October 26, 2010
JRM LANDSCAPING AND JOHN MAKRIS, D/B/A JRM LANDSCAPING, PLAINTIFFS-APPELLANTS,
CAROL STROUMTSOS, DEFENDANT-RESPONDENT.
On appeal from the Superior Court of New Jersey, Law Division, Special Civil Part, Union County, Docket No. DC-21449-07.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted September 27, 2010
Before Judges Sabatino and Alvarez.
Plaintiffs, JRM Landscaping ("JRM") and John Makris d/b/a JRM Landscaping ("Makris"), appeal from the Special Civil Part's order dated October 2, 2009. The order denied plaintiffs' application to set aside the default judgment in the sum of $4,544.70, plus costs, that was entered, sua sponte, against plaintiffs on the counterclaim of defendant, Carol Stroumtsos.
The order also denied plaintiffs' request to reinstate their own complaint for damages against defendant. For the reasons stated in this opinion, we affirm the trial court's denial of plaintiffs' motion to restore their complaint and to vacate the entry of default as to the counterclaim. However, we remand the case for a proof hearing to re-examine the quantum of defendant's damages and the claim of a consumer fraud violation.
Both plaintiffs' complaint and defendant's counterclaim arise out of their disputes over certain landscaping and leaf removal services that plaintiffs agreed to provide at defendant's residence in 2007. The limited record indicates that in the early part of that year, plaintiffs and defendant entered into a written agreement ("the first agreement") under which plaintiffs would perform certain lawn services on defendant's property on a monthly basis from March 2007 through December 2007. The agreement specified the particular services to be provided each month, depending on the season, which included monthly lawn maintenance, application of fertilizer and weed killer, spot treatment for insects and fungus, leaf removal, and spring and fall "clean-up" measures. The agreement itemized the charges for the services and provided that payment by defendant would be made by the fifteenth of each month. The agreement was signed only by Makris, although it appears that defendant*fn1 assented to its terms by allowing plaintiffs' workers on her property and by making various payments for the work.
On June 20, 2007, the parties entered into a second written agreement*fn2 ("the second agreement") for additional services, which were apparently described in one or more "addendums" to that agreement. Although the addendums were not furnished to us on appeal, the parties' submissions indicate that the second agreement obligated plaintiffs to prepare the grounds of defendant's property for an outdoor bridal shower in August 2007 and a wedding in September 2007. Fifty percent of the total payment due under this second agreement was to be paid at the start of work, with the balance due upon completion. The second agreement specifically provides that plaintiffs "must complete [the] work in a timely fashion," as "[t]imed to [the] dates of [defendant's] events," and that "no oral changes to the contract" were allowed.
Although the record is not completely developed, it appears that over a period of several months plaintiffs delivered and spread mulch at defendant's residence and performed other landscaping work, both prior to the August 2007 bridal shower and again prior to the September 2007 wedding. However, defendant was dissatisfied with the work for numerous reasons.
In particular, defendant asserted that plaintiffs failed to supply certain flowers and plants that allegedly were to be supplied before the shower. Defendant further asserted that the mulch, which was delivered only a short time before the shower, had an offensive odor that was unpleasant for defendant's guests. Defendant also contended that plaintiffs did not remove leaves from the property as part of the agreed-upon fall cleanup in December 2007, despite defendant's repeated requests. According to defendant, she had to purchase her own flowers in order to decorate the grounds in time for the bridal shower, and she had to hire another company to remove the leaves from her property, at a cost of $2,214.90. In addition, defendant claimed that plaintiffs had not given her appropriate credit for payment that she had made for the mulch.
In December 2007, plaintiffs filed a complaint against defendant in the Special Civil Part, seeking payment on a book account allegedly due in the amount of $3,685.45. Defendant filed an answer, denying that she owed any payments to plaintiffs, and filed a counterclaim, seeking reimbursement for the expenditures she made to cure plaintiffs' alleged contractual breaches and for treble damages under the Consumer Fraud Act, ("CFA"), N.J.S.A. 56:8-1 to -20. With her answer and counterclaim, defendant served various discovery requests upon plaintiffs.
At a hearing on April 14, 2008,*fn3 the Special Civil Part judge considered various motions by defendant. That proceeding resulted in three separate orders bearing that same date: (1) an order directing plaintiffs to "file an answer to [the] counterclaim within 10 days of receipt of the within order, failing which the [c]court will enter a default [judgment] against [p]laintiff[s]; (2) dismissing plaintiffs' complaint without prejudice because of plaintiffs' failure to respond to defendant's requests for admissions; and (3) denying defendant's motion for summary judgment without prejudice. All three orders indicate that the court's reasons were placed on the record that day, April 14, 2008, "in [the] presence of [the] [p]arties."
