July 22, 2010
HILLSIDE GOLF, INC., FAIRFIELD DELTA, INC., AND GURMAIL SINGH, PLAINTIFFS-RESPONDENTS,
GINO INN, INC., DEFENDANT, AND GINO E. INNARELLA, AND RACHEL INNARELLA, DEFENDANTS-APPELLANTS.
On appeal from the Superior Court of New Jersey, Law Division, Morris County, L-2751-05.
The opinion of the court was delivered by: R. B. Coleman, J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued July 8, 2009
Before Judges R. B. Coleman and Graves.
Defendants Gino E. Innarella and Rachel Innarella appeal from the March 28, 2005 order denying their motion to vacate final default judgment and for leave to file an answer out of time.*fn1 The motion judge determined that the proofs submitted by plaintiffs established that the summons and complaint were properly served and that "[defendants'] active choice not to serve an answer in this matter does not constitute excusable neglect." We affirm the order from which defendants appeal.
On September 28, 2005, plaintiffs Hillside Golf, Inc., Fairfield Delta, Inc., and Gurmail Singh, filed a complaint against defendants Gino Inn, Inc., Gino E. Innarella, and Rachel Innarella, alleging that defendants were responsible for the environmental remediation of property located at 37 Clinton Road, in Fairfield, the Property, because an environmental investigation of the Property revealed a gasoline or petroleum contamination of the soils and surface groundwater pre-dating the Agreement and Lease. It is undisputed that plaintiffs successfully served defendant Gino Inn, Inc. with the summons and complaint through its agent on December 21, 2005; however, Gino E. Innarella and Rachel Innarella (the Innarellas), the principals of Gino Inn, assert that to the best of their knowledge and recollection they were never personally served with the summons and complaint in this civil action.
Plaintiffs' attorney certified that: (a) "several attempts were necessary to serve" the Innarellas individually; (b) the Summons and Complaint were first sent via New Jersey Lawyer Service on October 3, 2005 but were refused and returned; (c) service was resent via United States certified mail, return receipt requested but was unclaimed and returned; and, (d) defendants were personally served on December 29, 2005 at their home address by a private server, Guaranteed Subpoena.
The Affidavits of Service (Affidavits) returned by the private server reflect that the Innarellas were successfully served at 26 Clinton Avenue, Fairfield, New Jersey, by Gino Innarella's acceptance of the Summons and Complaint on his own behalf and on behalf of his wife, Rachel Innarella, on December 28, 2005 at 4:40 p.m. The Affidavits describe Mr. Inarella as a white male with grey hair between fifty-one and sixty-five years-old, between five feet, four inches (5'4") and five feet, eight inches (5'8") tall, and weighing over 200 pounds.
In contrast to the Affidavits of Service, Mr. Innarella certified in support of the Innarellas' motion to vacate default judgment that he: (a) is fifty-eight years old; (b) has dark brown hair; (c) has never dyed his hair; (d) is approximately five feet, eight inches tall (5'8"); (e) weighs approximately 170 pounds; (f) has never weighed 200 or nearly 200 pounds; (g) resides at 26 Clinton Road, Fairfield, New Jersey; (h) believes Fairfield does not contain a street named Clinton Avenue; and, (i) he never received service of process in this matter. The Innarellas, as principals of Gino Inn, Inc., acknowledge their awareness of plaintiffs' Summons and Complaint, but according to the certification of Mr. Innarella, "our attorney . . . advised that neither of us had to [a]nswer the [c]omplaint."
Mr. Innarella's certification stated further that their attorney advised them that they were not properly served, and that "for tactical and legal reasons, neither my wife nor I should take action to defend Gino Inn, Inc. . . . and that our best bet was to defend the personal allegations of the complaint when properly served." The Innarellas never filed an answer nor otherwise defended the complaint.
