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Household Finance Corp. v. Russell

April 27, 2009

HOUSEHOLD FINANCE CORPORATION, PLAINTIFF,
v.
GLADYS EVELYN RUSSELL, A/K/A GLADYS EVELYN BREWER RUSSELL, A/K/A GLADYS RUSSELL, DEFENDANT/THIRD-PARTY PLAINTIFF-RESPONDENT,
v.
FAIRBANK INC., WALSH SECURITIES, INDEPENDENT MORTGAGE, LYDONN JACKSON, BENEFICIAL NEW JERSEY AND JOHN MACK, THIRD-PARTY DEFENDANTS, AND BRIAN LYLES, THIRD-PARTY DEFENDANT-APPELLANT.



On appeal from the Superior Court of New Jersey, Chancery Division, Hudson County, Docket No. F-20830-00.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Submitted February 11, 2009

Before Judges Waugh and Newman.

Third-party defendant Brian Lyles appeals the denial of his application to vacate a default judgment in the principal amount of $228,000 docketed against him on April 23, 2002. We affirm.

I.

The underlying litigation began as a foreclosure action against third-party plaintiff Gladys Russell in December 2000. At the same time she filed her responsive pleading in March 2001, Russell included a third-party complaint against Lyles, among others, alleging fraud and other wrongful conduct in connection with her acquisition of the property that was the subject of the foreclosure.

Based upon a return of service by the Hudson County Sheriff, a default judgment in the amount of $228,000 was entered against Lyles on January 23, 2002, and docketed on April 23, 2002.

Lyles concedes that he first learned about the default judgment from a bankruptcy related Charles Jones search in or before April 2004. He subsequently learned in September 2006 that the judgment was not dischargeable in bankruptcy because it was premised on allegations of fraud. Lyles's bankruptcy attorney had made an application in the Chancery Division to cancel the judgment of record because Lyles had been through bankruptcy, but the application was denied in an order dated October 11, 2006.

After attempting to obtain asset discovery with minimal success, Russell moved in October 2007 for an order of incarceration to force Lyles to supply responsive asset discovery as previously ordered by the court. Lyles filed a cross-motion seeking to set aside the default judgment, relying on Rule 4:50-1(d).

Following an evidentiary hearing, Judge Thomas P. Olivieri denied the motion to vacate the judgment. His findings of fact and conclusions of law included the following:

The evidence in this matter, in this court's mind, is clear, and although I appreciate Mr. Lyles's candor, Mr. Lyles does not deny receiving the third party summons and complaint in this matter. He doesn't remember it, but he can't deny it.

The documents in this matter, that is the third-party complaint and the summons in this matter, reflect that Mr. Lyles was served. I believe, and so find, that on or about March 16, 2001, he was served with the third-party complaint. I make that finding based upon Mr. Lyles's own testimony, where he doesn't deny receiving it, the fact that he lived at 122 Bidwell Avenue Jersey City on that date, and when the court looks at [the summons and complaint] in evidence, at least the summons portion of that document refers to Mr. Lyles as the defendant.

Mr. Lyles, as the court pointed out, was not a first-party plaintiff or defendant in this matter. He certainly knew sometime in 2001 that his aunt and he, his aunt being another third-party defendant, were ...


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