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Lynch Metals, Inc. v. Griffin Thermal Products

June 30, 2008

LYNCH METALS, INC., PLAINTIFF-RESPONDENT,
v.
GRIFFIN THERMAL PRODUCTS, INC., JACQUELINE G. GRIFFIN, AND HUGH R. GRIFFIN, PERSONALLY, DEFENDANTS-APPELLANTS.



On appeal from Superior Court of New Jersey, Law Division, Union County, Docket No. L-3457-05.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Submitted November 26, 2007

Before Judges A. A. Rodríguez and Collester.

Defendant Hugh R. Griffin (Griffin) appeals from a Law Division order of February 2, 2007, denying his application to vacate a default judgment entered by the court on February 6, 2006. We affirm.

Plaintiff Lynch Metals, Inc. (Lynch), an aluminum distributor, was a vendor for Griffin Thermal Products, Inc. (Griffin Thermal) supplying goods which Lynch claims were specially manufactured for Griffin Thermal. In March 2005, Griffin Thermal owed a balance to Lynch, and it was agreed that Lynch would continue to supply product upon execution of a promissory note in the amount of $316,308.45 representing overdue invoices in addition to forthcoming invoices. The promissory note was designed to facilitate continued supply of metal to Griffin Thermal while at the same time allowing pay down of overdue and forthcoming invoices. On March 15, 2005, the promissory note was prepared on Griffin Thermal stationery. The note was signed by Griffin both as president of Griffin Thermal and personally. The note also bore the purported signature of Jacqueline G. Griffin (Jacqueline).

After the note was signed, Lynch Metals continued to supply Griffin with material. When payments were not made on the promissory note, Lynch filed its complaint on September 26, 2005 naming Griffin Thermal Products, Jacqueline, and Griffin as defendants. There is no dispute that the defendants were properly served with the complaint, but no answer was filed.

The complaint was stayed because the corporation filed for bankruptcy under Chapter 11. However, default was entered against Griffin and Jacqueline, and a final judgment by default was entered against both jointly and severally on February 6, 2006 in the amount of $117,706.63.

After the judgment by default was served upon Griffin and Jacqueline, they filed separate motions to vacate. Jacqueline certified that she was no longer active with Griffin Thermal when the promissory note was signed on March 15, 2005, and she was negotiating the terms of her divorce from Griffin. She denied signing the note or authorizing anyone to sign on her behalf or use her name to personally guarantee the obligation of Griffin Thermal. She said that after she was served with the complaint, she turned it over to Griffin after he assured her that his attorneys would take care of the matter. Later when she was served with the application for default, she again notified Griffin, and he told her that the matter had been resolved. Finally, when she was personally served with the final judgment by default, she hired counsel to vacate the judgment. The trial judge granted Jacqueline's application to vacate the default and dismissed the case against her since no one challenged her claim that her signature on the note was forged.

Griffin filed his motion to vacate the default judgment on April 5, 2006. He certified that he did not answer the complaint because Griffin Thermal was in the midst of Chapter 11 bankruptcy, and he had gone through his divorce and moved from South Carolina to Florida. He also asserted that the amount due under the promissory note based on the invoices submitted by Lynch to Griffin Thermal amounted to only $3,194.49. Lynch responded and annexed the certification of its controller, Mark Rann, as well as invoices and purchase orders supporting the amount of the default judgment.

The Law Division judge found that Lynch supplied sufficient evidence to support its claim for the judgment amount and also rejected defendant's claim of excusable neglect under Rule 4:50-1. The judge held that Griffin's motion would be denied unless he deposited the judgment funds with the court within fourteen days of the order. Griffin did not post the funds and his motion was therefore denied.

Subsequently, Lynch made efforts to collect on the judgment including retaining a law firm in Florida. After application was made to garnish his wages, Griffin filed a second motion to vacate the default judgment. He stated that when he made his earlier motion to vacate the judgment, he did not have the "financial wherewithal" to post the amount but now was able to do so if his motion was granted. Griffin made no further argument on the issue of excusable neglect to add to his 2006 certification. But he reiterated that he had a meritorious defense claiming that the amount he owed under the guarantee was substantially less than the amount claimed in the default judgment. He claimed that the default judgment should be vacated under Rule 4:50-1(c) because Lynch fraudulently misrepresented the amount due. He based his argument upon the August 30, 2006 order of the bankruptcy court rejecting Lynch's proof of claim against Griffin Thermal for $279,350, and fixing the allowed claim at $44,861.81.

In denying Griffin's second motion to vacate the default judgment the motion judge stated:

[O]n an application pursuant to Rule 4:50 alleging fraud and that the judgment should be ...


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