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Un Capital, LLC, A New Jersey Limited Liability Company v. 511-517 Enterprises

December 16, 2010

UN CAPITAL, LLC, A NEW JERSEY LIMITED LIABILITY COMPANY, PLAINTIFF-RESPONDENT,
v.
511-517 ENTERPRISES, LLC, A NEW JERSEY LIMITED LIABILITY COMPANY; SERGIO ZEQUIERA, AN INDIVIDUAL, BELKIS ZEQUIERA, AN INDIVIDUAL, AND ANTONIO FIGUEREDO, AN INDIVIDUAL, DEFENDANTS-APPELLANTS.



On appeal from the Superior Court of New Jersey, Chancery Division, Hudson County, Docket No. F-21281-07.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Submitted: December 1, 2010 - Decided: Before Judges Axelrad and R. B. Coleman.

Defendants 511-517 Enterprises, LLC (Borrower), its principal and guarantor, Sergio Zaquiera, and guarantors Belkis Zequiera*fn1 and Antonio Figueredo, appeal from an order of the Chancery Division denying their motion to vacate a default judgment entered in a foreclosure action. We affirm.

Plaintiff filed a foreclosure complaint against defendants on or about August 21, 2007. Defendants filed an answer and counterclaim, asserting a general denial of the allegations raised by plaintiff and raising no defenses disputing the validity or priority of plaintiff's mortgage. Plaintiff filed a motion for summary judgment, which defendants did not oppose, and on January 4, 2008 the court granted the motion in its entirety, striking defendants' answer and counterclaim for failure to comply with discovery, entering default against each defendant, and permitting plaintiff to proceed in the action as an uncontested foreclosure. On January 29, 2008, plaintiff filed with the Foreclosure Unit of the Superior Court its final foreclosure judgment package, which included a notice of motion for entry of judgment and certification of amount due, along with a proposed writ of execution and proposed final judgment. The same day, copies of the documents were served by Federal Express, overnight delivery, on defendants' counsel of record and sent by certified mail, return receipt requested, to each individual defendant. Defendants filed nothing in opposition. Accordingly, on November l4, 2008, a final judgment was entered in the foreclosure action in favor of plaintiff, awarding plaintiff $2,l00,302.64, with interest and counsel fees, and authorizing the sale of the property, with the proceeds to be used to satisfy the judgment. Upon receipt of the final judgment, plaintiff's counsel served it on defendants' counsel of record and served copies on each of the individual defendants by Federal Express.

On December 24, 2008, defendants, represented by new counsel, filed a motion to vacate the default judgment. After conducting several hearings, Judge Olivieri denied defendants' motion on the record on January l4, 2010, memorialized in an order of January 20, 2010. By order of February 3, 2010, the court denied defendants' motion to stay the foreclosure scheduled for February 4, 2010. On February 4, 2010, we denied defendants' emergent motion for a stay, as did the Supreme Court. This appeal ensued.

On appeal, defendants contend the judge failed to apply the appropriate standard for vacating a default judgment because he appeared to have overlooked that such application is "viewed with great liberality, and every reasonable ground for indulgence is tolerated to the end that a just result is reached." See Marder v. Realty Constr. Co., 84 N.J. Super. 313, 319 (App. Div.), aff'd, 43 N.J. 508 (l964). Defendants also argue the judge erred in finding defendants did not demonstrate excusable neglect in having failed to oppose the foreclosure and they had a meritorious defense to the action as required by Rule 4:50-l. Based on our review of the record and applicable law, we find defendants' arguments unpersuasive, and affirm substantially for the reasons articulated by Judge Olivieri on the record. We add the following comments.

On May 2, 2005, plaintiff and Borrower entered into a construction loan agreement whereby plaintiff agreed to loan Borrower the total principal amount of $1,450,000. Subsequently, Borrower executed three separate amendments, increasing the total loan commitment up to $1,712,000. In connection with the loan agreement, Borrower executed four separate promissory notes, the first dated May 2, 2005, as well as a mortgage of the same date securing Borrower's real property located at 5ll-5l7 Third Street in Union City. The mortgage and subsequent amendments were duly recorded. To further secure Borrower's obligations under the loan documents, the individual defendants each executed payment guarantees.

Plaintiff advanced funds in accordance with the loan documents. It is uncontested defendants failed to repay that portion of the loan evidenced by the first three notes by December 31, 2005, in accordance with the notes, as well as that portion of the loan evidenced by the fourth note by September 30, 2006, in accordance with the terms of that note. Defendants also failed to cause certain construction work to be timely completed in accordance with the loan documents, also constituting a default.

Pursuant to Rule 4:50-l, a court may relieve a party from a final judgment based on

(a) mistake, inadvertence, surprise, or excusable neglect;

(c) fraud[,] . . . misrepresentation, or other misconduct of an adverse part; [or]

(f) any other reason justifying relief from the operation of the judgment or order.

"Generally, a defendant seeking to reopen a default judgment must show that the neglect to answer was excusable under the circumstances and that he has a meritorious defense." Siwiec v. Fin. Res., Inc., 375 N.J. Super. 212, 219 ...


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