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Credit Union of New Jersey v. Al's Auto Body Service


December 19, 2007


On appeal from Superior Court of New Jersey, Law Division, Mercer County, Docket No. L-751-06.

Per curiam.


Argued October 17, 2007

Before Judges Lihotz and Simonelli.

Defendant Al's Auto Body Service, Inc. appeals from the denial of its motion to vacate a final order entered on May 22, 2006, which required defendant to pay plaintiff Credit Union of New Jersey $8,300. The money judgment was entered on the return date of plaintiff's application for emergent relief.

The City of Trenton (City) hired defendant as a private contractor to store designated abandoned vehicles towed to its premises. On February 27, 2005, in accordance with the City's towing ordinance, the City police impounded and towed to defendant's premises a 1996 Acura 3.5 (VIN JH4KA9646TC010084). By letter dated December 7, 2005, the City notified plaintiff, which held a security interest in the vehicle, the car was towed and stored. The City's notice advised plaintiff that "[v]ehicles not claimed within twenty days from the [date of the notice] would be disposed of according to New Jersey law." On December 21, 2005, plaintiff wrote to defendant seeking release of the subject car, pursuant to N.J.S.A. 39:10A-20. Defendant declined to release the automobile unless its storage charges were paid. The vehicle was sold on February 21, 2006.

Plaintiff filed an Order to Show Cause (OTSC), summons and complaint for replevin. N.J.S.A. 2B:50-1. In support of its request for emergent relief, plaintiff stated its security interest "takes priority over a garage keeper's lien pursuant to . . . N.J.S.A. 39:10A-20," compelling defendant to release the vehicle. In the alternative, plaintiff sought judgment against defendant for $8,300, representing "the value of the subject vehicle." Defendant was served with the summons, OTSC and complaint.

Defendant did not appear at the May 5, 2006 return date of the OTSC. Correspondence between the parties' counsel dated May 16, 2006, referenced a telephone conversation on May 15, during which plaintiff was told that the vehicle had been disposed of pursuant to the provisions of the City's towing ordinance.

On May 22, 2006, after verifying proper service of plaintiff's motion to which defendant filed no opposition, the trial court entered its order. The order compelled defendant to relinquish possession of the vehicle free and clear of all storage and repair fees, or alternatively, pay plaintiff $8,300. Plaintiff registered the order as a judgment against defendant for $8,300. Defendant filed a motion to vacate the judgment and to add the City as a third-party defendant, which was opposed by plaintiff and the City. The trial judge denied the motion on November 13, 2006, without appearances or oral argument.

On appeal, defendant argues that the trial court erred in denying its motion to vacate the judgment pursuant to Rule 4:50-1(a) (inadvertence or excusable neglect) and -1(f) (the rule's residual clause). Further, defendant asserts plaintiff was not entitled to relief as no writ of replevin was served, Rule 4:61-4, and an award of money damages could not initially issue, N.J.S.A. 2B:50-5.

Plaintiff counters that the trial judge did not abuse his discretion in denying defendant's motion to vacate the default judgment and although plaintiff disputes the applicability of Rule 4:50-1(f) to these circumstances, it maintains that defendant demonstrated neither exceptional circumstances nor a meritorious defense warranting relief. We have carefully reviewed this record in light of both parties' contentions and have concluded that our intervention is necessary.

A motion for relief from a judgment or order is addressed to the sound discretion of the trial court, guided by principles of equity and the need to achieve justice. F.B. v. A.L.G., 176 N.J. 201, 207 (2003); Farrell v. TCI of Northern New Jersey, 378 N.J. Super. 341, 350 (App. Div. 2005) (quoting Housing Auth. of Town of Morristown v. Little, 135 N.J. 274, 283 (1994)). A trial court's decision will be left undisturbed unless a clear abuse of discretion appears. Del Vecchio v. Hemberger, 388 N.J. Super. 179, 186-87 (App. Div. 2006). "Although the ordinary 'abuse of discretion' standard defies precise definition, it arises when a decision is 'made without a rational explanation, inexplicably departed from established policies, or rested on an impermissible basis.'" Iliadis v. Wal-Mart Stores, Inc., 191 N.J. 88, 123-24 (2007) (quoting Flagg v. Essex County Prosecutor, 171 N.J. 561, 571 (2002)).

Defendant argues that it was "understandably misled and confused" by the fact that it received a summons and an OTSC. Counsel states he was not aware plaintiff alternatively sought a money judgment on the return date of the OTSC in lieu of possession of the vehicle, because defendant failed to provide him with both pages of the OTSC. Additionally, defendant asserts that the motion judge failed to consider its meritorious defense that liability rested with the City.

We find defendant's argument to vacate bottomed on excusable neglect unavailing. Counsel's failure to request page two of the OTSC from his client was not "attributable to an honest mistake that is compatible with due diligence or reasonable prudence." Mancini v. EDS, 132 N.J. 330, 335 (1993). Counsel should have sought the complete order from his client. We do note, however, that defendant honestly believed, as stated in the summons, it had time to answer the complaint, present its defenses, and file a third-party claim against the City prior to a determination on the merits of plaintiff's damage request. Defendant's failure to attend the return date of the OTSC, "although inexcusable, was neither willful nor calculated." Id. at 336.

