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Newton & Associates, LLC v. Innovative Solutions Systems

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


November 13, 2008

NEWTON & ASSOCIATES, LLC, PLAINTIFF-RESPONDENT,
v.
INNOVATIVE SOLUTIONS SYSTEMS, DEFENDANT-APPELLANT.

On appeal from Superior Court of New Jersey, Law Division-Special Civil Part, Middlesex County, Docket No. DC-11405-07.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Submitted October 22, 2008

Before Judges Fisher and Baxter.

Defendant Innovative Solutions Systems appeals from a December 21, 2007 order that denied its motion, filed pursuant to Rule 4:50-1, to vacate a judgment entered in favor of plaintiff Newton & Associates, LLC on September 27, 2007. We reverse.

I.

Plaintiff is a collection agency hired by defendant to collect a debt owed to defendant by a third party, Syncro. When defendant failed to pay the fifteen percent fee, which plaintiff claimed it was owed as a result of collecting the underlying debt in full, plaintiff instituted suit to recover the "contingent/contractual fees" that defendant owed for plaintiff's collection services.

As we understand the record, there was never a contract signed by plaintiff and defendant setting forth the parties' respective understandings of the fee to be paid plaintiff for the collection work it performed. Instead, on September 13, 2006, plaintiff sent defendant a letter by fax that provided, in relevant part, as follows:

To: David Parks

RE: OUTSTANDING AMOUNT FROM SYNCRO TEC[H]NOLOGIES, INC. TOTAL OUTSTANDING $24,696.00 SENDING HEREWITH THE INVOICES FOR COLLECTION.

THE PERSON RESPONSIBLE: SONNY MUJUMDAR [PHONE NUMBER]. FACT[S] OF THE CASE: SYNCRO BOOKED OUR CONSULTANT . . . FOR A PROJECT. AS PER AGREEMENT, THEY WILL PAY US at $63.00 PER HOUR OF HIS WORK. HE HAS COMPLETED THE JOB. WE HAVE SUBMITTED THE INVOICE BUT TILL (SIC) DATE THREE INVOICES ARE PENDING FROM JUNE 2006 (ENCLOSED). IF YOU NEED MORE INFORMATION, SIDHARTHA@ISSSOFT.COM THANKS SID GUHA INNOVATION SOLUTION SYSTEMS, INC., ONE WOODBRIDGE CENTER, SUITE 435 WOODBRIDGE, NEW JERSEY 07095.

SEND YOUR OFFICIAL ADDRESS AND RESULTS OF YOUR FINDINGS AND THE TIME REQUIRED AS WE GO BY TIME. OUR FAX NUMBER IS 732 596 1115.

[(emphasis added).]

Plaintiff succeeded in collecting the entire $24,696 debt that Syncro owed to defendant, and sent defendant an invoice in the amount of $3,704.

The complaint that plaintiff filed on June 11, 2007, alleged that defendant owed the sum of $3,704, but failed to specify how it arrived at that sum. On or about August 6, 2007, plaintiff propounded requests for admissions on defendant. Among other things, plaintiff requested that defendant admit that "defendant failed to pay the plaintiff its 15% fee."

In a September 17, 2007 letter to plaintiff's counsel, defendant's counsel wrote, "[i]n response to your admission number 4[,] the defendant at this point denies any 15% fee is due and owing to the plaintiff . . . ." Defense counsel also stated that he had no copy of a contract to collect a debt between plaintiff and defendant wherein his client had agreed to pay a 15% collection fee. He demanded that plaintiff provide a copy of the contract in question.

However, on September 14, 2007, before receiving the September 17, 2007 letter from defendant's counsel, plaintiff filed its motion for summary judgment. In that motion, plaintiff asserted that because defendant failed to deny the request for admission within thirty days of service, the allegation was deemed admitted in accordance with the provisions of Rule 4:22-1. Plaintiff never advised the court of the contents of defendant's September 17, 2007 letter. When defendant filed no opposition to plaintiff's summary judgment motion, the court granted it on September 27, 2007.

The next day, plaintiff sent a letter to defendant advising that the court had granted plaintiff's motion for summary judgment and demanding full satisfaction of the judgment within ten days.

On November 21, 2007, defendant filed its motion for relief from judgment. In support of that motion, defendant argued: 1) the summary judgment motion was never served upon its counsel; 2) the requests for admissions were denied by way of defense counsel's letter to plaintiff's counsel on September 17, 2007; and 3) there was no contract under which defendant had ever agreed to compensate plaintiff fifteen percent of the funds plaintiff collected on defendant's behalf.

Plaintiff opposed the motion, contending that it had indeed mailed the motion for summary judgment to defendant. Plaintiff also maintained that the September 17, 2007 letter, in which defendant denied the admission in question, was "suspiciously" mailed to plaintiff a few days after the motion for summary judgment was filed. Plaintiff also argued that the proofs offered in support of the motion to vacate judgment were inadequate.

The judge denied the motion to vacate, holding in a brief oral decision that he was "skeptical" of defendant's claim that it never received the motion for summary judgment. The judge did not, however, rule on that particular point, since he went on to ultimately hold that defendant never disputed the facts upon which the summary judgment was based.

II.

A judge is obliged to grant relief from judgment if the moving party demonstrates "mistake, inadvertence . . . excusable neglect . . . misrepresentation, or other misconduct of an adverse party . . . or any other reason justifying relief from the operation of the judgment or order." R. 4:50-1. In this case, we are satisfied that there was a factual dispute between the two parties as to whether the motion for summary judgment was ever served on defense counsel. Plaintiff's counsel contends he mailed it; defense counsel says he never received it. There is no receipt or other documentation to support either claim. Under those circumstances, defendant should have been afforded the opportunity to respond to the summary judgment motion on its merits. At the very least, the judge should have conducted an evidentiary hearing to resolve the issue of service of the summary judgment motion.

Moreover, there appears to be a genuine dispute about the nature of the agreement between the parties, i.e. whether defendant should have been charged a contingent fee of fifteen percent as plaintiff maintains, or, as defendant maintains, an hourly rate. Indeed, the September 13, 2006 letter of engagement, which defendant faxed to plaintiff when defendant forwarded the collection account in question, demanded that plaintiff forward a record of the time expended "as we [defendant] go by time." Thus, the September 13, 2006 fax expressed defendant's understanding that plaintiff would be paid on an hourly rate, rather than on the contingent fee basis that plaintiff described in its summary judgment motion.

We do not deem the fifteen percent allegation in plaintiff's request for admissions to have been admitted in light of the uncertainty about the precise date on which defendant received the request for admissions. Although plaintiff asserts in its brief that the request for admissions was mailed to defendant "on or about August 6, 2007," no cover letter or proof of service is included in plaintiff's appendix. Consequently, we cannot be certain that defendant's September 17, 2007 letter denying the allegation was actually out of time.

In light of both the uncertainty about whether defendant was ever served with the underlying summary judgment motion and the real controversy that existed concerning how plaintiff was to be paid for the collection services it rendered on defendant's behalf, we conclude that the judge erred when he denied defendant's motion for relief from judgment. We are satisfied that defendant presented ample reasons entitling it to relief from the earlier judgment in plaintiff's favor. We therefore reverse the denial of defendant's motion for relief from judgment and remand the matter to the Special Civil Part for trial.

Reversed and remanded.

20081113

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