Makris admits in a certification dated July 28, 2009 that he was indeed present in court on April 14, 2008 when the judge required him to file an answer to the counterclaim. However, for reasons that are unclear, the Special Civil Part did not provide the parties with copies of the three orders until six months later, in October 2008, when the trial judge learned that the three orders had not previously been supplied to the parties.
The parties dispute what ensued after the April 14, 2008 orders were issued, particularly with respect to the order directing plaintiffs to file an answer to the counterclaim "within 10 days of receipt" of the orders. According to defendant, no such answer to her counterclaim was timely filed or served. Consequently, she moved for default judgment on her counterclaim.
On the other hand, according to Makris' certification, he "promptly did file an [a]nswer to the [c]ounterclaim," in compliance with the court's directive of April 14, 2008. Makris attached to his certification a copy of what he purports to be his answer to the counterclaim, which consists of a one-page letter from Makris explaining his position on the merits of the case. The answer included assertions that Makris had told defendant before the wedding that he was going to be away because of a death in the family but that he had assured her that he would complete the work upon his return. He further asserted that he received no communications from defendant until forty-five days after the wedding and that she did not then mention any problems to him concerning the work delays. Makris also asserted that defendant had not given him receipts for the flowers and plantings that she had purchased before the bridal shower.
The typed date on plaintiffs' counterclaim answer is "April 15, 2009," a year after the answer was due. The record does not explain whether or not the stated year on the answer was a typographical error, or whether the answer, in fact, was actually not prepared until April 2009.
Makris attached to his certification a certified postal receipt dated April 26, 2008, addressed to and countersigned by defendant. He contends that his counterclaim answer was enclosed in that mailing. Makris provided no documentation that he mailed the counterclaim answer to the Special Civil Part, nor did he indicate whether the answer was otherwise delivered to the court.
Despite plaintiffs' assertion that he timely filed an answer to the counterclaim, the Special Civil Part apparently did not receive it, and the court did not docket the filing of any such answer. Consequently, on April 25, 2008, the clerk entered default against plaintiffs on the counterclaim.
Still, evidently believing that plaintiffs had not answered her counterclaim, defendant submitted an ex parte request to enter default judgment against plaintiffs on the counterclaim, which the Special Civil Part filed on October 24, 2008. In her supporting certification, defendant requested damages totaling $4,544.70, plus court costs. The calculated damages included treble damages sought by defendant under the CFA.
On January 8, 2009, the Special Civil Part returned defendant's request for the entry of default judgment as untimely under Rule 6:6-3(d), as the request had not been made within six months of the date of the entry of default. Defendant then wrote a letter to the court on January 23, 2009, asserting that her request for default judgment was indeed timely and that it had been improperly rejected. After further review, the Special Civil Part reconsidered defendant's application and deemed it timely.
Consequently, the Special Civil Part judge entered what is labeled as a "Sua Sponte Order" on March 16, 2009, granting defendant the full requested amount of her counterclaim of $4,544.70, plus costs. The judge apparently conducted no proof hearing to ascertain and quantify defendant's damages. There is no statement of reasons appended to the order delineating the basis for the court's implicit finding that plaintiffs violated the Consumer Fraud Act.*fn4
After the Special Civil Part served the parties with a copy of the sua sponte order granting default judgment, plaintiffs retained counsel. Counsel for plaintiffs then filed a motion on August 17, 2009, seeking to vacate the default judgment and to restore the case to the trial list. The motion included the aforesaid certification of Makris, attesting that he had, in fact, filed a timely answer to the counterclaim. Makris contended that he was unaware of the fact that default had been entered on the counterclaim until he received a copy of the March 20, 2009 sua sponte order. According to Makris, after he supposedly filed his counterclaim answer, he assumed that the case would be listed for trial, and that he was surprised to discover the sua sponte default judgment. Defendant filed written opposition to plaintiffs' motion, contending that plaintiffs had not answered the counterclaim and asserting that the entry of default judgment was appropriate and should not be disturbed.
The Special Civil Part judge heard plaintiffs' application to vacate the default judgment on an adjourned return date of October 2, 2009. Despite the fact that plaintiffs' counsel had specifically requested oral argument, neither Makris nor his attorney appeared in court on the return day. After waiting about an hour for plaintiffs to appear, the trial court swore in defendant and heard her presentation. Defendant attested that she had never seen the answer to her counterclaim before it was included with plaintiffs' 2009 motion papers. She acknowledged that she received a certified letter from Makris on April 26, 2008, but denied that the answer was contained in that mailing. She also emphasized to the judge that the answer bears an April "2009" date rather than an April "2008" date, thereby suggesting that the answer had been fabricated or ineptly back-dated.
