April 27, 2010
CLAUDINA BRIZUELA, PLAINTIFF-RESPONDENT,
VICTOR ALONSO, DEFENDANT-APPELLANT.
On appeal from Superior Court of New Jersey, Chancery Division, Family Part, Middlesex County, Docket No. FM-12-674-07.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted December 1, 2009
Before Judges Carchman and Ashrafi.
Defendant Victor Alonso appeals denial of his motion to vacate a default judgment that equitably distributed property he jointly owned with plaintiff Claudina Brizuela. We reverse and remand for reconsideration and a limited proof hearing.
The relevant facts are contained in Brizuela's amended complaint for annulment or divorce and the motion papers filed in support of and in opposition to Alonso's motion to vacate the judgment.
Brizuela and Alonso were married in August 1992. A few months after the marriage ceremony, Brizuela learned from a lawyer that Alonso was not yet formally divorced from a previous marriage. When confronted, Alonso said the previous marriage was only to obtain legal residency status for the woman he had married.
Brizuela and Alonso resided together as husband and wife for fourteen years. No children were born of the relationship or are otherwise involved.
In 1993, they purchased together the marital home located in Metuchen, New Jersey. Although no documents in the record establish the specifics, it appears that they obtained a mortgage loan to finance the $87,000 purchase price.
In 1998, they purchased for $252,000 another property located in East Brunswick, New Jersey, the former home of Alonso's parents. The deed named Brizuela, Alonso, and Alonso's brother, Randall Bratton, as grantees. Brizuela contends that Bratton did not contribute any funds toward the purchase but was included on the deed at the last-minute urging of Alonso to help his brother's credit rating. Alonso asserts that he considers the property his inheritance, and his parents wanted Bratton to be part owner. A mortgage on the property secured an original debt of $201,600 and named all three owners.
In 2003, the parties refinanced the mortgage loan on the East Brunswick property in the amount of $275,000. All three owners are named in the mortgage documents. According to Alonso, proceeds from the refinancing were used to pay off the existing mortgage balance of about $65,000 on the marital home so that the Metuchen property was thereafter owned by Brizuela and Alonso free and clear of debt.
In 2006, the parties separated. Each filed a domestic violence complaint against the other, and later, both complaints were dismissed voluntarily. In September 2006, Brizuela filed her complaint for annulment or divorce. Alonso retained attorney Steven Segalas, who filed an answer on his behalf. In 2007, Brizuela amended her complaint to add Bratton as a party. Bratton was served but never filed an answer, and default was entered against him. He is not a party to this appeal.
In pretrial proceedings, Brizuela alleged that Alonso was uncooperative in providing discovery and otherwise caused her delay and unnecessary expenses. A judge of the Family Part conducted a case management conference and entered an order dated January 8, 2008, requiring the parties to exchange responsive answers to discovery by February 1, 2008. The order also authorized either party to seek remedies in the event of continuing non-compliance with discovery demands.
At the next scheduled case management conference on February 5, 2008, Brizuela's attorney reported that Alonso had not provided discovery as ordered by the court. Segalas requested leave to withdraw as Alonso's attorney, apparently telling the judge that Alonso was not maintaining contact with him or paying him.*fn1 The judge denied the request of Segalas to withdraw from the case.
A few weeks later, Brizuela moved to strike Alonso's answer for discovery violation and to enter default against Alonso. The motion papers were served by mail on Segalas and also to an address at which Brizuela believed Alonso was personally receiving his mail. No opposition was filed by Segalas, or otherwise by Alonso, and the court granted the motion and entered default against Alonso on March 26, 2008.
On April 10, 2008, Brizuela served notice on Segalas alone that she would seek default judgment on May 1, 2008. In accordance with Rule 5:5-10, Brizuela also served a notice of equitable distribution, listing the properties to be distributed as the marital home in Metuchen, with a value of $200,000 and no debt, and the East Brunswick property, with a value of $440,000 and a debt of $150,000. In her proposal for equitable distribution, Brizuela stated she would take sole title to the marital home. As to the East Brunswick property, the parties would sell that property, Brizuela would be paid $25,000 from the proceeds of sale, and Alonso and his brother could split the remainder as they saw fit. Alonso did not file any opposition to the proposed equitable distribution.
On May 1, 2008, the court held a hearing on Brizuela's request for entry of default judgment. Neither Segalas nor Alonso attended the hearing. The court heard abbreviated testimony from Brizuela and approved her proposal for equitable distribution. Immediately at the conclusion of the hearing, Segalas appeared in the courtroom to renew his request to be relieved as Alonso's attorney. The court granted his motion.
The court entered final judgment dated May 1, 2008, declaring that the parties were not married and awarding the Metuchen home to Brizuela free and clear of debt. The court ordered Alonso to issue a quitclaim deed to Brizuela for the Metuchen property and further authorized Brizuela to execute such a deed as attorney-in-fact if Alonso did not do so by the end of the month. The judgment also ordered Alonso and Bratton to execute documents to list the East Brunswick property for sale and granted Brizuela $25,000 from the proceeds of sale.
