May 29, 2009
MAE REALTY L.L.C., A LIMITED LIABILITY COMPANY OF THE STATE OF NEW JERSEY AND SUBLIMINAL RECORDS, INC., PLAINTIFFS-RESPONDENTS,
AL MACDOWELL, DEFENDANT-APPELLANT.
On appeal from the Superior Court of New Jersey, Law Division, Hudson County, L-408-07.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted April 21, 2009
Before Judges Winkelstein, Fuentes and Chambers.
Following a proof hearing, the trial court entered a July 1, 2008 final judgment against defendant, awarding plaintiffs $84,980 for past-due rent; $2278.16 for past-due sewer charges; and $15,000 as the amount due on unpaid loans. The court also awarded plaintiffs possession of the premises known as Unit 10, 193-199 Hackensack Plank Road, Weehawken. On appeal, defendant raises the following arguments for our consideration:
I. THE LOWER COURT ERRED IN LEVYING SANCTIONS AGAINST DEFENDANT FOR FAILURE TO ANSWER INTERROGATORIES BECAUSE DEFENDANT DID NOT RECEIVE THE REQUEST FOR INTERROGATORIES, AND MADE A GOOD-FAITH EFFORT TO REMEDY THE PROBLEM, WHICH PLAINTIFFS REJECTED.
II. THE LOWER COURT ERRED IN FAILING TO VACATE THE DEFAULT JUDGMENT, BECAUSE DEFENDANT DID NOT RECEIVE PROPER SERVICE BY MAIL OF THE NOTICE OF MOTION, CAUSING HIM TO FAIL TO OPPOSE THE MOTION OR TO APPEAL.
III. THE LOWER COURT ERRED BY AWARDING PLAINTIFFS DAMAGES REPRESENTING RENT AND SEWER CHARGES, BECAUSE DEFENDANT WAS UNDER NO AGREEMENT TO PAY RENT.*fn1
In light of the procedural and factual history and controlling law, we reject defendant's arguments and affirm. Because the final judgment was entered following a proof hearing after defendant had been defaulted as a result of failing to answer interrogatories, we set forth in some detail both the factual and procedural aspects of the case.
Plaintiff Mae Realty is the owner of 193-199 Hackensack Plank Road in Weehawken. Defendant Al MacDowell is a musician. He entered into an agreement with plaintiff Subliminal Records to "write and produce new and original tracks." The agreement between Subliminal and defendant, captioned "Studio/Producer Agreement," was reduced to writing on March 20, 2002, and was amended by written agreement of February 6, 2003. Subliminal was to provide an engineer and pay for the costs of producing the records, and defendant and Subliminal would then divide the revenue (the royalties) generated by the records.
As part of the agreement, Mae Realty, which is a limited liability company, verbally agreed to lease Unit 10 of 193-199 Hackensack Plank Road (the premises) to defendant for $1300 per month, for use as a recording studio. The building in which the studio was located was a commercial building; defendant was prohibited from living in it.
The agreement between plaintiffs and defendant provided that Subliminal would pay rent to Mae Realty for the premises, and defendant would reimburse Subliminal for the rent from the royalties generated from the records defendant produced. Mae Realty would pay the "first couple of months rent" until the royalties were produced or defendant could "get the money elsewhere" to pay the rent. If the royalties were insufficient to pay the rent, rents would nevertheless accrue, and, according to Eric Morillo, plaintiffs' chief operating officer, defendant would "be responsible for paying every single cent back."
In addition, in 2003, Subliminal loaned defendant $5000 to purchase "things for his recording studio," such as carpet and whatever else defendant required to "get his recording studio set up." Later, from December 2005 through May 2006, Subliminal advanced an additional $10,000 to defendant for "services defendant was to perform" in connection with his recording business, to be repaid to Subliminal on demand in the event defendant failed to provide such services. Defendant failed to perform the required services, and plaintiffs demanded repayment of the $10,000.
