November 25, 2009
JODI K. STATON, PLAINTIFF-RESPONDENT,
THETA HOLDING CO., L.P. AT OVERLOOK GREAT NOTCH AND/OR THETA HOLDING CO., L.P. AND/OR THETA HOLDING CO., AND F.K.C. CONSTRUCTION, DEFENDANTS, AND CHIMENTO CONSTRUCTION AND FRANK CHIMENTO, DEFENDANTS-APPELLANTS.
On appeal from the Superior Court of New Jersey, Law Division, Passaic County, Docket No. L-5064-05.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted September 15, 2009
Before Judges Fuentes and Simonelli.
Defendants Chimento Construction and Frank Chimento (Chimento) appeal from the October 10, 2008 Law Division order denying their motion to vacate default judgment, and from the November 21, 2008 Law Division order denying their motion for reconsideration. We affirm.
The following facts are undisputed. Defendant Theta Holding Co. (Theta), owns property located in Little Falls known as Overlook at Great Notch. Chimento is the principal of Chimento Construction and defendant F.K.C. Construction Co. (FKC), both New Jersey close corporations with the same business office located in Belleville.*fn1 Chimento is responsible for the operation of both companies. On November 15, 2003, FKC and Chimento entered into a contract with Theta to provide snow and ice removal services at the property.
On December 5, 2003, plaintiff Jodi K. Staton suffered injuries as a result of a slip and fall on accumulated snow and ice on the property. On March 18, 2005, plaintiff's attorney, Michael Burakoff (Burakoff), wrote to Theta about the accident. Theta's insurance carrier wrote to FKC and Chimento advising them of the accident and seeking indemnification pursuant to the contract.
On April 8, 2005, Chimento called Burakoff, advised him that he owned FKC and Chimento Construction, and confirmed that he was the snow removal contractor Theta had hired. Chimento also gave Burakoff the same Clifton office address and telephone and facsimile numbers for both companies and assured counsel that his attorney and insurance company would contact counsel shortly.
On November 30, 2005, plaintiff filed a complaint against Theta, FKC, Chimento Construction and Chimento.*fn2 In January 2006, the Passaic County Sheriff unsuccessfully attempted to serve defendants at the Clifton address Chimento had provided to Burakoff. Thereafter, on January 17, 2006, Burakoff mailed copies of the summons and complaint to defendants at the Clifton address.
On January 31, 2006, a woman identifying herself as "Heather" called Burakoff, stating that she was defendants' office manager and was calling at Chimento's request. In a letter dated that same day, sent by facsimile and regular mail, Chimento acknowledged receipt of the summons and complaint. Chimento Construction appears on the facsimile letterhead, as does a Belleville address.
On February 28, 2006, an Essex County Sheriff's Officer served defendants at the Belleville address by serving a copy of the summons and complaint on Heather McCaster (McCaster), identified in the proof of service as the "Manager in Charge." On April 5, 2006, plaintiff filed and served on defendants a request to enter default, which was granted on April 6, 2006.
On May 25, 2006, Theta served on Chimento its answer and cross-claim for indemnification against FKC. On September 11, 2006, the court entered default against FKC for failure to file an answer to the cross-claim.
On November 29, 2006, Theta filed and served on FKC a motion to enter default judgment on liability. On January 19, 2007, the court granted the motion. Theta served the default judgment on Chimento. In response, Chimento advised Theta's attorney that "he was on the way to his insurance agent."
On July 27, 2007, Chimento attended a mandatory arbitration in this matter, at which he advised the arbitrator, Burakoff and Theta's attorney that he was well aware of the lawsuit and would instruct his lawyers to take appropriate action. Chimento mentioned nothing about having sent the summons and complaint to his insurance carrier. Upon conclusion of the arbitration hearing, the arbitrator entered an award of $325,000 in favor of Staton, with liability allocated as follows: forty percent against Theta; forty percent against "FKC/Chimento"; and twenty percent against plaintiff.
