December 22, 2008
LLANFAIR HOUSE NURSING HOME, A CORPORATION OF THE STATE OF NEW JERSEY, PLAINTIFF-RESPONDENT,
ESTATE OF ETHEL LITCHULT BY ITS EXECUTRIX, JANIS CAMPAGNA, AND JANIS CAMPAGNA, INDIVIDUALLY, DEFENDANTS-APPELLANTS.
On appeal from the Superior Court of New Jersey, Law Division, Passaic County, Docket No. L-2236-06.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued September 8, 2008
Before Judges Carchman, R. B. Coleman and Simonelli.
Defendants Estate of Ethel Litchult by its Executrix, Janis Campagna and Janis Campagna (Campagna), individually, appeal from a September 7, 2007 order of the Law Division denying defendants' motion to set aside a default judgment. We affirm.
The essential facts are not in dispute. In June 2003, Ethel Litchult, Campagna's mother, was admitted to plaintiff Llanfair House Nursing Home (Home) as a resident. At that time, Campagna executed an admission agreement on behalf of her mother wherein Campagna agreed to act as the resident's representative. She represented that she would be filing a Medicaid application on her mother's behalf. The Private Admission Agreement further provided that the "[r]esident and/or resident's representative accept full responsibility for and agree to pay the full amount charged by the Home in the event that any third party payor shall deny coverage of or responsibility for resident's claim or any part thereof."*fn1
Eventually, Litchult's assets were exhausted, and in April 2005, Campagna represented to plaintiff that she would file the application. Despite plaintiff not receiving payment for defendant's care, Litchult remained at plaintiff's facility as the Medicaid application presumably moved forward. Ultimately, the application was denied in August 2005 because certain requested information had not been provided.*fn2 Mrs. Litchult died on October 24, 2005, and her Medicaid application was never approved. At the time of Litchult's death, $48,882.77 was due to plaintiff for her care.
In May 2006, plaintiff filed an action against defendants in the Law Division to recover the amount due, alleging breach of contract, quantum meruit, detrimental reliance and equitable estoppel. After service of the summons and complaint on June 12, 2006, defendants requested and were granted a thirty-day extension to file an answer. No answer was filed within that time, and another thirty-day extension was requested and granted on August 17, 2006. Again, no answer was filed. On September 15, defendants requested yet another extension to file an answer; this extension was to expire on October 2, 2006. No answer was filed within that time period.
Finally, on October 23, 2006, plaintiff requested the entry of a default and default judgment. Four days later, on October 27, 2006, defendants requested another extension but were informed that a request to enter default and default judgment had been filed. At this point, defendant Campagna submitted a copy of the Medicaid documentation for plaintiff's review and requested that no further action be taken. Although, plaintiff took no further affirmative action, the previously requested default judgment was entered by the clerk on November 13, 2006.
On December 15, 2006, defendants forwarded a consent order to plaintiff to both set aside the judgment and file an answer within fourteen days. Plaintiff returned the executed consent order to defendants' attorney on December 21, 2006, but no answer was forthcoming. According to defendants' attorney, he never received the returned consent order nor the follow-up phone call on January 18, 2007. Defendants made no inquiry nor took any further action until six-months later when in July 2007, defendants requested consent to vacate the default judgment. Plaintiff refused to consent.
In August 2007, defendants moved to vacate the default judgment, seeking relief under R. 4:50-1(a)(c) and (f). The motion judge denied the application and endorsed the order indicating:
This application is denied. Despite 3 extensions to answer the complaint, despite the fact that Plaintiff signed a consent order allowing for the defendant to vacate default judgment and file an answer to this on 12/26/06 and despite plaintiff's follow-up regarding the consent order, defendant still has not filed an answer. Defendants were originally served on 6/12/06. Excusable neglect clearly not demonstrated. This appeal followed.
The thrust of defendants' arguments on appeal focus on R. 4:50-1 (a), (c) and (f). The applicable rules provide:
On motion, with briefs, and upon such terms as are just, the court may relieve a party or the party's legal representative from a final judgment or order for the following reasons: (a) mistake, inadvertence, surprise, or excusable neglect; . . . (c) fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party; . . . (f) any other reason justifying relief from the operation of the judgment or order.