On November 17, 2006, Agueda Chavez, Subliminal's office manager, sent two letters to defendant addressed to 193 Hackensack Plank Road, Unit 10, Weehawken. The letters advised defendant that he had violated his agreement with both Subliminal and Mae Realty, both to pay royalties and to pay rent for the premises. The letters were hand-delivered, as well as sent by certified and regular mail. The certified mail was returned from the postal service as unclaimed. The letters referred to a July 2005 notice Subliminal had given defendant to vacate the premises by July 1, 2006, because of defendant's failure to pay rent. The letters further informed defendant that despite repeated requests by Subliminal to defendant to stop using the premises for residential purposes, he continued "to unlawfully and improperly use the premises" for that purpose.
The letters further informed defendant that as of November 1, 2006, he owed $61,100 in past-due rent; $228 in sewer charges; and he had failed to repay the $5000 advanced to him in 2003. In the second letter, Subliminal advised defendant that he had failed to repay the $10,000 Subliminal had advanced to him between December 2005 and May 2006 for recording services he failed to provide.
On January 22, 2007, plaintiffs filed the instant complaint against defendant, seeking damages and defendant's removal from the premises. Plaintiffs subsequently filed an amended complaint on April 10, 2007, which plaintiffs had personally served on defendant at "193-199 Hackensack Plank Road Unit 10[,] Weehawken" on April 25, 2007. On May 29, defendant, representing himself, filed an answer and counterclaim.
On July 12, 2007, plaintiffs' counsel served an original and one copy of a first set of interrogatories on defendant at 193-199 Hackensack Plank Road - Unit 10. Plaintiffs also enclosed a copy of their answer to defendant's counterclaim, and affirmative defenses, as well as a copy of a notice to take defendant's deposition and produce documents, returnable on October 17, 2007. The letter and accompanying documents were served on defendant by certified mail, return receipt requested, and by regular mail. The certified mail was returned by the postal service marked "unclaimed," and the regular mail was not returned to the sender.
By letter dated July 23, 2007, plaintiffs served defendant, at the same address, also by certified mail, return receipt requested, and regular mail, a copy of a revised first set of interrogatories. Again, the envelope marked certified mail was returned by the postal service marked "unclaimed," and the regular mail was not returned.
By letter dated October 4, 2007, plaintiffs' counsel again wrote to defendant at the 193-199 Hackensack Plank Road - Unit 10 address. In that letter, counsel advised defendant that plaintiffs would file a motion to suppress his answer and dismiss his counterclaim unless he provided interrogatory answers within ten days from the date of the letter. The letter was sent certified mail, return receipt requested, and by regular mail.
On October 12, 2007, defendant's wife, Debra MacDowell, telephoned plaintiffs' counsel, indicating that she was an attorney, but not licensed to practice law in New Jersey. She told plaintiffs' counsel that defendant had received a letter from him, presumably referring to the October 4, 2007 letter, indicating that defendant had failed to comply with discovery. She claimed that defendant had not received the interrogatories. Plaintiffs' counsel declined to send defendant another set of interrogatories, or grant Debra MacDowell's request for an extension of time for her husband to answer the interrogatories.
Not having received an acceptable response from defendant to the October 4, 2007 letter, on October 25, 2007, plaintiffs filed a motion to dismiss defendant's counterclaim, and to suppress defendant's answer and affirmative defenses, for defendant's failure to make discovery. The motion was served on defendant on October 24, 2007, again at 193-199 Hackensack Plank Road - Unit 10, by certified and regular mail. Neither the certified mail envelope nor the regular mail envelope was returned to plaintiffs' counsel. The record does not indicate if the return receipt cards were signed or returned.
Defendant did not respond to plaintiffs' motion to dismiss his counterclaim and suppress his answer. Instead, Debra MacDowell filed an "affidavit in opposition." The copy of the "affidavit," allegedly taken in New York state, which defendant has provided to the court, simply has "/s" where the notary was to have signed; it does not appear to contain a notary seal. In a "certification" submitted with the affidavit, Debra MacDowell referred to her submission as an "affirmation in opposition" to plaintiffs' motion to dismiss. Plaintiffs' counsel responded to Debra MacDowell's submission with his own affidavit. On November 16, 2007, the trial court suppressed defendant's answer and dismissed his counterclaim without prejudice. The court entered an amended order suppressing the answer and dismissing the counterclaim without prejudice on November 30, 2007.