After hearing defendant's presentation, the judge issued an oral ruling denying plaintiffs' motion. In that oral ruling, the judge traced the procedural history of the case. He indicated that the court was treating plaintiffs' motion as an application to vacate a judgment pursuant to Rule 4:50-1. The judge noted that, based upon his own recollections of what had transpired at the April 14, 2008 hearing and his review of the sound recording of that hearing, Makris "understood what the court had directed him to do" in answering the counterclaim, and, when asked by the court, he had specifically responded that he had no questions. The judge adopted as credible defendant's sworn assertion that she did not receive plaintiffs' counterclaim answer in the mail or otherwise in April 2008. Further, the judge rejected Makris' contention that he was unaware of the entry of default against him until the court's order of March 2009.
Based upon these findings, the judge concluded that "[plaintiffs] ha[d] not established surprise or mistake or excusable neglect" to justify setting aside the default judgment. The judge further concluded that "[plaintiffs] ha[d] not established an issue of meritorious defense[.]"
On appeal, plaintiffs contend that the trial judge erred in denying their motion to vacate the judgment. Although plaintiffs and their attorney do not explain their non-appearance on the return date of that motion, they contend that their answer to the counterclaim raised meritorious defenses and that the default judgment thus lacks a proper factual foundation. Plaintiffs further argue that the trial court should have conducted a merits hearing, with appropriate assessments of the credibility of the parties, before awarding defendant the full amount of her counterclaim.
In response, defendant, who is still self-represented, argues that the trial court properly applied the standards of Rule 4:50-1 in denying plaintiffs' motion. She further contends that the merits of her counterclaim and the propriety of awarding her treble damages under the CFA was adequately documented in her submissions to the trial court.
In evaluating the parties' contentions on appeal, we are mindful that our court system prefers adjudicating contested matters on their merits. See Crescent Park Tenants Ass'n v. Realty Equities Corp., 58 N.J. 98, 107-08 (1971). Nevertheless, litigants also must adhere to the requirements of the Court Rules and to the trial court's pretrial and case management orders, so as to advance the important public policies for the "expeditious handling of cases, avoiding stale evidence, and providing uniformity, predictability and security in the conduct of litigation." Zaccardi v. Becker, 88 N.J. 245, 252 (1982); see also Seacoast Builders Corp. v. Rutgers, 358 N.J. Super. 524, 542 (App. Div. 2003).
We are equally cognizant that, in general, "a decision to vacate a default judgment lies within the sound discretion of the trial court, guided by principles of equity." Coryell, L.L.C. v. Curry, 391 N.J. Super. 72, 79 (App. Div. 2006) (citing Hous. Auth. of Morristown v. Little, 135 N.J. 274, 283 (1994)). In particular, a well-established two-pronged test applies. "In order to achieve relief pursuant to subsection (a) [of Rule 4:50-1] . . . the defendant must be prepared to 'show that  his neglect to answer was excusable under the circumstances and  that he has a meritorious defense.'" Dynasty Bldg. Corp. v. Ackerman, 376 N.J. Super. 280, 285 (App. Div. 2005) (quoting Marder v. Realty Const. Co., 84 N.J. Super. 313, 318 (App. Div.), aff'd, 43 N.J. 508 (1964)). In Mancini v. EDS, 132 N.J. 330 (1993), the Supreme Court recognized that "[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." Id. at 334-35 (internal quotations and citations omitted).
In the present case, we are satisfied that the trial court did not misapply its discretion in declining to vacate the entry of default that had been entered against plaintiffs under Rule 4:43-1. The trial judge found that plaintiffs had failed to file a timely answer to the counterclaim, despite having been ordered to do so by the court within ten days.*fn5
On the Rule 4:50-1 motion, the trial court had before it conflicting sworn representations by the parties as to whether the counterclaim answer was, in fact, actually filed and served. However, the April "2009" typed date on the answer raised legitimate concerns about whether the answer was, in actuality, not prepared until 2009 after default judgment was entered. Makris supplies no certification explaining this discrepancy. Had plaintiffs and plaintiffs' counsel appeared at the adjourned October 2, 2009 hearing, we presume that the trial judge would have taken testimony from both Makris and defendant, exploring the actual timing of the creation and service of the counterclaim answer. Given, however, plaintiffs' unexplained failure to appear, we conclude that the trial judge did not misapply his discretion in accepting defendant's sworn account. Moreover, plaintiffs do not at all address their failure to answer defendant's discovery requests which led to the dismissal of plaintiffs' own complaint without prejudice. See R. 4:23-5(a). The denial of the motion to vacate the default is therefore affirmed.