On August 28, 2007, plaintiff settled her claims against Theta. On August 31, 2007, Burakoff filed and served on defendants a motion to confirm the arbitration award and enter final judgment thereon. Defendants did not respond to the motion or take any action to overturn the arbitration award. On September 20, 2007, the court entered an order confirming the arbitration award and entering final judgment against defendants in the amount of $130,000, plus $9,976.71 in pre-judgment interest. On September 24, 2007, Burakoff served a copy of the order and judgment on defendants.
Two months later, on November 6, 2007, defendants' attorney telephoned Burakoff and advised that he would file a motion to vacate the judgment. However, the motion was not filed until September 19, 2008, three hundred and sixty-four days after the judgment's entry, and it was only filed as to Chimento Construction and Chimento.*fn3 Defendants waived oral argument and consented to a disposition on the papers unless plaintiff filed opposition or made a request for oral argument. Although plaintiff filed opposition,*fn4 defendants did not thereafter seek oral argument.
In his certification submitted in support of the motion to vacate, Chimento did not deny receiving the summons and complaint or that he had actual knowledge of the claims against him and his companies prior to the entry of plaintiff's judgment. He also did not deny communicating with plaintiff's counsel, attending the arbitration, or receiving Theta's answer and cross-claim, motion to enter default judgment and the default judgment, plaintiff's motion to confirm the arbitration award and enter final judgment, or plaintiff's and Theta's judgments. Rather, he contended, as he does here, that McCaster was not authorized to accept service on his behalf, that the motion to vacate was not filed earlier due to his or his family's health issues, and that he believed FKC's insurance company was handling this matter. Defendants also claimed a meritorious defense.
The trial judge denied the motion on October 10, 2008, finding, incorrectly, that defendants "waited one year after default judgment was entered to do anything about the judgment[.]" The judge also found that the judgment was entered as a result of an arbitration award made at an arbitration, and that defendants "failed to show excusable neglect or any other basis provided under [Rule 4:50-1] for relief."
Defendants filed a motion for reconsideration. Except to disagree with the judge's decision, they offered no new information. They submitted no certifications or other competent evidence confirming Chimento's or his family members' alleged health issues, or that Chimento had, in fact, submitted the complaint to FKC's insurance company.
The notice of motion for reconsideration contained in defendants' appendix on appeal indicates that they again waived oral argument unless plaintiff filed opposition. Although plaintiff filed opposition, defendants did not thereafter seek oral argument.
On November 21, 2008, the judge denied the motion on the papers, finding that defendants failed to meet the standards for reconsideration. This appeal followed. On appeal, defendants contend that the judge abused his discretion in denying their motion because (1) they filed the motion within a reasonable time; (2) service of process was defective: (3) the arbitration award is invalid because it was based on multiple errors; and (4) they have a meritorious defense. They also contend that the judge committed reversible error by failing to grant oral argument.
We first address defendants' contention relating to the failure to grant oral argument. Defendants expressly waived oral argument for the original motion and the motion for reconsideration unless opposition was filed. Rule 1:6-2(d) permits a movant to condition a request for oral argument on the filing of opposition. However, "[i]f the movant merely reserves the right to request oral argument if the motion is contested, an affirmative request must then be made once opposition papers have been filed." Pressler, Current N.J. Court Rules, comment on R. 1:6-2 (2010) (citing Tretola v. Tretola, 389 N.J. Super. 15, 20 (App. Div. 2006)). No affirmative request was made here.
Even if an affirmative request for oral argument had been made for the motion for reconsideration, defendants offered nothing new to the motion judge which would warrant oral argument. The court may deny a request for oral argument of a substantive motion that is frivolous, repetitive, based on unsubstantiated allegations, or intended to harass. Kozak v. Kozak, 280 N.J. Super. 272, 274-76 (Ch. Div. 1994), certif. denied, 151 N.J. 73 (1997).
