and Ken at 240 Prospect Avenue, Apt. 105, Hackensack, New Jersey.

Defendants were married in November 1991. They separated in August 2001, and sometime thereafter Ken commenced residing at 240 Prospect Avenue in Hackensack. The marriage was dissolved by a final judgment of divorce entered on September 13, 2001, and in the property settlement agreement (PSA) executed by defendants in July 2001, Ken agreed to convey to Ellen all of his "right, title and interest" in the marital residence at 160 Overlook Avenue, Unit 12B, in Hackensack. Ellen remained in the marital residence until it was sold, and then moved in 2002 to a new home in Paramus. There is no evidence that Ellen ever resided at 240 Prospect Avenue in Hackensack.

On April 15, 2005, Ellen phoned the offices of plaintiff's attorneys. The call was recorded and a transcript of the call was submitted to the trial court. According to the transcript, someone at the law firm had phoned Ellen the night before and left a message. Ellen returned the call, and spoke with a paralegal. Ellen stated that she had never received mail at 240 Prospect Avenue in Hackensack. The paralegal asked Ellen for her current address but she did not provide it.

The paralegal told Ellen that the Bank One credit card account had been opened in 1996, and "charged off" in 2003. The debt was $5,315.10. Ellen stated that she had opened an account in 1996. Ellen said her name may have been on the card, but she insisted that she had never used the card. Ellen stated that she was going to fight collection of the debt. The paralegal did not inform Ellen that a complaint had been filed against her seeking a judgment for the monies due on the account. In the call, Ellen made no reference to the pending lawsuit.

Ellen did not file an answer to the complaint, or otherwise appear in the action. On June 8, 2005, a final judgment by default was entered against her. Notice of the judgment was sent to Ellen on June 13, 2005, at the 240 Prospect Avenue address. Ken died in December 2005. According to Ellen, she first learned of the judgment in March 2006, while investigating her credit for a car loan. On or about April 6, 2006, Ellen filed a motion to vacate the default judgment, which plaintiff opposed.

The motion was heard on June 9, 2006. The judge found that Ellen had not been properly served with the complaint but she had actual notice of the lawsuit in April 2005. However, the judge decided to deny Ellen's motion without prejudice to afford her an opportunity to present additional evidence in support of her contention that she was not responsible for the debt. An order was entered on June 13, 2006, in conformance with the judge's decision.

Subsequently, Ellen filed a motion seeking reconsideration of the June 13, 2006 order, and an order vacating the default judgment. In a certification submitted in support of that motion, Ellen asserted that, contrary to the judge's finding, she did not have notice of the lawsuit in April 2005. Ellen insisted that in the phone call on April 15, 2005, the paralegal had not informed her of the pending action.

Ellen also maintained that she was not responsible for the debt. She furnished the court with a copy of the PSA, which did not mention any specific credit card accounts and merely stated that Ellen and Ken would each be responsible for any debts in their own names. Ellen asserted, "There is no mention [in the PSA] of any Bank One Card. I know that I have not used anything except the [credit card] listed on my [case information statement] for many years." The judge denied the motion by order entered on August 24, 2006. This appeal followed.

Ellen raises the following points for our consideration: 1) the judge erred by not vacating the default judgment because the court did not have jurisdiction in the matter; 2) the judge erred by refusing to vacate the judgment because her failure to answer the complaint was excusable in the circumstances and there is a meritorious defense; 3) the judge erred by applying a higher standard to her "merely because she is an attorney"; and 4) the default judgment should be vacated because plaintiff failed to comply with the requirements of R. 6:6-3.

If "a default judgment is taken in the face of defective personal service, the judgment is [generally] void." Rosa v. Araujo, 260 N.J. Super. 458, 462 (App. Div. 1992), certif. denied, 133 N.J. 434 (1993). "However, not every defect in the manner in which process is served renders the judgment upon which the action is brought void and unenforceable." Ibid. "Where due process has been afforded a litigant, technical violations of the rule concerning service of process do not defeat the court's jurisdiction." Id. at 463.

We are satisfied from our review of the record that service of the complaint in this matter was not made in accordance with our court rules. R. 6:2-3; R. 4:4-4. The complaint was served upon Ellen at 240 Prospect Avenue in Hackensack. Although that was the residence of Ellen's former husband, there is no evidence that Ellen ever resided at that address. Plaintiff has argued that the Post Office delivered the summons and complaint to defendant and would have returned the mail as undeliverable if she was not living there. However, it is reasonable to assume that if the summons and complaint had also been addressed to Ken, the mail would have been delivered to 240 Prospect Avenue in Hackensack because he was living there at the time.

Although Ellen was not served in the manner required by our court rules, the judge found that the court had personal jurisdiction over Ellen because she had notice of the pending action. The record does not support that finding. The record shows that Ellen contacted plaintiff's attorneys on April 15, 2005, after the complaint had been filed, and spoke with a paralegal. However, the transcript of the phone call makes clear that while Ellen and the paralegal discussed the debt, no mention was made of any pending lawsuit. Ellen could reasonably have assumed that plaintiff's attorneys had called her merely to discuss the debt. Therefore, we are convinced that, contrary to the judge's finding, Ellen did not have notice of the lawsuit.

We are satisfied that, in these circumstances, the judge erred by refusing to set aside the judgment. The failure to serve the summons and complaint upon Ellen was not a mere technical defect. Ellen did not have notice of the lawsuit and was not given an opportunity to be heard. Therefore, the court did not have personal jurisdiction over Ellen, and the default judgment entered against her is void and unenforceable.

We note additionally that where, as in this case, a judgment is void because of defective service, a defendant need not establish a meritorious defense in order to vacate the judgment. Jameson v. Great Atl. & Pac. Tea Co., 363 N.J. Super. 419, 425 (App. Div. 2003), certif. denied, 179 N.J. 309 (2004). However, we are satisfied that, if such a showing is required, Ellen has provided sufficient facts which, if believed by the trier of fact, could be a meritorious defense to the claim.

As indicated in the transcript of the telephone call on April 15, 2005, Ellen told the paralegal for plaintiff's attorneys that she opened the credit card account in 1996. However, in the certification submitted in support of her motion for reconsideration, Ellen noted that Ken had not listed the Bank One credit card account on the case information statement that he filed in the matrimonial action in April 2001. In her certification, Ellen states that she listed a different credit card on her case information statement. She asserted:

I know that I personally did not charge any item on the credit card in question. The only basis for any liability on my part would be if this were a joint credit card. According to [p]laintiff the card was taken out in 1996 and there were payments made through November 2003. I honestly doubt I would have taken a card out with my ex-husband in 1996 as we had no joint finances by then.

Ellen's defense has sufficient merit to warrant vacation of the judgment.

Reversed and remanded for further proceedings consistent with this opinion. We do not retain jurisdiction.

20070809

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