On March 19, 2008, plaintiffs sent to defendant, at 193-199 Hackensack Plank Road - Unit 10, a "notice to pro se party pursuant to Rule 4:23-5(a)(2)," informing defendant that plaintiffs were seeking to suppress his answer and dismiss his counterclaim with prejudice as a result of his failure to furnish fully responsive and certified interrogatories. The notice informed defendant that the motion would be heard on April 11, 2008. The notice and motion were served by both certified and regular mail. The record does not indicate whether either the regular mail or certified mail envelopes were returned. On April 11, 2008, not having received a response to plaintiffs' motion from defendant, the court entered an order suppressing defendant's answer and dismissing his counterclaim with prejudice.
Plaintiffs requested a proof hearing. Plaintiffs provided defendant with notice of the proof hearing at 193-199 Hackensack Plank Road - Unit 10. The court provided defendant with notice of the proof hearing at "193 Hackensack Plank Road."
The proof hearing was held on June 10, 2008. After the proceedings had started, defendant and his wife appeared. Although the judge was made aware that defendant's wife was not an attorney licensed to practice law in New Jersey, the judge permitted her to address the court.
Debra MacDowell asked the court "to consider vacating the . . . order which suppressed our answer." The court responded that it could not do that based on a verbal request. Then, Debra MacDowell asked for time to "make a motion so that we could make that request on paper." She informed the court that when she received the motion to suppress, she called plaintiffs' counsel (the October 12, 2007 telephone call) and indicated that "we're having trouble receiving interrogatories at the plaintiff's premises," but counsel declined to send her another copy of the interrogatories. Debra MacDowell asked the court for an adjournment to make a motion to vacate the default and reinstate defendant's answer and counterclaim. After hearing argument from plaintiffs' counsel, which included an offer by plaintiffs' counsel to provide testimony by a process server, the court denied the request for an adjournment. In doing so, the judge made the following findings:
I'd like the record to reflect that the Court is not familiar with the entire procedural history of this case. However, the Court sees in the court file that by . . . an order dated November . . . 16th, 2007, the order suppressed, without prejudice, the answer and affirmative defenses of the defendant. That was by order dated November 16th, 2007. I don't remember whether or not that order was opposed.
In other words, there was a motion that was made for that order to be signed and I believe that that order received opposition. That is to say the November 16th[,2007] order . . . suppressing the answer and defenses without prejudice.
Subsequently, on April 11th, 2008, there was an order by this Court suppressing the answer and the defenses of the defendant with prejudice. And there is no . . . information whatsoever in the file that there was any motion to file for reconsideration or to change those orders by the Court.
And that is the procedural history that the Court takes into consideration at this time to deny the motion for an adjournment of this proof hearing today.
The defendant, obviously, was notified to be here today and the defendant is here. That was as a result of a letter that was sent on or about May 30th for today's proof hearing.
So, I'm going to deny the request for an adjournment under these circumstances, because the defendant has had, in the Court's view, an ample opportunity to file any motion for reconsideration or any other motion to . . . modify or to change the orders of November and April. And that didn't happen.
I will give Mr. MacDowell the opportunity to cross examine the witness for the plaintiff, but I will not allow anything else at this proof hearing other than a cross examination of the witness by Mr. MacDowell.
Unfortunately, Mrs. MacDowell is not an attorney in the State of New Jersey and is not appearing as the defendant's attorney.
So, I will not allow her to represent Mr. MacDowell in this proceeding.
