THE APPROVAL OF THE APPELLATE DIVISION SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION
September 28, 2010
PALISADES COLLECTION, LLC, PLAINTIFF-RESPONDENT,
WAYMAN BROWN, DEFENDANT-APPELLANT.
On appeal from the Superior Court of New Jersey, Law Division, Special Civil Part, Mercer County, Docket No. DC-82-06.
NOT FOR PUBLICATION WITHOUT
December 15, 2010
Decided Before Judges Messano and Waugh.
Defendant Wayman Brown appeals from the May 5, 2009 order of the Law Division, Special Civil Part, denying his motion to vacate the default judgment entered against him and in favor of plaintiff, Palisades Collection, L.L.C. Defendant argues that the judgment "is void because of defective service of process," and that the motion judge "abused [his] discretion when [he] failed to grant [defendant's] motion to vacate default judgment." We have considered these arguments in light of the record and applicable legal standards. We reverse.
Plaintiff filed this collection action on January 4, 2006, alleging that it was the owner of "defendant's AT&T Wireless . . . account" and that defendant was in default in the amountof $5,739.44, plus additional accrued interest. The summons and complaint were served simultaneously by regular and certified mail addressed to "Wayman Brown" at an address on North Lenape Avenue, Trenton, (the Trenton address), which was claimed to be defendant's last known address and the address of his sister, Ruth Davis. The certified mail was returned to the court on January 17 with the words "in jail" handwritten in two places on the envelope. The regular mail was not returned. On March 23, default judgment was entered against defendant. See R. 6:6-3(a) (permitting entry of default judgment "for a sum certain" by the clerk "on request of the plaintiff and on affidavit . . . if a default has been entered against the defendant for failure to appear . . . .").*fn1
On May 3, plaintiff served an information subpoena on defendant simultaneously by regular and certified mail at the Trenton address. R. 6:7-2(c). Receiving no response to the information subpoena, on June 12, plaintiff filed a motion to enforce litigant's rights, serving copies of the motion simultaneously by regular and certified mail at the Trenton address. R. 6:7-2(e). In support of the motion, plaintiff's counsel represented that the "certified mail return receipt card [for the information subpoena] [w]as . . . signed for and returned," and that the regular mail was not returned. The record does not reveal who signed the receipt card, which is not part of the appendix. On September 15, the judge granted plaintiff's motion.
On August 8, 2008, plaintiff levied on bank accounts at Sovereign Bank held jointly by defendant and Davis. Apparently in response to a "notice to debtor," see R. 6:7-1(c), on September 23, Davis filed a written objection. She claimed to be the "joint account holder" of the levied accounts, and that she held a "[p]ower of [a]attorney for [her] brother during his current incarceration." Davis further claimed that she had not been notified of the suit and further asserted that "[t]he monies being held [we]re a collection of contributions from [her] paychecks, [her] mother['s] . . . Social Security checks, and [her] sister['s] . . . pension checks[.]" Davis claimed the levied funds were intended to defer defendant's legal expenses.
On October 1, plaintiff filed a motion for turnover and mailed notice to defendant at the Trenton address. See N.J.S.A. 2A:17-63. OnOctober 10, Davis filed a pro se motion on behalf of herself anddefendant opposing the turnover. In her certification, Davis alleged that defendant was incarcerated andhad appointed her his attorney-in-fact "during his incarcerationin [Pennsylvania]." She further claimed that service of the summons and complaint in 2006 was not "proper and timely . . . ." In his opposition, plaintiff's counsel did not addressany issues regarding service of the summons and complaint, instead certifying that Davis "failed to provide proof that thefunds levied upon belong to someone other than . . . . [d]efendant or that the funds are exempt from levy."
On November 7, defendant sent a letter to the judge in which he claimed that he had "not resided at [his] sister['s] . . . home for more than eleven (11) years," and confirmed the source of the monies in the levied accounts. In an attached affidavit, defendant further claimed that he had been incarcerated since 2000, that he was currently serving his sentence in a federal prison in Pennsylvania, and that he had "never entered into any [c]ontract with . . . AT&T for the purchase of a [c]ell [p]hone prior to [his] incarceration . . . ."