In the next several months, Alonso and Bratton did not take any action to sell the East Brunswick property. On Brizuela's unopposed motion, the court entered an order dated August 29, 2008, appointing Brizuela attorney-in-fact to sell that property.
Alonso then retained a new attorney and filed a motion to vacate the default judgment of May 1, 2008, and to reconsider the order of August 29, 2008. By order of October 24, 2008, the court denied Alonso's request to vacate the final judgment, but it granted his motion to vacate the August 29 order appointing Brizuela attorney-in-fact for sale of the property.
On November 21, 2008, the court heard further argument and determined that it would appoint attorney George Gussis to sell the East Brunswick property. Alonso filed a notice of appeal from the court's order of October 24, 2008, denying his motion to vacate the default judgment under Rule 4:50-1.
In relevant part, Rule 4:50-1 states:
On motion, with briefs, and upon such terms as are just, the court may relieve a party . . . 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; . . . or (f) any other reason justifying relief from the operation of the judgment or order.
Alonso argues that the judge of the Family Part erred because:
(1) Alonso's failure to participate in the proof hearing of May 1, 2008, was the result of excusable neglect, (2) Brizuela presented fraudulent evidence regarding the net equitable value of the two properties, and (3) the judgment was otherwise unjust. We reject the first two points but conclude, under subsection (f) of the rule, that the trial court should review accurate evidence of the equity the parties had in the two properties and reconsider equitable distribution.
Rule 4:50-1 is applicable to motions to vacate judgments in the Family Part. Eaton v. Grau, 368 N.J. Super. 215, 222 (App. Div. 2004). On appeal, a ruling pursuant to that rule is subject to the abuse of discretion standard of review. Hous. Auth. of Morristown v. Little, 135 N.J. 274, 283-84 (1994); Del Vecchio v. Hemberger, 388 N.J. Super. 179, 186-87 (App. Div. 2006).
Although the rule should be used sparingly to revisit judgments of the court, Hous. Auth., supra, 135 N.J. at 283-84; Hodgson v. Applegate, 31 N.J. 29, 37 (1959), motions to vacate default judgments, as opposed to judgments entered after contested litigation, are "viewed with great liberality, and every reasonable ground for indulgence is tolerated to the end that a just result is reached[,]" Marder v. Realty Const. Co., 84 N.J. Super. 313, 319 (App. Div.), aff'd, 43 N.J. 508 (1964). Alonso argues that he had a legitimate excuse for failing to file opposition or appear at the proof hearing. He asserts he did not receive adequate notice of the hearing, and he was caring for his dying mother at that time.
"Excusable neglect" under Rule 4:50-1(a) has been defined as carelessness "attributable to an honest mistake that is compatible with due diligence or reasonable prudence." Mancini v. EDS, 132 N.J. 330, 335 (1993). Here, Alonso's neglect of the litigation was due to his own failure to maintain communication with his attorney rather than the fault of anyone else to provide him with adequate notice. Contrary to Alonso's contentions, Brizuela and her attorney complied with the requirements of Rule 1:5-2 by serving Segalas with notices of her motion to strike Alonso's answer and to enter default, and subsequently, to enter default judgment with equitable distribution. They were not required to search for Alonso personally and to ensure that he was aware of the proceedings. Furthermore, although the record does not contain a record of the representations Segalas made to the court when seeking to withdraw as Alonso's attorney, it appears that Segalas had attempted unsuccessfully to communicate with Alonso and that Alonso was uncooperative and neglected the litigation.
Concerning the death of Alonso's mother on May 3, 2008, two days after entry of the final judgment, that family responsibility might explain Alonso's inaction on the days immediately near the time of the proof hearing and judgment, but it does not explain why he failed to communicate with Segalas for months or ask him to seek an adjournment of the proof hearing.
The judge of the Family Part did not abuse his discretion in declining to vacate the judgment on the ground of excusable neglect under Rule 4:50-1(a).
Next, Alonso contends that Brizuela made fraudulent misrepresentations in placing a value on the marital home and the parties' equity in the East Brunswick property. Regarding the marital home, he argues that Brizuela listed its value as $225,000 on her Case Information Statement filed in 2007 but, without explanation, attributed a lesser value of $200,000 to that property in her proposal for equitable relief. The difference in the figures, however, does not prove misrepresentation. We do not know whether a decline in the real estate market may have been the reason for the difference, but we cannot attribute fraudulent intent to Brizuela with respect to the value of the marital home.
Regarding the East Brunswick property, Alonso does not dispute the listed value of $440,000, but he alleges that Brizuela knowingly misrepresented the debt owed on that property when she listed it as $150,000. Alonso argues that Brizuela had executed the 2003 mortgage documents when the property was refinanced with a loan of $275,000, and so, she must have known that much more than $150,000 was still owed. He attributes purposeful intent to Brizuela in overstating the equity in the East Brunswick property while understating the equity in the marital home to make her proposed distribution seem more balanced and fair.
Brizuela responds that she was not involved with management of the East Brunswick property. Having forgotten her execution of the 2003 mortgage documents for refinancing, she estimated $150,000 as the balance due on the original mortgage loan of about $200,000 obtained ten years earlier, in 1998.