Following the denial of the adjournment application, the court heard testimony from Morillo. The court allowed defendant to cross-examine him. Following Morillo's testimony, the court found that plaintiffs had proved that defendant owed Mae Realty rent in the sum of $84,930. The court found that the sum should have been paid by royalties, but defendant did not earn any royalties. The court further found that defendant owed $2278.16 for sewer charges that he incurred while a tenant in the premises, and owed $15,000 for loans or monies advanced by plaintiffs to defendant since defendant had taken occupancy of the premises. The court memorialized its findings in the July 1, 2008 judgment.
In his brief on appeal, defendant claims default should not have been entered because he never received the interrogatories; he was not served with the motion to suppress his answer and dismiss his counterclaim; and the evidence at the proof hearing was insufficient to support the judgment. We reject each of these arguments.
Although it is not exactly clear from defendant's brief, we construe his first two arguments to mean that the trial court abused its discretion by failing to vacate the default entered for defendant's failure to answer interrogatories because defendant was never served with those interrogatories; or, alternatively, the court abused its discretion by failing to grant defendant an adjournment to provide him with an opportunity to make a formal motion to set aside the default. We review these arguments under an abuse of discretion standard. "A decision declining to reinstate a complaint dismissed for noncompliance with discovery obligations lies within the discretion of the trial court." Cooper v. Consolidated Rail Corp., 391 N.J. Super. 17, 22 (App. Div. 2007). "We will 'decline to interfere with [such] matters of discretion unless it appears that an injustice has been done.'" Id. at 23 (quoting Comeford v. Flagship Furniture Clearance Ctr., 198 N.J. Super. 514, 517 (App. Div. 1983), certif. denied, 97 N.J. 581 (1984)).
Applying that standard here, we conclude that the trial court did not abuse its discretion. Defendant's primary argument is that he was not served with the interrogatories, or with the motions to dismiss and suppress, both with and without prejudice. Defendant has not, however, supplied a certification or affidavit to this court setting forth his position. A response to a motion that relies on facts not of record or subject to judicial notice must be supported by an affidavit in compliance with Rule 1:6-6. R. 1:6-2(a). In lieu of an affidavit, the affiant may submit a certification. R. 1:4-4(b). In either event, the affidavit must be based on personal knowledge. R. 1:6-6. Here, defendant did not submit any legally competent evidence to support his argument. He did not provide the required affidavit or certification to the trial court, or to this court, explaining that he did not receive plaintiffs' motion to suppress and dismiss or their discovery requests.
Defendant essentially asks the court to accept the representations of Debra MacDowell, his wife, that defendant was not properly receiving his mail, and that plaintiffs sent the interrogatories, as well as the motions to suppress both with and without prejudice, to the wrong address. He claims that plaintiffs served him at 193-199 Hackensack Plank Road - Unit 10, instead of 193 Hackensack Plank Road - Unit 10. We reject defendant's argument.
Debra MacDowell's November 9, 2007 "affidavit" does not comply with Rule 1:6-6, and is therefore inadmissible because the facts contained in the submission are hearsay, not based on her personal knowledge. The "affidavit," which does not appear to contain a notary seal, simply indicates that defendant is a musician, and is often traveling, and that defendant has a problem receiving mail at his office address at 193 Hackensack Plank Road. Notably, the affidavit does not specifically say that defendant did not receive either the interrogatories or the motions to dismiss. Personal knowledge excludes facts based merely upon information and belief; likewise, affidavits by attorneys of facts that are not based upon their personal knowledge, but have been related to them by their client constitute objectionable hearsay. Pressler, Current N.J. Court Rules, comment on R. 1:6-6 (2009); Wang v. Allstate Ins. Co., 125 N.J. 2, 15-16 (1991); Murray v. Allstate Ins. Co., 209 N.J. Super. 163, 169 (App. Div. 1986), appeal dismissed by 110 N.J. 293 (1988). Consequently, defendant has not presented any admissible evidence to support his arguments that he was never served with either the interrogatories or the motions to suppress and dismiss.
Defendant's argument that plaintiffs did not properly serve him at the correct address is also unsupported by the record.