That said, we now address defendants' remaining contentions. Before doing so, we emphasize that plaintiff's judgment is not a default judgment. Rather, as the motion judge correctly recognized, the judgment confirms an arbitration award rendered after an arbitration. Chimento attended the arbitration, and thus, defendants should have filed a notice of rejection of the award and a demand for a trial de novo within the thirty-day period required by Rule 4:21A-6(b)(1). Because defendants had an opportunity to argue the merits of their case before the arbitrator, they were not denied their day in court, they received a fair hearing on the merits, and they cannot invoke Rule 4:50-1 to overturn the arbitration award and judgment entered thereon. Hartsfield v. Fantini, 149 N.J. 611, 617-18 (1997). Although we consider this dispositive, we continue our analysis.
Assuming the judgment was a default judgment, the decision to grant or deny a motion to open it "will be left undisturbed unless it represents a clear abuse of discretion." Hous. Auth. of Morristown v. Little, 135 N.J. 274, 283 (1994) (citations omitted). "[A] defendant seeking to reopen a default judgment because of excusable neglect must show that the failure to answer was excusable under the circumstances and that a meritorious defense is available." Id. at 284 (citing Marder v. Realty Const. Co., 84 N.J. Super. 313, 318 (App. Div.), aff'd, 43 N.J. 508 (1964). Applying these standards, we continue our analysis.
Defendants do not challenge the service of process on Chimento Construction. Rather, they claim to have timely filed the motion to vacate plaintiff's judgment because it was filed within one year of the judgment's entry. Alternatively, they contend that excusable neglect exists for their untimely filing, and that they have a meritorious defense. Also, although not specifically referring to Rule 4:50-1(d), Chimento contends that the judgment is void as to him because he was not personally served at his residence and McCaster was not authorized to accept service on his behalf.*fn5
We first address whether defective service renders the judgment void as to Chimento. Rule 4:4-4(a)(1) requires service of a summons and complaint on an individual either personally, or by leaving a copy . . . at the individual's dwelling place or usual place of abode with a competent member of the household of the age of 14 or over then residing therein, or by delivering a copy thereof to a person authorized by appointment or by law to receive service of process on the individual's behalf.
Rule 4:4-4(a)(4) permits alternative service on an individual proprietor provided the action arises out of a business in which the individual is engaged within this State . . . by delivering a copy of the summons and complaint to the individual . . . or . . . to a managing agent or general agent employed by the individual in such business[.]
Both FKC and Chimento Construction are corporations incorporated under the laws of New Jersey, not individual proprietorships. Accordingly, service of Chimento on McCaster at the companies' business address was defective. "However, not every defect in the manner in which process is served renders the judgment upon which the action is brought void and unenforceable." Rosa v. Araujo, 260 N.J. Super. 458, 462 (App. Div. 1992), certif. denied, 133 N.J. 434 (1993). As long as the defendant has been afforded due process, "technical violations of the rule concerning service of process do not defeat the court's jurisdiction." Id. at 463.
Also, a defendant may be estopped from challenging service of process by his or her conduct after being notified of the action, or where he or she had actual knowledge of the lawsuit and participated in it, or received notice of the judgment's entry. Wohlegmuth v. 560 Ocean Club, 302 N.J. Super. 306, 311-12 (App. Div. 1997); Rogan Equities, Inc. v. Santini, 289 N.J. Super. 95, 112-113 (App. Div.), certif. denied, 145 N.J. 375 (1996).
We are satisfied from our review of the record that Chimento received all due process protections and/or that estoppel applies. This case does not involve a defendant who was unaware of the pending litigation, of a request to enter default, or of entry of a judgment. It also does not involve a defendant who was deprived of an opportunity to defend. Rather, Chimento received the summons and complaint shortly after institution of suit and was well aware of the claims against him and his companies for nearly two years before the entry of the judgment confirming the arbitration award. He also participated in the action by communicating with plaintiff's counsel and appearing at the arbitration; he had actual notice of plaintiff's motions to enter default and to confirm the arbitration award and enter final judgment thereon. Accordingly, the technical violation of Rule 4:4-4(a)(1) did not defeat the court's jurisdiction over Chimento or render the judgment void as to him.