Plaintiffs' requests for entry of default against each of the defendants for their failure to file an Answer or otherwise defend pursuant to Rule 4:43-1 were filed in the Law Division on February 3, 2006. Plaintiffs' counsel certified that a copy of the filed Entry of Default was served on each defendant by ordinary mail and by certified mail, return receipt requested, and on June 6, 2006, plaintiffs requested final default judgment against defendants pursuant to Rule 4:43-2. Thereafter, on June 15, 2006, the court entered a final judgment in the amount of $609,340.62 against Gino Inn, Inc. Final default judgment was not then entered against the Innarellas individually due to plaintiffs' failure to provide (a) affidavits of non-military service, (b) support for entitlement to treble damages, and (c) support for entitlement to counsel fees.
Coincidental to plaintiffs' request for default and for default judgment, the court had issued a Dismissal Notice dated June 10, 2006, which notified plaintiffs that on August 9, 2006, the court would dismiss Gino Inn, Inc. for lack of prosecution, unless action was then taken pursuant to Rule 1:13-7 or Rule 4:43-2. A similar notice dated June 16, 2006, was subsequently sent to plaintiffs respecting a prospective dismissal of the action against the Innarellas on August 15, 2006, unless action required under the rules was taken. By letter dated August 14, 2006, plaintiffs again requested the entry of final default judgment against the Innarellas, and this time they provided the necessary affidavits of non-military service.
Final default judgment was entered on September 1, 2006. The order stated in relevant part that plaintiffs proved a loss of "$10,068.40 for environmental consulting, $30,680.05 for NJEP oversight costs and $554,600 for future remediation, and could "submit a revised [o]rder setting forth prejudgment interest and costs based on a loss of $567,737.05." The court denied plaintiffs' request for treble damages and legal fees under N.J.S.A. 56:8-2. The September 1, 2006 order was mailed to the Innarellas via United States certified mail at 26 Clinton Avenue, Fairfield; it was "refused" and returned to sender. On September 26, 2006, a revised order of final judgment by default reflecting prejudgment interest and costs was entered against the Innarellas in the sum of $692,756.10.
The Innarellas contend that they did not learn of the default judgment until they attempted to re-mortgage their personal residence. The Innarellas filed and re-filed their motion to vacate default judgment, arguing that the default judgment is void. They argue that they were not personally served and that default judgment was obtained more than six months after default was obtained without the filing of the required motions under Rule 4:43-2(d). They further argue that good cause existed to vacate default judgment under Rule 4:50-1(f).
The trial court denied defendants' motions, reasoning that the defendants had been properly served with the complaint and summons. The court further reasoned that the Innarellas had notice of default and the subsequent final default judgment; that they "made an admittedly informed decision not to file an answer," attempted to characterize a Rule 4:50-1(a) argument of failure to answer due to "excusable neglect" as a Rule 4:50-1(f) argument justifying relief for "any other reason"; and that "defendants only decided to defend this case, more than a year after the entry of judgment, . . . when it became difficult to obtain a mortgage."
The grant of a motion for relief from judgment pursuant to Rule 4:50-1 lies within "the sound discretion of the trial court, whose determination will be left undisturbed unless it results from a clear abuse of discretion." Pressler, Current N.J. Court Rules, comment 1 on R. 4:50-1 (2010). See also Hous. Auth. of the Town of Morristown v. Little, 135 N.J. 274, 283-84 (1994). However, judgments obtained by default are "more vulnerable to being set aside[,]" Morales v. Santiago, 217 N.J. Super. 496, 505 (App. Div. 1987), and 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 Constr. Co., 84 N.J. Super. 313, 319 (App. Div.), aff'd, 43 N.J. 508 (1964). See also Hous. Auth. of the Town of Morristown, supra, 135 N.J. at 283-84; Mancini v. EDS ex rel. N.J. Auto Full Ins. Underwriting Assoc., 132 N.J. 330, 334 (1993).