Defendant rented property from Mae Realty to be used as a recording studio. That property was unit 10 in a series of buildings located at 193-199 Hackensack Plank Road in Weehawken. The record shows that defendant was personally served with the amended complaint at that address. Defendant received the October 4, 2007 letter advising him that he was in default in answering the interrogatories, as it was in response to that letter that Debra MacDowell called plaintiffs' counsel on October 12. Defendant received the motion to dismiss without prejudice, as Debra MacDowell's November 9, 2007 "affidavit in opposition" was in response to that motion.
Plaintiffs' counsel complied with the rules for service of the motions to dismiss, both with and without prejudice. When the provision is made for service by certified or registered mail, service may also be made simultaneously by ordinary mail.
R. 1:5-4. Upon compliance with that rule, service is complete upon mailing of ordinary mail. R. 1:5-4(b). "The failure to claim certified mail . . . will not defeat statutory compliance." EMC Mortgage Corp. v. Chaudhri, 400 N.J. Super. 126, 140 (App. Div. 2008). Here, therefore, service was properly made, so long as the mail was sent to the correct address.
It was. The amended complaint was personally served at 193-199 Hackensack Plank Road, Unit 10, and the attorney certified to service of the interrogatories and motions to dismiss at the same address. See R. 1:5-3. When service was made by mail, none of the letters sent regular mail were returned, and in the majority of cases, the certified mail was returned as "unclaimed." Indeed, attached to defendant's brief, Tab E, is a copy of an envelope mailed March 19, 2008, to defendant at 193-199 Hackensack Plank Road - Unit 10, which, according to plaintiffs' counsel's certification, contained the motion to dismiss the complaint with prejudice as well as a notice to the pro se party pursuant to Rule 4:23-5(a)(2). Obviously, by attaching a copy of that envelope to his brief, defendant acknowledged that he received it.
What is more, even when plaintiffs sent the November 17, 2006 certified letters to defendant at the 193 Hackensack Plank Road Unit 10 address, those certified letters also went unclaimed, as did the rest of the letters plaintiffs sent to the 193-199 Hackensack Plank Road - Unit 10 address. That defendant failed to claim the certified mail does not affect the validity of service because service was also properly made by ordinary mail. R. 1:5-3; 1:5-4; see also First Resolution Investment Corp. v. Seker, 171 N.J. 502, 513 (2002) (recognizing that the postal service notation for unclaimed mail is the equivalent of a postal service notation that the party "refuses to claim" the mail).
The failure to comply with discovery demands has consequences.
Rule 4:23-5 sets forth the consequences for failure to respond to timely discovery demands. The party seeking discovery must first move for dismissal without prejudice, after which the delinquent party may move to vacate the dismissal. Rule 4:23-5(a)(1).
Ninety days after the dismissal without prejudice, the party seeking the discovery may move for dismissal with prejudice. Rule 4:23-5(a)(2). [Leon v. Parthiv Realty Co., Inc., 360 N.J. Super. 153, 155 (App. Div. 2003).]
Here, plaintiffs' counsel meticulously complied with these rules in seeking to have defendant's answer suppressed and his counterclaim dismissed. At no time, even as late as the proof hearing, did defendant personally certify that he never received the interrogatories or the motions to dismiss; nor did he properly move to vacate the dismissal. Under those circumstances, the court did not abuse its discretion by refusing to vacate the default.
We also conclude that the trial court did not abuse its discretion in failing to grant defendant an adjournment of the proof hearing to allow defendant to file a formal motion to set aside the default. Without doubt, at the latest, defendant was aware that he was in default for failing to answer interrogatories upon receiving the October 4, 2007 letter, to which Debra MacDowell responded by calling plaintiffs' counsel and submitting the November 9, 2007 "affidavit in opposition" to the motion to dismiss. At no time prior to the proof hearing, approximately seven months later, did defendant take any formal action to either obtain another set of interrogatories or set aside the default. Under these circumstances, the court did not abuse its discretion by failing to grant defendant an adjournment to file a formal motion.
Defendant's final argument, that the evidence at the proof hearing was insufficient to support the final judgment, is without sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).