Even if the judgment was void due to defective service, Chimento had to file a motion to vacate it within a reasonable time. "[A]lthough a claim of voidness of the judgment under section (d) of R. 4:50-1 is not subject to the one-year limitation applicable to sections (a), (b), and (c) imposed by R. 4:50-2, that rule nevertheless requires all motions under R. 4:50-1 to be brought within a reasonable time." Bascom v. Chase Manhattan Bank, 363 N.J. Super. 334, 340 (App. Div. 2003), certif. denied, 178 N.J. 453, certif. denied, 542 U.S. 938, 124 S.Ct. 2911, 159 L.Ed. 2d (2004); see also Rogan Equities, supra, 289 N.J. Super. at 114. "[T]he reasonable-time requirement applies to judgments alleged to be void because of a failure of in personam jurisdiction." Bascom, supra, 363 N.J. Super. at 340; see also Wohlegmuth, supra, 302 N.J. Super. at 312; Last, supra, 227 N.J. Super. at 606-07.
Also, a motion to vacate a judgment based on excusable neglect must be made "within a reasonable time" and "not more than one year after the judgment, order or proceeding was entered or taken." R. 4:50-2. The one-year time limit is merely an outer time limit. The real inquiry is whether the motion was filed within a reasonable time under the totality of the circumstances. See Pressler, Current N.J. Court Rules, comment on R. 4:50-2 (2010). We are satisfied that the lapse of three hundred and sixty four days and, at the very least, the lapse of more than ten months after defendants learned of the judgment, was not reasonable under the totality of circumstances in this case. See Jackson Constr. Co. v. Ocean Twp., 182 N.J. Super. 148, 152, 162-63 (Tax Ct. 1981) (holding that a delay of nine months was unreasonable under the circumstances).
Even if defendants had timely filed that motion, "'[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.'" Morales v. Santiago, 217 N.J. Super. 496, 501 (App. Div. 1987) (alteration in original) (quoting Marder, supra, 84 N.J. Super. at 318). Excusable neglect is neglect "which might have been the act of a reasonably prudent person under the same circumstances." Tradesman Nat'l Bank & Trust Co. v. Cummings, 38 N.J. Super. 1, 5 (App. Div. 1955). Carelessness may be excusable when attributable to an honest mistake which is compatible with due diligence or reasonable prudence. Mancini v. EDS, 132 N.J. 330, 335 (1993). Further, corporations are held to a somewhat higher standard because, "being entities that should expect to be sued from time to time, [they] have an obligation to institute procedures within their organization for receiving and responding to law suits." Davis v. DND/Fioreo, Inc., 317 N.J. Super. 92, 98 (App. Div. 1998).
Defendants argue that Chimento's and his family's alleged health issues, and Chimento's belief that FKC's insurance company was handling the matter constitute excusable neglect. However, Chimento's unspecified health issue claim lacks competent evidential support. To be sure, Chimento never mentioned health concerns to anyone until the motion to vacate, and his actions during the course of this matter contradict that an illness, be it his or a family member's, interfered with his ability to defend or to timely file a motion to vacate.
We also reject Chimento's claim that he believed FKC's insurance company was handling the matter. The record lacks competent evidence showing that Chimento actually notified FKC's insurance company about this litigation. Even if such evidence existed, when Chimento attended the arbitration (which occurred after he knew of plaintiff's request to enter default and Theta's default and a default judgment against FKC), he knew or should have known that the insurance company was not defending the claim. Chimento failed to exercise due diligence thereafter to determine why the insurance company was not protecting defendants' interests.
Defendants further contend that relief is warranted under the catchall provision of Rule 4:50-1(f). We disagree. Our Supreme Court has stated that "[b]ecause of the importance that we attach to the finality of judgments, relief under Rule 4:50-1(f) is available only when 'truly exceptional circumstances are present.'" Hous. Auth. Of Morristown, supra, 135 N.J. at 286 (quoting Baumann v. Marinaro, 95 N.J. 380, 395 (1984)). No such circumstances exist here.
Having determined that defendants failed to show excusable neglect, we need not address their claim of a meritorious defense. Marder, supra, 84 N.J. Super. at 318.