We are less confident, however, with respect to the trial court's calculation of the treble damages embodied in the default judgment, and its implicit finding that plaintiffs violated the CFA. The record supplied to us by the parties does not contain any statement of reasons by the trial court as to why it adopted, in full, defendant's quantification of damages. Pursuant to Rule 1:7-4(a), the trial court should have explained the basis for its award of damages. See Pressler and Verniero, Current N.J. Court Rules, comment 1 on R. 1:7-4 (2010) (emphasizing that "[t]he Rule requires findings to be made on all motions decided by written orders appealable as of right" and highlighting the "critical importance of that function"). Unless the litigants have failed to provide us with copies of additional findings that were made by the trial court, we have no indication as to why the trial court accepted each of defendant's itemized damages and, in particular, why the trial court granted trebling of those damages under the CFA.
Defendant asserted in her certification opposing plaintiffs' motion to vacate judgment that "Mr. Makris operated a business and represented himself to be a landscaper when[,] in fact[,] he was not licensed [to engage in such work] by the state of New Jersey [and that] [h]e was in violation of the [CFA], by virtue of his unreasonable business practices[.]"
To be sure, the CFA is remedial legislation that is to be broadly construed. Lettenmaier v. Lube Connection, Inc., 162 N.J. 134, 139 (1999). The statute specifically prohibits:
The act, use or employment by any person of any unconscionable commercial practice, deception, fraud, false pretense, false promise, misrepresentation, or the knowing, concealment, suppression, or omission of any material fact with intent that others rely upon such concealment, suppression or omission, in connection with the sale or advertisement of any merchandise or real estate, or with the subsequent performance of such person as aforesaid, whether or not any person has in fact been misled, deceived or damaged thereby, is declared to be an unlawful practice. [N.J.S.A. 56:8-2.]
The term "merchandise" within the CFA covers not only goods, (such as the mulch and plantings in this case) but also "services or anything offered, directly or indirectly to the public for sale." N.J.S.A. 56:8-1(c). However, despite its broad wording and remedial objectives, the statute "does not cover every sale in the marketplace," instead, a "case by case analysis" of the transaction must be conducted. Papergraphics Int'l., Inc. v. Correa, 389 N.J. Super. 8, 13 (App. Div. 2006); see also 539 Absecon Blvd., L.L.C. v. Shan Enterprises, Ltd. P'ship, 406 N.J. Super. 242, 277 (App. Div.), certif. denied, 199 N.J. 541 (2009).
The CFA limits private causes of action to instances where a claimant establishes each of three key elements: "(1) unlawful conduct by the [opposing party]; (2) an ascertainable loss on the part of the [claimant]; and (3) a causal relationship between the [opposing party]'s unlawful conduct and the [claimant]'s ascertainable loss." Dabush v. Mercedes-Benz U.S.A., L.L.C., 378 N.J. Super. 105, 114, (App. Div. 2005) (citing New Jersey Citizen Action v. Schering-Plough Corp., 367 N.J. Super. 8, 12-13 (App. Div.), certif. denied, 178 N.J. 249 (2003)); see also N.J.S.A. 56:8-19. The alleged misrepresentation or omission must be material. Cole v. Laughrey Funeral Home, 376 N.J. Super. 135, 144 (App. Div. 2005); Ji v. Palmer, 333 N.J. Super. 451, 462 (App. Div. 2000).
The record before us does not demonstrate the precise basis of the court's implicit conclusion that plaintiffs violated the CFA in their interactions with defendant. We do not know, for example, if the trial court found credible defendant's claim that Makris had misrepresented his status to defendant, whether he actually lacks a license to operate as a landscaper, and, if he does not have such a license, whether any misstatement or omission concerning his licensure was material. We also cannot tell if the court found that the damages claimed by defendant proximately flowed from such alleged misrepresentations or omissions. See Dabush, supra, 378 N.J. Super. at 122 (requiring a CFA claimant to prove the "causal nexus" between the statutory violation and his or her ascertainable loss).
Given the incomplete state of the record, and the many credibility issues associated with defendant's damages claims, we conclude that it is most equitable and prudent to remand this matter for a proof hearing under Rule 4:43-2, at which time defendant can amplify her damages claims with testimony and supporting documentation. Plaintiffs, because of their default status, will not be permitted to adduce counter proofs at that proof hearing, but they may cross-examine defendant and any other witnesses that defendant chooses to present. See Chakravarti v. Pegasus Consulting Group, 393 N.J. Super. 203, 210-11 (App. Div. 2007).
Upon the completion of the proof hearing, the trial court shall make appropriate detailed findings, including specific findings as to whether and how plaintiffs violated the CFA and, if so, how those violations correspond to defendant's claim of damages. Pending such a proof hearing, conducted on notice to plaintiffs, the default judgment shall be vacated, without prejudice. If the ultimate determination of the trial court is to reinstate the judgment, in full or substantial part, the court may award costs to defendant, to the extent appropriate and authorized by law.
Affirmed in part, vacated in part, and remanded for further proceedings consistent with this opinion.