"Nevertheless a default judgment will not be disturbed unless the failure to answer or otherwise appear and defend was excusable under the circumstances and unless defendant has a meritorious defense; either to the cause of action itself, or, if liability is not disputed, to the quantum of damages assessed." Pressler, Current N.J. Court Rules, comment 4.1 on R. 4:50-1. See also Marder, supra, 84 N.J. Super. at 319; Mancini, supra, 132 N.J. at 334. The party seeking to vacate default has the "overall burden of demonstrating that its failure to answer or otherwise appear and defend should be excused." Jameson v. Great Atl. and Pac. Tea Co., 363 N.J. Super. 419, 425-26 (App. Div. 2003), certif. denied, 179 N.J. 309 (2004).
A party seeking relief under Rule 4:50-1(a), (b) or (c) must do so within one year "after the judgment, order or proceeding was entered." Palko v. Palko, 73 N.J. 395, 397 (1977) (citing R. 4:50-2). However, the one-year time bar does not apply to motions for relief from judgment made under 4:50-1(d) or 4:50-1(f). Ibid.; Berger v. Paterson Veterans Taxi Service, 244 N.J. Super. 200, 205-06 (App. Div. 1990); Palko, supra, 73 N.J. at 397. Applications for relief under those provisions must be made "within a reasonable time." R. 4:50-2.
The defendants argue that the entry of default judgment against them was void because (1) they never received proper service of the complaint, and (2) plaintiffs requested final default judgment more than six months after the entry of default and failed to file and serve a notice of motion in accordance with Rules 4:43-2(d) and 1:6.
As to the first argument, "when a court is satisfied on a R. 4:50-1(d) application that initial service of process was so defective that the judgment is void for want of in personam jurisdiction, the resulting void default judgment must ordinarily be set aside." Berger, supra, 244 N.J. Super. at 205. See also Jameson, supra, 363 N.J. Super. at 425 (default judgment is void "when a substantial deviation from service of process rules has occurred, casting reasonable doubt on proper notice."). If a judgment is void because of defective service of process, the movant is not required to present a meritorious defense in order to vacate default judgment. Pressler, Current N.J. Court Rules, comment 4.1 on R. 4:50-1 (citing Peralta v. Heights Med. Ctr., Inc., 485 U.S. 80, 108 S.Ct. 896, 99 L.Ed. 2d 75 (1988)). Even where a defendant has actual knowledge of an action, "default judgment will be set aside for a substantial deviation from the service of process rules." Sobel v. Long Island Entm't Prods., Inc., 329 N.J. Super. 285, 293 (App. Div. 2000).
Pursuant to Rule 4:4-4(a)(1):
The primary method of obtaining in personam jurisdiction over a defendant in this State is by causing the summons and complaint to be personally served within this State pursuant to [Rule] 4:4-3 as follows: . . . by delivering a copy of the summons and complaint to the individual personally . . . .
"Summonses shall be served, together with a copy of the complaint, by the sheriff, or by a person specially appointed by the court for that purpose, or by plaintiff's attorney or the attorney's agent, or by any other competent adult not having a direct interest in the litigation." Rule 4:4-3(a). Where service is performed by someone "other than a sheriff or a court appointee, proof of service shall be" rendered by affidavit which "shall include the facts of the affiant's diligent inquiry regarding defendant's place of abode, business or employment."
It is well settled that a sheriff's return of service creates a "presumption that the facts recited therein are true[,]" Garley v. Waddington, 177 N.J. Super. 173, 180 (App. Div. 1981), and that presumption may only be rebutted by clear and convincing evidence that the return is false. See Goldfarb v. Roeger, 54 N.J. Super. 85, 89-90 (App. Div. 1959) (noting that generally the uncorroborated testimony of the defendant is not sufficient to impeach the return); Jameson, supra, 363 N.J. Super. at 426 (observing that in order for the sheriff's return to be established as false, clear and convincing evidence must be submitted).
