July 16, 2010
SHORELINE ELECTRICAL CONTRACTORS, INC., PLAINTIFF-RESPONDENT,
RUSTIN R. HAFEN, DEFENDANT-APPELLANT.
On appeal from Superior Court of New Jersey, Law Division, Special Civil Part, Monmouth County, Docket No. DC-006722-08.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted June 1, 2010
Before Judges Reisner, Yannotti and Chambers.
Defendant Rustin R. Hafen appeals from the default judgment entered against him on November 17, 2008, and from the orders of May 1, 2009, and August 17, 2009, denying his motions to vacate the default judgment. Given the "great liberality" accorded such motions, Marder v. Realty Construction Co., 84 N.J. Super. 313, 319 (App. Div.), aff'd, 43 N.J. 508 (1964), we reverse and remand in order that defendant may be allowed to file an answer and the case may proceed to be heard on the merits.
These are the salient facts. On March 19, 2008, plaintiff Shoreline Electrical Contractors, Inc. filed an action in the Special Civil Part against defendant for breach of contract. The complaint alleged that defendant had retained plaintiff to perform certain electrical work at the agreed upon price of $17,411.*fn1 Plaintiff contended that it had performed all of the work and that a balance of $1,500 was due and owing. In addition, plaintiff sought attorney's fees and costs for bringing the lawsuit as permitted by the terms of the contract.
Although defendant was served on April 18, 2008, with the summons and complaint by mail in accordance with Rule 6:2-3(d), he failed to file an answer within the thirty-five day period required by Rule 6:3-1. Accordingly, default was entered against him on May 23, 2008, by the clerk's office, as permitted by Rule 6:6-2. Upon application of plaintiff, a default judgment was entered against defendant on November 17, 2008, in the sum of $2,323.50, representing the balance due on the contract plus attorney's fees and costs. The record does not indicate whether plaintiff provided defendant with notice of the entry of judgment as required by Rule 6:6-3(e).*fn2
Plaintiff's counsel sent an information subpoena to defendant dated March 6, 2009. Shortly thereafter, on March 13, 2009, defendant answered the information subpoena and attempted to file an answer with the court. He also filed a motion to vacate the default judgment. In the motion papers, defendant stated that plaintiff had not completed the work under the contract and explained the various aspects of the work that had not been done. He also stated that portions of the work did not meet New Jersey code requirements and industry standards. The trial judge denied the motion by order dated May 1, 2009, stating that "[t]here was no appearance by the defendant at the hearing and no showing of excusable neglect or a meritorious defense."
On June 24, 2009, defendant filed his second motion to vacate the default judgment. Defendant requested oral argument. In the motion papers, defendant explained that his "[i]nitial 'Answer' was miss filed [sic] by court with initial 'motion to vacate default judgment' (dated 13 March 2009) and 'Answer' was not processed by the court." This statement apparently refers to the answer he had sent to the court at the time of his first motion to vacate the default judgment. He further stated that he had not been advised of a court hearing for the motion and did not learn of the court's order denying the motion until he received a letter dated May 21, 2009, from plaintiff's counsel.
In his second motion to vacate the default judgment, defendant developed in further detail his contention that some of the contract work had not been completed and that other portions of the work did not meet industry standards or the requirements of the New Jersey electrical code. He provided to the court a detailed letter setting forth specifically the work that had not been completed or had been unsatisfactorily performed. Defendant further stated that he had made good faith attempts to settle with plaintiff but those efforts had been rejected.
At oral argument held on the motion on August 14, 2009, in response to the court's question why he had not filed a timely answer, defendant explained that he had been seeking legal counsel and was attempting to negotiate the dispute.*fn3 Further, he was attempting to get the work completed so that he could figure out what was owed and what was not. Having now had the work completed, he maintained that he overpaid plaintiff. It appears from the discussion between defendant and the court on the record that defendant had not fully understood the consequences of failing to file a timely answer.
The trial judge found that defendant had failed to show excusable neglect and a meritorious defense and, by order dated August 17, 2009, denied his motion to vacate the default judgment. Defendant filed this appeal on September 15, 2009.
Plaintiff raises various procedural arguments to defeat defendant's appeal. It contends that the motion filed on June 24, 2009, was effectively a motion for reconsideration and was filed outside the twenty days allowed under Rule 4:49-2 and Rule 6:6-1. We will not consider this argument because the record does not indicate it was raised below and it is not an error that is "clearly capable of producing an unjust result." R. 2:10-2. Further, the twenty days runs from the service of the order or judgment, Rule 4:49-2, and the record is silent on exactly when defendant was served with the order of May 1, 2009. We also reject plaintiff's argument that defendant's appeal is untimely under Rule 2:4-1(a), since his appeal of the order entered on August 14, 2009, was filed within forty-five days of the entry of that order in accordance with Rule 2:4-1(a).
Our review in this case is governed by the abuse of discretion standard. Cummings v. Bahr, 295 N.J. Super. 374, 389 (App. Div. 1996). A motion for reconsideration is properly granted "when the court's decision is based on plainly incorrect reasoning or when the court failed to consider evidence or there is good reason for it to reconsider new information." Pressler, Current N.J. Court Rules, comment 2 on R. 4:49-2 (2010).
Under New Jersey law, motions to vacate default judgments are treated with "'great liberality'" and courts "should tolerate 'every reasonable ground for indulgence'" with a view towards opening default judgments in order "'that a just result is reached.'" Mancini v. EDS, 132 N.J. 330, 334 (1993) (quoting Marder v. Realty Constr. Co., supra, 84 N.J. Super. at 319). "A court's liberality in vacating default judgments is justified, since a default judgment is based on only one side's presentation of the evidence without due consideration to any countervailing evidence or point of view, and, thus, may not be a fair resolution of the dispute." Nowosleska v. Steele, 400 N.J. Super. 297, 303 (App. Div. 2008). As a result, any doubt about whether to vacate the default judgment will "be resolved in favor of the parties seeking relief." Mancini v. EDS, supra, 132 N.J. at 334.
To vacate a default judgment, the moving party need merely show excusable neglect and a meritorious defense. Marder v. Realty Constr. Co., supra, 84 N.J. Super. at 318. It appears from the record that defendant did not understand the necessity of filing a timely answer. He explained that his delay in taking action was due to efforts to ascertain exactly how much he owed plaintiff, to retain counsel, and then to settle the dispute. Indeed, the record contains a letter dated July 29, 2008, after the complaint was filed, sent by an attorney on behalf of defendant to plaintiff's counsel making an offer to settle the litigation. Further, defendant presented a meritorious defense, setting forth in detail numerous deficiencies in plaintiff's performance of the contract. Defendant was not required to prove his defenses on the motion to vacate the default; it was sufficient that he articulated reasons that if proven would constitute a valid defense. See T & S Painting & Maint., Inc. v. Baker Residential, 333 N.J. Super. 189, 193 (App. Div. 2000) (reversing an order denying a motion to vacate a default judgment in light of defendant's "questionable service" and a "colorably meritorious defense").
Given the "great liberality" in which a trial court must consider a motion to vacate a default judgment, Marder v. Realty Constr. Co., supra, 84 N.J. Super. at 319, once the trial judge had an opportunity to consider defendant's meritorious defenses and his explanation for not answering the complaint, it was a mistaken exercise of discretion to deny the motion to vacate the default judgment and then to deny the motion for reconsideration.
Reversed and remanded.