On appeal from the Superior Court of New Jersey, Law Division, Monmouth County, L-8130-91.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Skillman and Winkelstein.
On October 31, 1990, defendant Gary Grieser, as tenant, entered into a ten-year commercial lease (the lease) with 200 Ocean Boulevard Associates (the landlord) for the second floor of a building at 200 Ocean Boulevard in Monmouth Beach.*fn1
Defendant subsequently failed to pay rent and plaintiff, as the assignee of the landlord, obtained a default judgment against defendant on May 20, 1992, for $1,630,481.69 (the default judgment). Defendant has filed multiple motions to vacate the default judgment, all of which have been denied. On March 19, 2004, the Law Division entered an order prohibiting him from filing further motions contesting the validity of the default judgment without leave of court. Defendant did not appeal from that order.
In this appeal, defendant challenges the Law Division's June 14, 2007 order denying his motion for leave to challenge the default judgment. We conclude that the trial court mistakenly exercised its discretion by denying that motion, and consequently, we reverse and remand for further proceedings.
The material facts and procedural history relevant to defendant's current application are as follows. On April 22, 1991, defendant filed a Chapter 7 bankruptcy petition, but failed to list the lease as a liability or an asset, and failed to list the landlord as a creditor. Though defendant occupied the leased premises until October 1991, he did not pay rent after he filed his bankruptcy petition.
On October 31, 1991, the landlord filed a complaint in Superior Court seeking past due rent, as well as rent for the approximately nine years remaining on the term of the lease. The landlord served defendant by publication, and obtained the default judgment.
On September 26, 1996, defendant obtained title to a property at 3 Ocean Avenue in Monmouth Beach. After plaintiff levied on that property, defendant filed an order to show cause to stay the sheriff's sale, and to vacate the default judgment. He claimed that the underlying debt upon which the default judgment was based had been discharged in bankruptcy. The trial court denied the application. In an unpublished opinion, we affirmed the court's denial of defendant's application to vacate the default judgment. MMU of N.Y. v. Grieser, No. A-4441-00 (App. Div. May 3, 2002). We held that the debt was not discharged because it was a post-petition debt; defendant's argument that the debt was discharged even though it was not listed on his bankruptcy schedules had no merit; and defendant had "unclean hands on a matter closely related to his discharge in bankruptcy which under state law warrants denying him the relief afforded by the statute." Id. (slip op. at 6-8).
Plaintiff obtained the property at a sheriff's sale for $100 in September 2001. The following month, plaintiff entered into a contract to sell the property for $1,175,000.
Defendant filed a pro se motion in May 2003 to set aside the default judgment. The Law Division entered an order on June 27, 2003, denying the motion and amending the default judgment to reflect defendant's aliases. Defendant moved for reconsideration. The court denied the motion and included the following prohibition in a March 19, 2004 order: "Defendant is prohibited from filing any further motions contesting the validity of the Judgment dated May 20, 1992 bearing Docket No. MON-L-8130-91 and Judgment No. J-062123-92 without prior leave of the court to file such motion."
On January 16, 2007, defendant filed a motion for an accounting of the amount due on the default judgment. Defendant withdrew the motion after plaintiff voluntarily provided him with the requested materials. These documents reflect a balance due on the default judgment, as of February 16, 2007, of $1,681,883.40. They show that in an attempt to satisfy the default judgment, plaintiff collected the following amounts: $1,131,695.69 on the sale of 3 Ocean Avenue in Monmouth Beach; $100,000 on 34 Park Road in Monmouth Beach; $24,000 on properties in Sea Bright and Asbury Park; $15,000 on a property in Plainfield; and $15,000, $27,444, and $7500 for three properties in Paterson.
In April 2007, defendant filed a motion seeking leave to challenge the validity of the default judgment. The trial judge denied that motion by order of June 14, 2007. The court reasoned that defendant's unclean hands precluded him from substantively challenging the default judgment. In arriving at its decision, the trial court referred to our May 3, 2002 decision, in which we stated: "Grieser's conduct in failing to disclose the lease, aside from whatever ramifications it might have in bankruptcy, together ...