The judge conducted a hearing on November 13. Appearing pro se, Davis reiterated that defendant had not resided with her for many years and that the monies in the joint accounts derived from contributions made by other family members. She also claimed that defendant did not have a cell phone and that the AT&T bill was likely her father's, Wayman Brown, Sr., who passed away two years prior to the hearing. Davis also denied that she had "refused" the summons by telling the postal authorities that defendant was "in jail." She claimed plaintiff had not made "effective service" upon defendant. On November 18, the judge entered an order for turnover compelling Sovereign Bank to pay the levied funds into court. The judge noted on the order that "[t]he joint account-holder said the funds were those of defendant being accumulated for his defense. Accordingly they are subject to levy."
On December 19, defendant filed a notice of appeal. On March 4, 2009,
we dismissed the appeal without prejudice so that defendant might file
a motion to vacate the default judgment, which he did on April 15. In
his affidavit in support of that motion, defendant reiterated that he
had been incarcerated since2000 and claimed that he "never owned,
possessed, or been under a
contract with AT&T Wireless, or any other [c]ell [p]hone provider."
Defendant further stated that his "sister . . . ha[d] been [his] Power
of Attorney from the time [he] first entered into custody, for the
express purpose of handling [his] personal, business and legal affairs
while being incarcerated . . . ." On May 5, the judge denied
defendant's motion to vacate the default judgment, finding
"[d]efendant was served at the address of his Attorney-in-Fact, the
same person and same address from which a prior motion was filed in
On July 6, 2009, we granted defendant's motion to vacate dismissal of his original appeal and reinstate the appeal. We limited the appeal, however, solely to the denial of defendant's Rule 4:50-1 motion to vacate the default judgment.*fn2
In the interim, the motion judge supplemented his decision with a written statement of reasons. R. 2:5-1(b). The judge concluded that service on defendant and his attorney-in-fact "was proper" pursuant to Rule 1:5-4(b). The judge noted that both "Davis and [d]efendant admit[ted] that Davis was [d]efendant's attorney-in-fact beginning at the time of his incarceration, before commencement of this action." Therefore, the judge reasoned that service on Davis would serve as notice of the action to defendant, and that "service through his sister and [p]ower of [a]attorney was [not] improper."
The judge further determined that personal service at the Trenton address was valid, despite defendant's incarceration in Pennsylvania. Citing Ellingburg v. Connett, 457 F.2d 240, 241 (5th Cir. 1972), the judge noted that defendant was not domiciled at the prison because he was there involuntarily and did not intend to remain there indefinitely. The judge further concluded:
[The return of] the certified mail slip by the admitted attorney-in-fact with a handwritten message was nothing more than a refusal of the certified mail, so that service would have still been complete on the mailing of regular mail, which was never returned. Both Davis's residence at [d]efendant's last known address and her status as his [p]ower of [a]attorney made service at [the Trenton address] sufficient to satisfy due process.
The judge also determined that defendant's motion to vacate was not timely pursuant to Rule 4:50-2, and that defendant had not demonstrated excusable neglect for the delay or a meritorious defense to plaintiff's claim.
Defendant contends that the default judgment "was procured through defective service of process," and, as a result, is "void." Defendant further argues that his motion to vacate the default judgment should have been granted pursuant to Rule 4:50-1(a) (providing relief from a judgment due to "mistake, inadvertence, surprise, or excusable neglect"), or subsection (f) (providing relief because of "any other reason justifying relief from the operation of the judgment or order"). Although not explicitly stated, it is clear from defendant's brief that he also argues the judgment should be vacated pursuant to the Rule 4:50-1(d) (granting relief if "the judgment . . . is void"). "The technique of service of initial process in actions brought in the Special Civil Part differs substantially from the provisions of Part IV [of the Court Rules]." Pressler and Verniero, Current N.J. Court Rules, comment 1 on R. 6:2-3 (2011). Rule 6:2-3 (the Rule) provides in pertinent part:
a) By Whom Served. . . . After the filing of a complaint and receipt of a docket number, service may be made by mail pursuant . . . to R. 6:2-3(d), by the clerk . . . .
(b) Manner of Service. Service of process within this State shall be made in accordance with R. 6:2-3(d) or as otherwise provided by court order consistent with due process of law, or in accordance with R. 4:4-5. Substituted service within this State shall be made pursuant to R. 6:2-3(d)
(c) . . . .
(d) Service by Mail Program. If the process is to be served in this State, or if substituted service of process is to be made within this State:
(1) Initial Service.