The 2000 amendment to Rule 4:4-3 "eliminated the requirement that the sheriff must first attempt service before others may do so at the plaintiff's attorney's behest[.]" Pressler, N.J. Court Rules, comment on R. 4:4-7 (2002). Now, "[p]laintiff's attorney may make the choice between sheriff's service . . . or personal service effected by plaintiff's attorney, the attorney's agent, or any competent adult not having a direct interest in the litigation." Pressler, Current N.J. Court Rules, comment on R. 4:4-3. As such, it would be logical to assume, and we do accept, that the presumption of validity of a sheriff's return also applies to affidavits of service submitted "by a person other than a sheriff or a court appointee" authorized to serve process under Rule 4:4-3. R. 4:4-7. But see Intek Auto Leasing v. Zetes Microtech Corp., 268 N.J. Super. 426, 432 (App. Div. 1993) (stating that the presumption of validity does not apply where service was by a person not authorized to do so under Rule 4:4-3).
We have recognized a sheriff's return of service "is prima facie evidence that service of process . . . was proper." Garley, supra, 177 N.J. Super. at 181. Thus, we hold that a return of service by a private process server, authorized to effect service, is likewise prima facie evidence that service was proper. The party seeking to vacate default judgment bears the burden of producing clear and convincing evidence that the affidavit of process is false. Jameson, supra, 363 N.J. Super. at 426. "'If the opposing party introduces evidence "tending to disprove" the presumed fact, the presumption disappears.'" Id. at 427 (quoting Ahn v. Kim, 145 N.J. 423, 439 (1996)).
Here, the Innarellas claim that the Affidavits returned by the private server reflect an incorrect address and an incorrect description of Mr. Innarella, proving the falsity of the Affidavits. Regarding the address, we take cognizance of the error pointed out by defendants. Defendants reside at 26 Clinton Road, as opposed to Clinton Avenue, and that Fairfield does not have a street named Clinton Avenue. We are convinced, however, that this error does not give rise to a genuine issue of material fact that would preclude the entry of judgment. Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995). The record shows that mail addressed to 26 Clinton Avenue was delivered to the Innarellas at their 26 Clinton Road address in Fairfield. Multiple mailings reflect that mailed items were either received, or refused and returned, as opposed to being marked "no such number/street" or "not deliverable as addressed."*fn2
As to the discrepancy between the process server's description of Mr. Innarella and Mr. Innarella's description of himself, we find that the discrepancy is not substantial. Sobel supra, 329 N.J. Super. at 292. See also Garley, supra, 177 N.J. Super. at 181 (finding that describing recipient as plaintiff's "cousin" when the plaintiff's family certified that no cousin resided at the address for service sufficiently rebutted the presumption). The Innarellas claim that the process server's description of Mr. Innarella was deficient with regard to Mr. Innarella's height, weight and hair color. First, we find no material inconsistency between the description of Mr. Innarella's height as between five feet, four inches (5'4") and five feet, eight inches (5'8") tall, and Mr. Innarella's description of himself as "approximately" five feet, eight inches (5'8") tall. Regarding his hair color and weight, it is clear to us that both of these characteristics are not easily discerned precisely from a brief meeting. Moreover, as noted above, Mr. Innarella's uncorroborated certification alone cannot overcome the presumption that the Affidavits show proper service. Garley, supra, 177 N.J. Super. at 181.
The Innarellas further argue that the entry of default judgment was improper under the New Jersey Court Rules in effect on August 15, 2006. At that time, Rule 4:43-2(d), "Failure to Apply for Judgment Within Six Months[,]" stated:
If a party entitled to a judgment by default fails to apply therefor within four months after the entry of the default, the court shall issue a written notice in accordance with [Rule] 1:13-7(a). An application for entry of default judgment made after the expiration of six months following the entry of default shall not be granted except on notice of motion filed and served in accordance with [Rule] 1:6.
