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American Zurich Insurance Co. v. SRC Construction Corp. of New Jersey

November 13, 2008

AMERICAN ZURICH INSURANCE COMPANY, PLAINTIFF-RESPONDENT,
v.
SRC CONSTRUCTION CORP. OF NEW JERSEY, DEFENDANT, AND SCOTT CARIDI, DEFENDANT-APPELLANT.



On appeal from Superior Court of New Jersey, Law Division, Bergen County, L-11700-04.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Submitted October 16, 2008

Before Judges Stern and Payne.

Defendant, Scott Caridi, the former president of defendant, SRC Construction Corp., appeals from a trial court order (1) denying his motion, filed pursuant to Rule 4:50-1(f), to vacate a default judgment in the amount of $100,146.99 entered on September 27, 2007 against him and SRC and in favor of plaintiff, American Zurich Insurance Company (Zurich), and (2) ordering discovery of assets. SRC, an insolvent company, did not seek to vacate the default judgment or contest the discovery order.

The procedural history of this matter is relatively lengthy. The claim by Zurich arises out of the failure by SRC to remit payment for workers' compensation insurance coverage provided to it by Zurich in the policy period extending from October 12, 2001 to October 12, 2002 and from October 12, 2002 to February 13, 2003. Zurich's suit against SRC and Caridi as its president was filed on August 27, 2004. The complaint contained no allegations supporting personal liability on the part of Caridi.

Service was effected on October 18, 2004. Defendants failed to answer the complaint, and on December 29, 2004, a final default judgment in the amount of $98,382.73 was entered against them. The judgment and an information subpoena were served on defendants on January 11, 2005. After the judgment had been recorded and a writ of execution had been issued and filed, on April 13, 2005, Zurich moved to enforce its litigant's rights. Two days later, defendants, represented by legal counsel, moved to vacate the default judgment entered against them. Following oral argument of the motion, the motion judge granted the relief sought in an order dated May 19, 2005, but conditioned that relief upon the posting of a supersedeas bond in the amount of the judgment. Because, contrary to Rule 2:5-4, a transcript of the hearing was not provided on appeal, we are unable to determine whether defendants resisted the requirement that a bond be posted or to determine the reasons stated by the judge for imposing that requirement. In any event, defendants did not seek reconsideration of the issue or leave to appeal from the judge's order.

At some point, an answer on behalf of SRC and Caridi was filed. However, because a copy of the answer was not included in the record on appeal as required by Rule 2:6-1(a)(1)(A), we are unable to determine whether Caridi asserted the absence of liability on his part as a defense to the claim. No bond was posted. As a consequence, on August 4, 2005, Zurich moved to dismiss defendants' answer and to enforce the May 19, 2005 default judgment. On August 19, 2005, the judge entered an order dismissing defendants' answer with prejudice and ordering that a default be entered against SRC and Caridi. Although Zurich has stated that oral argument on its motion occurred, the order states that the motion was unopposed. Again, no transcript of proceedings, if any, has been provided on appeal. On October 18, 2005, the judge signed an order for final judgment by default in the amount of $100,146.99 plus costs against SRC and Caridi. No proof hearing took place.

Following recordation of the judgment, service upon defendants of the judgment and an information subpoena, and issuance of an alias writ of execution, on April 18, 2006, Zurich again moved to enforce its litigant's rights. A copy of the motion was sent to the business address of SRC, located at 325 Sylvan Avenue, Englewood Cliffs, New Jersey. Following an unsuccessful effort in September 2006 to re-serve an information subpoena upon defendants, Zurich engaged a private investigator, who located the residence of Caridi in Norwood, New Jersey, and determined that he was employed by Accubuild Construction, a company located at the Englewood Cliffs address previously occupied by SRC.

On June 20, 2007, Zurich moved for entry of an order for execution against the wages paid by Accubuild to Caridi and to enforce its litigant's rights. On August 17, 2007, Caridi, represented by new counsel, moved pursuant to Rule 4:50-1(f), to vacate the second default judgment against him entered almost two years earlier. In support of his motion, Caridi argued that the judgment should be vacated because there was no factual or legal basis to hold him personally liable for the obligations of SRC, and that Zurich had not sought to pierce its corporate veil. He claimed that to "strap" him with a $100,000 judgment in this circumstance would be a grave injustice. Upon receipt of Caridi's motion, Zurich cross-moved for an order compelling post-judgment discovery, for appointment of a receiver in aid of execution and for retention of counsel to the receiver.

Following argument, the motion judge denied Caridi's motion to vacate the default judgment, stating in a thoughtful oral opinion that he had failed to demonstrate the exceptional circumstances required by Rule 4:50-1(f). Defendant Caridi has appealed.

Rule 4:50-1 permits relief from a final judgment if the movant can satisfactorily demonstrate "(a) mistake, inadvertence, surprise, or excusable neglect; . . . or (f) any other reason justifying relief from the operation of the judgment or order. Rule 4:50-2 requires that a motion to vacate pursuant to (a) must be brought within one year of the entry of judgment, whereas a motion pursuant to (f) need only be brought within a "reasonable" time. Rule 4:50-1 "is designed to reconcile the strong interests in finality of judgments and judicial efficiency with the equitable notion that courts should have authority to avoid an unjust result in any given case." Baumann v. Marinaro, 95 N.J. 380, 392 (1984) (quoting Manning Eng'g, Inc. v. Hudson County Park Comm'n, 74 N.J. 113, 120 (1977)).

In the case of default judgments, it has been firmly established that judges should view motions to vacate them with "great liberality" and should tolerate "every reasonable ground for indulgence . . . to the end that a just result is reached." Marder v. Realty Constr. Co., 84 N.J. Super. 313, 319 (App. Div.), aff'd, 43 N.J. 508 (1964). Whether a default judgment should be vacated is left to the sound discretion of the motion judge, whose decision cannot be disturbed in the absence of evidence of an abuse of discretion. Court Inv. Co. v. Perillo, 48 N.J. 334, 341 (1966).

"Generally, a defendant seeking to reopen a default judgment must show that the neglect to answer was excusable under the circumstances and that he has a meritorious defense." Marder, supra, 84 N.J. Super. at 318. Our review of the record in this case compels the conclusion that the evidence of excusable neglect presented by Caridi was weak, at best. Caridi does not claim that he failed to receive notice of the multiple proceedings in this matter or of the default judgments entered against him and his company. He asserts no inability to retain counsel, and he offers no evidence of negligence on his former attorney's ...


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