We also examine the applicability to the circumstances presented of Rule 4:50-1(f). That provision authorizes relief from judgments in "exceptional situations." Baumann v. Marinaro, 95 N.J. 380, 395 (1984). There is "[n]o categorization . . . of the situations which would warrant redress" under this sub-section. Court Inv. Co. v. Perillo, 48 N.J. 334, 341 (1966).

Here, plaintiff filed a summons and complaint for replevin and an OTSC seeking possession of the subject vehicle. A replevin action is used to seek return of seized property rightfully belonging to another. See N.J.S.A. 2B:50-1 to -5; R. 4:61-1 to -5. The court, after notice and a hearing, and after finding "a probability of final judgment for the plaintiff," is authorized "to grant possession of the goods to plaintiff; or order other just relief." N.J.S.A. 2B:50-2. The court rules set forth the procedures to execute a writ of replevin, once obtained. "If the court orders a person to relinquish goods and the person does not relinquish them, the court shall enter an order in aid of execution, or if the plaintiff so requests, assess damages." N.J.S.A. 2B:50-5.

Plaintiff did not obtain a writ of replevin, but proceeded in a summary manner by filing an OTSC, pursuant to Rule 4:67-1. The procedure was appropriate to regain possession of the car securing plaintiff's debt. However, prior to the entry of the trial court's order for relief, plaintiff was aware the vehicle was no longer available as it had been sold. Plaintiff did not disclose to the trial judge that its request for return of the vehicle was moot, leaving only its request for damages as the remaining basis of relief.

Although Rule 4:67-1 is intended to "accomplish the salutary purpose of swiftly and effectively disposing of matters which lend themselves to summary treatment while at the same time giving the defendant an opportunity to be heard," Pressler, Current N.J. Court Rules, comment on R. 4:67-1 (2007), the Rule is specifically inapplicable to "actions in which unliquidated monetary damages are sought." R. 4:67-1. Adding to this procedural irregularity is the fact that the record is void of evidence to support the amount of damages now recorded as a judgment against defendant. Neither an affidavit of the amount of debt due nor a proof hearing with evidence of value were offered by plaintiff. This deficiency alone warrants that the judgment be vacated.

Plaintiff argues that the long established superiority of a perfected security interest over a garage keeper's lien supports its success on the merits. We agree that the priority of lien holders has been expressed by the courts. See Hackensack Trust Co. v. Alvarez, 66 N.J. 275, 276 (1974), (held that creditor's security interest was superior to the garage keeper's storage and repair lien, entitling the secured creditor to judgment against the garage keeper for the market value of the automobile), cert. denied, 421 U.S. 918, 95 S.Ct. 1582, 43 L.Ed. 2d 785 (1975); see also Assocs. Commercial Corp. v. Wallia, 211 N.J. Super. 231, 233, (App. Div. 1986) (same). Also, in Midlantic Bank, N.A. v. Wood, 302 N.J. Super. 286, 290 (App. Div. 1997), we determined that the legislative enactment of the Abandoned and Unclaimed Motor Vehicles Act (Act), N.J.S.A. 39:10A-1 to -20,*fn1 did not overturn the long established superiority of a perfected security interest over a garage keeper's lien. Here, the car was not left at a repairman's establishment but was impounded by the City. The City's interest in taking possession of the subject vehicle was not disclosed. The vehicle may have been disabled, illegally parked, the subject of parking or motor vehicle violations, or other criminal activity.*fn2

In any event, in an exercise of the public safety powers, presumably set forth in the City ordinance, the City police, caused the vehicle to come into defendant's care.

It is unclear whether the City provided prior notice of its intended sale of the motor vehicle to plaintiff, as required by N.J.S.A. 39:10A-1(d), and the record does not reveal the amount and recipient of the proceeds of the vehicle's sale. Defendant maintains it acted as directed by the City, which remains responsible for payment to plaintiff. Defendant neither presents its written contract, if any, with the City, nor attaches the ordinance defining the City's impound authority, either of which might provide insight as to the obligations of the parties. From this record, we cannot evaluate defendant's claims of third-party liability. Nevertheless, the presentation of all relevant facts should be permitted to be presented to properly assess whether the City has responsibility regarding plaintiff's claims.

We conclude the trial judge misapplied his discretion by denying defendant's motion to vacate the judgment under Rule 4:50-1(f). The defendant's timely request proffered matters requiring full consideration and review. The May 22, 2006 order, now reduced to judgment, must be vacated to allow defendant to file its answer to plaintiff's complaint, along with any other appropriate pleadings. The judgment must also be vacated because it was entered without proof of plaintiff's loss, which must be the subject of a hearing.

Reversed and remanded consistent with this opinion.

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