On this record, we find no proof of fraud or intentional misrepresentation. Alonso does not dispute that Brizuela had limited involvement with the East Brunswick property, and her explanation is plausible to refute purposeful misrepresentation. Also, it was his delinquency in the discovery process that may have led her to an incorrect estimate of the balance due on the East Brunswick mortgage. We conclude the trial court did not abuse its discretion in rejecting Alonso's allegations of fraud under Rule 4:50-1(c).
Having found no ground to vacate the final judgment under subsections (a) and (c) of Rule 4:50-1, we next consider subsection (f), the catchall provision that gives trial courts discretion to vacate a judgment for "any other reason justifying relief from the operation of the judgment." The Supreme Court has laid out the broad contours of subsection (f):
[N]o categorization can be made of the situations which would warrant redress under subsection (f). . . . [T]he very essence of (f) is its capacity for relief in exceptional situations. And in such exceptional cases its boundaries are as expansive as the need to achieve equity and justice. [Hous. Auth., supra, 135 N.J. at 286 (quoting Court Inv. Co. v. Perillo, 48 N.J. 334, 341 (1966)).]
See also Mancini, supra, 132 N.J. at 336; Baumann v. Marinaro, 95 N.J. 380, 395 (1984); Palko v. Palko, 73 N.J. 395, 398 (1977); Hodgson, supra, 31 N.J. at 41. In applying subsection (f), courts must focus on equitable considerations to avoid an unjust result. Hous. Auth., supra, 135 N.J. at 294.
At the proof hearing, the trial court did not examine the figures provided by Brizuela for the two properties, trusting their accuracy and relying upon lack of opposition from Alonso. However, Brizuela had substantially overstated, whether inadvertently or not, the equity available for distribution from the East Brunswick property and thus justified her own claim for an additional $25,000 from the proceeds of its sale. Rather than about $290,000 in equity - $440,000 less the debt of $150,000 listed in Brizuela's notice of equitable distribution - the true amount of available equity for distribution was about $168,000 - $440,000 less the actual debt of $272,000. The difference is significant.
In Morales v. Santiago, 217 N.J. Super. 496, 504 (App. Div. 1987), we vacated a final judgment entered by default because the plaintiff had not presented adequate proof to support the large damage award she sought and obtained. Our "primary concern" was that the defendants "suffered a substantial judgment that appears to be undeserved on the merits." Id. at 505.
Similarly in this case, Brizuela received equitable distribution of $225,000, by her own figures, through sole ownership of the marital home without debt and an additional $25,000 from anticipated sale proceeds of the East Brunswick property. On the other hand, once the debt on the East Brunswick property is correctly noted, Alonso is left with about $71,500 in equitable distribution - the $168,000 equity in the East Brunswick property less $25,000 to Brizuela, then divided by two for Alonso and Bratton. On its face, the disparity in Alonso's share of marital property compared to Brizuela's $225,000 does not seem equitable in the absence of specific findings by the trial court. Contrary to figures presented in Alonso's briefs and motion papers, a fifty-fifty split of the property is not necessary for equitable distribution. See Rothman v. Rothman, 65 N.J. 219, 232 n.6 (1974); Wasserman v. Schwartz, 364 N.J. Super. 399, 410-11 (App. Div. 2001). But a significant disparity should be noted and justified in the court's decision.
Regarding motions to vacate judgments, we have also said previously:
Rule 4:50-1 is intended to reconcile the judicial efficiency resulting from treating judgments as final with the equitable principle of permitting courts to avoid injustice in a particular case. . . .
[S]ubsection (f) is to be used "sparingly" and only "in situations in which, were it not applied, a grave injustice would occur." [First Morris Bank & Trust v. Roland Offset Serv., Inc., 357 N.J. Super. 68, 71 (App. Div.) (quoting Hous. Auth., supra, 135 N.J. at 289), certif. denied, 176 N.J. 429 (2003).]
Here, it is also relevant that the parties allegedly paid off the mortgage loan on the marital home by using the extra loan funds from refinancing the East Brunswick property. The fact that her home was free of debt when she sought sole ownership should have reminded Brizuela of the greater mortgage loan she and Alonso had obtained on the East Brunswick property for that purpose.
If Brizuela were entirely blameless in this matter, we might debate whether the disparity in the division of the marital property is a "grave injustice" considering Alonso's failure to participate in the litigation and to make timely response to Brizuela's applications. While we do not attribute fraudulent intent to Brizuela, her substantial overstatement of the equity available to Alonso in the East Brunswick property, and the concomitant benefit she received by gaining sole ownership of the marital home, resulted from inaccurate information that she listed in her proposal for equitable distribution. Under these circumstances, her retention of a disparate share in distribution appears to be a grave injustice. Alonso should have another opportunity to prove the accuracy of his contentions regarding the value of the two properties so that the court can more equitably determine appropriate distribution.
We reverse the order of October 24, 2008, denying Alonso's motion to vacate the final judgment. We vacate so much of that judgment as determined the division of the two properties. We remand to the Family Part for reconsideration of equitable distribution of the two properties, taking into account the parties' actual equity in the properties.
Reversed and remanded. We do not retain jurisdiction.