The clerk of the court shall simultaneously mail such process by both certified and ordinary mail. Attorneys shall submit to the clerk the mailing addresses of parties to be served and the appropriate number of copies of the summons and complaint. . . . The clerk thereafter shall send a postcard to plaintiff or the attorney showing the docket number, date of mailing and a statement that, unless the plaintiff is otherwise notified, default will be entered on the date shown. If service cannot be effected by mail, the clerk shall send a second card to the plaintiff or attorney stating the reasons for incomplete service and requesting instructions for reservice.
Where initial service by mail is not effected, plaintiff or the attorney may request reservice by mail or by court officer personally pursuant to R. 4:4-4. If reservice by mail at the same address is requested the plaintiff or attorney shall be required to provide a postal verification or other proof satisfactory to the court that the party to be served receives mail at that address.
(3) . . . .
(4) Effective Service.
Consistent with due process of law, service by mail pursuant to this rule shall have the same effect as personal service, and the simultaneous mailing shall constitute effective service unless the mail is returned to the court by the postal service with a marking indicating it has not been delivered, such as "Moved, Left No Address," "Attempted -- Addressee Not Known," "No Such Number/Street," "Insufficient Address," "Not Deliverable as Addressed -- Unable to Forward," or the court has other reason to believe that service was not effected. However, if the certified mail is returned to the court marked "unclaimed" or "refused," service is effective provided that the ordinary mail has not been returned. . . .
(5) Vacation of defaults.
If process is returned to the court by the postal service subsequent to entry of default and displays any of the markings listed in the preceding paragraph, or other reason exists to believe that service was not effected, the clerk shall vacate the default or default judgment and shall immediately notify the plaintiff or attorney of the action taken. [Emphasis added.]
"Subparagraph (d)(4) prescribes the conditions for effective service in general accord with the provisions of R. 1:5-4." Pressler and Verniero, supra, comment 2 on R. 6:2-3(d) (2011).
[T]he return of certified mail addressed to defendant's residence with the indication that it was refused or unclaimed will not defeat service if the ordinary mail is not returned by the post office. Clearly, however, a post-office return with a marking indicating the defendant is not at the mailing address will render service ineffective. [Ibid. (emphasis added).]
In this case, the certified mail was returned with the words "in jail" written on the envelope in two places. Those notations clearly indicated that defendant "[wa]s not at the mailing address." Ibid. As a result, when the summons and complaint were returned to the clerk, default should not have been entered. Instead, the Rule provides for what should have occurred. "If service cannot be effected by mail, the clerk shall send a second card to the plaintiff or attorney stating the reasons for incomplete service and requesting instructions for reservice." R. 6:2-3(d)(1). The plaintiff must then "request reservice by mail or by court officer personally pursuant to R. 4:4-4." R. 6:2-3(d)(2). Moreover, "[i]f reservice by mail at the same address is requested the plaintiff or attorney shall be required to provide a postal verification or other proof satisfactory to the court that the party to be served receives mail at that address." Ibid. Because default was inappropriately entered, plaintiff never requested reservice. In short, service was not accomplished in strict compliance with the Rule.
The judge did not deem this deficiency to be critical under the facts presented. He determined that the notations, "in jail," coupled with Davis's status as defendant's attorney-in-fact, meant the certified mailing was "'unclaimed' or 'refused,'" thus making "service . . . effective [because] . . . the ordinary mail ha[d] not been returned." R. 6:2-3(d)(4). Under this rationale, of course, reservice was not required. At the time service by mail was attempted, however,neither the clerk nor plaintiff was aware of Davis's status; thus, the judge's reasoning does not excuse the failure to strictly comply with the Rule.
It would appear that plaintiff first became aware of Davis's status as attorney-in-fact when she contacted plaintiff's counsel in conjunction with her opposition to the levy. The record contains a handwritten fax from Davis to plaintiff's counsel dated September 16, 2008. Citing a prior conversation with the law firm on September 15, Davis attached a copy of a written power of attorney executed by defendant, and made effective, March 8, 2006, nearly two months after the mailing of the complaint. The March 2006 power of attorney is the only one in the record. Notably, while the March 2006 power of attorney is broadly-worded, it does not contain any specific authorization from defendant to Davis to accept service of process on his behalf in any litigation.