In considering such applications, certain basic principles apply. A motion to vacate a Default Judgment is "viewed with great liberality, and every reasonable ground for indulgence is tolerated to the end that a just result is reached." Goldhaber v. Kohlenberg, 395 N.J. Super. 380, 392 (App. Div. 2007) (citing Morristown v. Little, 135 N.J. 274, 283-84 (1994) (quoting Marder v. Realty Constr. Co., 84 N.J. Super. 313, 318-19 (App. Div. 1964), aff'd, 43 N.J. 508 (1964))). See also Nowosleska v. Steele, 400 N.J. Super. 297, 303 (App. Div. 2008). Further, default judgment will not be disturbed unless the failure to answer or otherwise appear and defend was "excusable under the circumstances and [defendant] has a meritorious defense."
Dynasty Bldg. Corp. v. Ackerman, 376 N.J. Super. 280, 285 (App. Div. 2005) (citing Marder, supra, 84 N.J. Super. at 318-19). The excusable neglect standard under Tradesmens Nat'l Bank and Trust Co. v. Cummings, 38 N.J. Super. 1, 5 (App. Div. 1955), refers to neglect, "which might have been the act of a reasonably prudent person under the same circumstances." See also Mancini v. Eds ex rel. N.J. Auto. Full Ins. Underwriting Ass'n, 132 N.J. 330, 335 (1993); Baumann v. Marinaro, 95 N.J. 380, 394 (1984); Shannon v. Academy Lines, Inc., 346 N.J. Super. 191, 197 (App. Div. 2001). However, of critical importance here, carelessness or a lack of due diligence alone do not amount to excusable neglect. See Mancini, supra, 132 N.J. at 335 ("Carelessness may be excusable when attributable to an honest mistake that is compatible with due diligence or reasonable prudence."); Baumann, supra, 95 N.J. at 394("[M]ere carelessness or lack of proper diligence on the part of an attorney is ordinarily not sufficient to entitled his clients to relief from an adverse judgment in a civil action.") (citing In re T., 95 N.J. Super. 228, 235 (App. Div. 1967)); SWH Funding Corp. v. Walden Printing Co., 399 N.J. Super. 1, 10 (App. Div. 2008) ("Rule 4:50-1(a) relief is not available, because inadvertence of counsel alone is insufficient, as a matter of law, to establish 'excusable neglect.'"); Shannon, supra, 346 N.J. Super. at 197 (noting that excusable neglect is "an honest mistake compatible with due diligence or reasonable prudence."); Burns v. Belafsky, 326 N.J. Super. 462, 469 (App. Div. 1999) aff'd 166 N.J. 466 (2001) ("Failure on the part of an attorney through mere inadvertence or lack of proper diligence is insufficient.") It is with these standards in mind that we consider the issues raised by defendants.
The thrust of defendants' argument under R. 4:50-1(a), is that defendants failed to file an answer "on the belief that the informal discovery would satisfy the Plaintiff [and] that they used their best efforts to qualify the Decedent for Medicaid, and in reliance of Plaintiff's agreement not to proceed with the entry of default or default judgment." Plaintiff counters by observing that it agreed to three extensions of time to answer, made no representations regarding default and its accommodations to defendants are now being used against it. We agree.
While attempts to resolve disputes by negotiation and settlement are encouraged, plaintiff's willingness to accommodate that end by acquiescing in three extensions of time to answer, executing a consent order to vacate the default judgment and then receiving nothing by way of answer cannot be perceived as contributing to establish mistake or excusable neglect.
Plaintiff did not execute on the judgment; it simply protected its interests. The time frames involved here negate defendants' arguments. The complaint was filed in June 2006, the first extension was granted in July 2006, the second extension was granted in August 2006 and the third was granted to October 2006. Only after the third extension did plaintiff act and then in December, defendants submitted to plaintiff the consent order to set aside the default and default judgment together with an additional fourteen days to file an answer. Even though defendants claim they never received the signed order (which plaintiff claims it signed and returned forthwith) or the follow-up phone call, no action was taken for an additional nine months until September 2007 when the motion was considered to set aside the default judgment. The time of the filing of the complaint to the filing of that motion extended over a period of one year. We conclude that there was no excusable neglect here that warrants setting aside the default judgment.