Our review of the record discloses that nine days after plaintiff's timely June 6, 2006 request for entry of final default judgment, the trial court denied their request as to the Innarellas individually only because plaintiffs' application was incomplete. They failed to provide: (a) affidavits of nonmilitary service; (b) support for entitlement to treble damages; and, (c) support for entitlement to counsel fees. Moreover, the dismissal notice issued at about that time informed plaintiffs that they had until August 15, 2006 to request entry of final default judgment against the Innarellas before the matter would be subject to dismissal for lack of prosecution. There is no dispute that plaintiffs not only made such a request, but also had resubmitted or supplemented their original request for entry of final default judgment against the Innarellas. They provided the required documents, on or before August 15, 2006 in compliance with the dismissal notice issued pursuant to Rule 1:13-7(a). Consequently, plaintiffs had requested the final default judgment against the Innarellas within the six months allotted under Rules 4:43-2(d) and 1:13-7, and they were not required to proceed by motion.
The court below recognized, and we agree, that the Innarellas are attempting to characterize what is in essence a Rule 4:50-1(a) argument (failure to answer due to "mistake, inadvertence, surprise, or excusable neglect") as one that justifies relief for "any other reason" under Rule 4:50-1(f) in order to avoid the one-year time limit. Subsection (f) specifically provides that a "court may relieve a party . . . from a final judgment or order . . . [for] any other reason justifying relief from the operation of the judgment or order." (emphasis added). Rule 4:50-1(f) "allows a judgment to be set aside in 'exceptional situations[,]'" and, "is applied 'sparingly, . . .' to prevent grave injustice." Nowosleska v. Steele, 400 N.J. Super. 297, 303-04 (App. Div. 2008). Though we recognize that when an application for relief "is to vacate a default judgment, subsection (f) is applied more liberally[,]" Nowosleska, supra, 400 N.J. Super. at 304, it would be contrary to the rules of court to allow the "any other reason" catch-all of subsection (f) to include failure to answer due to "mistake, inadvertence, surprise, or excusable neglect," under Rule 4:50-1(a).
The Innarellas additionally claim, relying on our decision in Davis v. DND/Fidoreo, Inc., 317 N.J. Super. 92 (App. Div. 1998), certif. denied, 158 N.J. 686 (1999), that exceptional circumstances exist justifying relief under Rule 4:50-1(f) because "'there [was] at least some doubt as to whether the defendant was in fact served with process, . . . requir[ing] a more liberal disposition of' the motion." Id. at 100 (quoting Goldfarb, supra, 54 N.J. Super. at 92). In Davis, the defendant's agent was properly served with process, however, the defendant never received the papers. Id. at 95. As a result, the defendant never filed an answer, and plaintiff obtained default judgment. Ibid. Upon learning of the suit, defendant promptly moved to vacate default judgment. Ibid. In granting the defendant's motion, we emphasized that "there was undeniably doubt about defendants' actual receipt of the process[.]" Id. at 100.
The situation presented in this case is not infected by the undeniable doubt of actual receipt that existed in Davis, and we decline to grant the Innarellas relief under Rule 4:50-1(f).
Davis, supra, 317 N.J. Super. at 100. As discussed earlier in this opinion, there is ample evidence in the record that the Innarellas were properly served. Beyond this, the Innarellas candidly admit in their brief, and in the certification of Gino Innarella, they were advised by counsel "that neither of [them] had to answer the complaint," allegedly because they were not properly served; and that, "for tactical and legal reasons," they should not take action to defend Gino Inn, and that their "best bet was to defend the personal allegations of the complaint when properly served." Without doubt, they had actual possession of the complaint, and chose to ignore this lawsuit. Such willful neglect will not serve as a basis for relief from default judgment under Rule 4:50-1(f). See Nowosleska, supra, 400 N.J. Super. at 305; Mancini, supra, 132 N.J. at 336.
As the trial court stated, though the Innarellas "may have meritorious defenses in this matter[,] they made an admittedly informed decision not to file an answer, allegedly on the advice of counsel, that they were not subject to personal liability." Regardless of the fact that the Innarellas may have possessed meritorious defenses to plaintiffs' claims, they failed to make a showing of "exceptional" circumstances justifying relief from default judgment under subsection (f).