Exactly when Davis was appointed defendant's attorney-in-fact is unclear. In his affidavit, defendant claimed that Davis had been his attorney-in-fact "from the time [he] first entered into custody" in 2000; meanwhile Davis claimed she was defendant's attorney-in-fact "during his [current] incarceration." The judge concluded that Davis had served asdefendant's attorney-in-fact "beginning at the time of his incarceration." As noted, however, the March 2006 power of attorney was not executed until nearly two months after the mailing of the summons and complaint.
Analogizing the situation to acceptable personal service under Rule 4:4-4(a)(1), plaintiff argues that if Davis had "refused" the certified mail, that would be tantamount to a refusal of service by "a person authorized by appointment or by law to receive service of process on [defendant's] behalf." The motion judge implicitly accepted this argument.
"A power of attorney is a written instrument by which an individual known as the principal authorizes another individual . . . known as the attorney-in-fact to perform specified acts on behalf of the principal as the principal's agent." N.J.S.A. 46:2B-8.2(a) (emphasis added); D.D.B. Interior Contr., Inc. v. Trends Urban Renewal Ass'n, Ltd., 176 N.J. 164, 168 (2003). "Its primary purpose is not to define the authority conferred on the agent by the principal, but to serve as evidence to third persons of agency authority. It should be construed in accordance with the rules for interpreting written instruments generally." Kisselbach v. Cnty. of Camden, 271 N.J. Super. 558, 564 (App. Div. 1994) (citing Bank of Am., Nat'l Trust & Sav. Ass'n v. Horowytz, 104 N.J. Super. 35, 40 (Cty. Ct. 1968)).
Although the March power of attorney is broadly-worded, it does not expressly appoint Davis to accept process on defendant's behalf.*fn3 More importantly, there is no evidence that a written power of attorney that complied with N.J.S.A. 46:2B-8.2(a) existed prior to March 2006.
As we have noted, plaintiff was unaware of Davis's status when it mailed the summons and complaint to defendant. Thus, it possessed no "evidence . . . of [her] agency authority," and could not have relied, to its detriment, upon any apparent authority she had to accept service. Instead, plaintiff now seeks to justify its failure to strictly comply with its service obligations under the Rule by relying upon facts that were subsequently disclosed by Davis and defendant themselves. We find no inequity in denying plaintiff this benefit.
The judge determined that Davis herself returned the certified mailing "with a handwritten message" that defendant was in jail. But, there was no evidence in the record to support that factual determination. Davis emphatically denied ever receiving the summons and suggested that perhaps it was her mother, who was alive in 2006 but had since died, who relayed the information that defendant was in jail to the postal authorities
In short, the record does not support the conclusion that Davis, acting under the authority of a written power of attorney, refused to accept service of the summons and complaint in January 2006.
As a result, we need not decide whether, in light of defendant's incarceration in Pennsylvania, service at the Trenton address would have been proper under any circumstances. The Rule requires that "[w]here initial service by mail is not effected, plaintiff . . . may request reservice by mail or by court officer personally pursuant to R. 4:4-4." Rule 4:4-4(a)(1) permits personal service to be accomplished "by delivering a copy of the summons and complaint to the individual personally, or by leaving a copy thereof 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. . . ." (Emphasis added). Even though no "court officer personally" effectuated service, the motion judge concluded service at the Trenton address was proper because it was defendant's "domicile."
In this regard, the judge relied upon Ellingburg, supra, 457 F.2d at 241, where the court concluded that an inmate's residence was unaffected by his incarceration, noting "[o]ne does not change his residence to the prison by virtue of being incarcerated there."; accord Cohen v. United States, 297 F.2d 760, 774 (9th Cir. 1962). We note, however, that our courts have construed the terms "dwelling place or usual place of abode" more restrictively. See Fidelity & Deposit Co. of Md. v. Abagnale, 97 N.J. Super. 132, 145 (Law Div. 1967) ("[T]he rule has been consistently applied that one's 'dwelling house or usual place of abode' is limited in its meaning to the place where one is 'actually living' at the time when service is made.") (citing Warfield v. Fischer, 94 N.J. Super. 142, 146 (Law Div. 1967)).*fn4
We next consider whether defendant's motion to vacate the default judgment should have been granted. "A motion under Rule 4:50-1 is addressed to the sound discretion of the trial court, which should be guided by equitable principles in determining whether relief should be granted or denied." Hous. Auth. of Morristown v. Little, 135 N.J. 274, 283 (1994) (citations omitted). A motion to vacate a default judgment is "viewed with great liberality, and every reasonable ground for indulgence is tolerated to the end that a just result is reached." Id. at 283-84 (quoting Marder v. Realty Constr. Co., 84 N.J. Super. 313, 318-19, (App. Div.), aff'd, 43 N.J. 508 (1964)). Rule 4:50-1(d) permits relief from a void judgment when a motion is "made within a reasonable time." R. 4:50-2. Moreover, "[a] judgment may be set aside as void for lack of personal jurisdiction without the need of the defendant to show a meritorious defense." Pressler and Verniero, supra, comment 5.4.2 on R. 4:50-1.