These facts further preclude relief under R. 4:50-1(c). Although the alleged misrepresentations focus on the entry of a default judgment, that judgment was entered in October 2006, and defendants had full knowledge of its entry. Defendants' December correspondence seeking a consent order to set aside the judgment negates any suggestion of misrepresentation or misconduct warranting relief under subsection (c). A plaintiff should not be required to "chase" defendants to file an answer and move a case forward. Plaintiff's willingness to cooperate with defendants' attempts to resolve the matter short of full litigation are readily apparent from the record. We perceive of no basis for relief under this subsection.
Finally, we reach the same result as it applies to R. 4:50-1(f). We need not restate the cogent facts that support our view that no relief is warranted under R. 4:50-1(a) and (c). Nothing presented by defendants support the view that exceptional circumstances or overarching equities require our intervention. This is simply a case where, for reasons not fully explained, an answer was not filed when plaintiff's counsel willingly indulged opportunities to respond. We must consider our review to be governed by the totality of the circumstances, In re Guardianship of J.N.H., 172 N.J. 440, 476 (2002), and circumstances that are exceptional. Nowosleska, supra, 400 N.J. Super. at 304-05. There are no such circumstances here. The facts demonstrate defendants who for reasons not fully articulated, failed to respond in a timely manner to the various implicit entreaties to file an answer or other responsive pleading. None was forthcoming.
We also recognize that in general, defendants seeking to vacate a default judgment based upon excusable neglect, must show "that the failure to answer was excusable under the circumstances and that a meritorious defense is available." Little, supra, 135 N.J. at 285. See also Goldhaber, 395 N.J. Super. at 391. Here, defendants failed to show excusable neglect, and it is unnecessary to examine the issue of meritorious defense. Woodrick v. Jack J. Burke Real Estate, Inc., 306 N.J. Super. 61, 78 (App. Div. 1997), appeal dismissed, 157 N.J. 537 (1998) (noting that even if defendant did have a plausible meritorious defense, it did not show excusable neglect and therefore the judgment should not be vacated); Morales v. Santiago, 217 N.J. Super. 496, 505 (App. Div. 1987) ("Without more...having a meritorious defense is ordinarily not a ground for setting aside a default judgment."); Mancini, supra, 132 N.J. at 334 ("A defendant seeking to reopen a default judgment because of excusable neglect must show that the neglect to answer was excusable under the circumstances and that he has a meritorious defense.")
In sum, "[t]he decision whether to vacate a judgment on one of the six specified grounds is a determination left to the sound discretion of the trial court, guided by principles of equity." F.B. v. A.L.G., 176 N.J. 201, 207 (2003) (citing Little, supra, 135 N.J. at 283). "Relief from judgment is not to be granted lightly" however, "[r]elief is more liberally granted...when the application is to vacate a default judgment." Bank v. Kim, 361 N.J. Super. 331, 336 (App. Div. 2003) (citing Marder, supra, 84 N.J. Super. at 318). The standard of review on a motion to vacate a default judgment is abuse of discretion. See F.B., supra, 176 N.J. at 207; J.N.H., supra, 172 N.J. at 473; Little, supra, 135 N.J. at 283; Del Vecchio v. Hemberger, 388 N.J. Super. 179, 186-87 (App. Div. 2006); Bank, supra, 361 N.J. Super. at 336. We perceive no abuse of discretion here.
The denial of motions to vacate a default judgment are difficult. They represent the denial to a defendant to have a matter adjudicated and resolved in a full and considered way. Nevertheless, a plaintiff is entitled to have a matter proceed forward to ultimate resolution. On balance, we indulge defendants who are dilatory, yet at some point in time, that indulgence ceases and plaintiff is entitled to relief. That is what happened here and we find no basis for our intervention.