On appeal from Superior Court of New Jersey, Law Division, Bergen County, DC 7662-98. Darryl T. Garvin argued the cause for appellant.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Stern, Collester and Lyons.
Defendant appeals from an order of November 18, 2005 denying her motion to vacate a default judgment and from an order of February 3, 2006 denying reconsideration. We affirm.
Plaintiff New Century Financial Services, Inc. (New Century) is the assignee of defendant's defaulted Discover credit card. A complaint was filed on May 15, 1998 by New Century as assignee of the debt, asserting an outstanding balance in the amount of $5,127.66 in addition to post-default interest at the contract rate of 19.80 percent. An amended complaint was filed on June 9, 1998 and served on defendant on July 1, 1998. Defendant did not file an answer, and a default judgment was entered against her on July 29, 1998 for $8,741.96 plus costs of $239.84 totaling $8,981.60.
Plaintiff made several post-judgment efforts at collection, commencing with an information subpoena pursuant to R. 6:7-2 served by certified and regular mail. Following failure of plaintiff to respond, orders were entered for her arrest for her disregard of post-judgment discovery. However, plaintiff did not pursue the issuance of a warrant for defendant's arrest, but instead docketed its judgment on March 4, 1999 and sought to levy upon defendant's realty and personalty.
Defendant refused entry by sheriff's officers to levy upon saleable items. Plaintiff then applied for an order to compel defendant to permit entry by the officers. On June 10, 1999 a letter was received from an attorney for defendant objecting to entry, but plaintiff's motion was granted by the court on July 29, 1999. However, access was again refused, and plaintiff then filed a motion in aid of litigant's rights as well as another information subpoena. No response was received by defendant or her attorney and the order was granted.
More than four years later on April 8, 2003, defendant's then attorney moved to vacate the March 4, 1999 default judgment. In a certification defendant said she did not pay the balance on the credit card because the card was stolen and used without her authorization. She attached an undated letter from her attorney sent by certified mail to "NCO Financial Systems, Inc." stating that:
"Ms. Carrero had lost her credit cards. She did not incur the $9,364.23 claim by your company. She duly reported the loss to her credit card issuer. Therefore, she is not liable for the amount of $9,364.23."
Defendant argued that the judgment against her was void because of the federal Truth in Lending statute limiting a cardholder's damages to a maximum of $50 where there has been unauthorized use. 15 U.S.C.A. 1643.
On May 23, 2003, the motion judge vacated the default judgment against defendant for the following reasons:
It appears that the defendant may have taken reasonable steps to inform the credit card company that issued the card that the credit card was purportedly stolen and used without her authorization. Defendant was apparently under the impression that reporting the card stolen to the credit card company was the proper and adequate response in order for her not to be responsible for monies charged to the card. The court is satisfied that the defendant made a showing of excusable neglect in relying on her communication with the credit card company as satisfying her obligation.
Further, the court is satisfied that the defendant has a meritorious defense in that the default judgment may well be void as violative of 15 U.S.C.A. 1643. While the instant matter pushes the limit of timely challenging the purported void default judgment pursuant to R. 4:50-1(d), public policy favors the disposition based on the merits of the case, not on default. [Berger v. Paterson Veteran's Taxi, 244 N.J. Super. 200 (App. Div. 1990)] sets forth that a void judgment not entitled to enforcement may be vacated at any time pursuant to R. 4:50-1(d). The ...