"'The requirements of the rules with respect to service of process go to the jurisdiction of the court and must be strictly complied with. Any defects . . . are fatal and leave the court without jurisdiction and its judgment void.'" Berger v. Paterson Veterans Taxi Serv., 244 N.J. Super. 200, 204 (App. Div. 1990) (quoting Driscoll v. Burlington-Bristol Bridge Co., 8 N.J. 433, 493, cert. denied, 344 U.S. 838, 73 S.Ct. 25, 97 L.Ed. 652 (1952)). However, "[n]ot every defect in service of process constitutes a denial of due process qualifying defendant for relief from the default judgment." Pressler and Verniero, supra, comment 5.4.2 on R. 4:50-1.
A minor defect in service, coupled with the defendant's actual knowledge of the litigation, does not offend due process. See, e.g. Rosa v. Araujo, 260 N.J. Super. 458, 463 (App. Div. 1992) (finding no due process violation where complaint was received by someone not a member of the defendant's household, but defendant and his attorney acknowledged receipt before default was entered), certif. denied, 133 N.J. 434 (1993). "Nevertheless, a substantial deviation from the service of process rules does require relief from a default judgment, even if [the] defendant ha[s] actual knowledge of the pendency of the suit by other means." Pressler and Verniero, supra, comment Sobel, supra, is instructive. In that case, the defendant had actual notice of the suit and failed to answer prior to entry of the default judgment. 329 N.J. Super. at 292. Nevertheless, we found initially that Rule 4:4-4(c), providing for optional mailed service, specifically anticipated that no default judgment should enter if the defendant had not answered. Id. at 293. We further noted that "there was no 'affirmative duty on the part of a party who was improperly served to take any protective action' unless his 'conduct after being notified of the action . . . estop[s] the defendant from challenging the service of process.'" Id. at 294 (quoting Wohlegmuth v. 560 Ocean Club, 302 N.J. Super. 306, 311 (App. Div. 1997 5.4.2 on R. 4:50-1 (citing Sobel v. Long Island Entertainment, 329 N.J. Super. 285, 293-94 (App. Div. 2000)).
In this case, the Rule specifically requires that "[i]f process is returned to the court by the postal service subsequent to entry of default and displays any of the markings" indicating "that service was not effected, the clerk shall vacatethe default or default judgment and shall immediately notify theplaintiff or attorney of the action taken."
R. 6:2-3(d)(5). Thus, as in Sobel, our rules governing service in the Special Civil Part anticipate that even though the defendant has not answered, no default or default judgment should enter if "service was not effected."
Additionally, in this case the deviation from proper service was substantial. It is undisputed that defendant had not lived at the Trenton address since at least 2000 and during most of that time he was incarcerated in another state. After the mail service was returned, it should have been obvious to plaintiff that defendant was "in jail" and not at the Trenton address. Nevertheless, plaintiff continued to prosecute the claim through post-judgment proceedings, apparently unaware of Davis's status until 2008. Under these circumstances, defendant was under no "affirmative duty . . . to take any protective action."
Plaintiff's subsequent efforts to collect on the void judgment, presuming Davis or defendant became aware of them, do not persuade us to conclude that defendant should now be estopped from challenging the judgment in the first instance. Initially, we note that even if Davis received plaintiff's information subpoena and subsequent motion to enforce litigant's rights, those notices were directed to defendant, not her. There is nothing in the record to support the conclusion that Davis told defendant about those documents; indeed, she denied ever receiving them in her certification opposing the turnover.
Whenever the timeliness of a defendant's motion to vacate is at issue, "the consequences of [the] defendant's failure to [move for relief] must be determined by balancing the weight of estoppel and laches considerations favoring each party in the circumstances." Pressler and Verniero, supra, comment 5.4.2 on R. 4:50-1. In this case, the equities weigh in favor of defendant.