April 7, 2011
WEST ESSEX BUILDING SUPPLY, PLAINTIFF-RESPONDENT,
KMG STUCCO CO., INC., KEITH GABLE, DENNIS GABLE, DEFENDANTS,
AND KENNETH GABLE, DEFENDANT-APPELLANT.
On appeal from Superior Court of New Jersey, Law Division, Passaic County, Docket No. L-8418-92.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted March 15, 2011
Before Judges Carchman and Waugh.
Defendant Kenneth Gable appeals the Law Division's order denying his motion to vacate a default judgment entered against him in September 1993. We affirm.
Plaintiff West Essex Building Supply (West Essex) sold exterior molding to co-defendant KMG Stucco Co., Inc. (KMG) in or about 1992. KMG, which is now defunct, was formed in 1990, with co-defendant Keith Gable as its president. Kenneth and Keith Gable are brothers.*fn1 Kenneth asserts that he was merely an employee of KMG, which was owned by Keith, who is now deceased. However, the record contains a credit report concerning Kenneth that lists him as KMG's operations manager.
In 1992, West Essex filed a collection action against KMG, Keith, Kenneth, and another brother. According to West Essex's attorney, Kenneth was served with the summons and complaint in 1992 at his home. Default judgment against all defendants was entered on September 9, 1993. It has not been satisfied.
In February 2010, West Essex served an information subpoena on Kenneth's attorney. See R. 4:59-1(e) and R. 6:7-2. When Kenneth did not respond to the subpoena, West Essex filed a motion to enforce litigant's rights. See R. 1:10-3. Kenneth filed a cross-motion, seeking to set aside the default judgment pursuant to R. 4:50-1.
In the certification in support of his cross-motion, Kenneth stated that he was advised of the outstanding judgment by a title company in October 2009 when he attempted to refinance his house. He related that he was an employee, rather than an owner or officer, of KMG. However, Kenneth did not deny having been served with the summons and complaint in 1992, nor did he specifically assert that he had not known about the judgment until he attempted to refinance his house in 2009.
West Essex filed certifications by its attorney and George Dirk, its general manager, in opposition to the cross-motion. The attorney's certification attached the credit report listing Kenneth as KMG's general manager and stated that his office routinely sent collection letters to Kenneth after the judgment was entered, but received no response. Dirk asserted that all three Gable brothers were involved in managing the business of KMG.
Kenneth filed a responding certification, which attached the certificate of incorporation and corporate reports to the State, all of which name Keith and his wife as corporate officers and directors. He did not, however, deny that he was served with the complaint or that he had received collection letters over the years.
The motion was decided on the papers. In an order dated June 3, 2010, the motion judge denied the motion. In his brief written explanation, the judge noted that Kenneth's submissions only addressed the merits of the claim against him. He continued: "What is conspicuously absent is any denial he was served." This appeal followed.
On appeal, Kenneth relies on Rule 4:50-1(f), which provides: "On motion, with briefs, and upon such terms as are just, the court may relieve a party or the party's legal representative from a final judgment or order for the following reasons . . . (f) any other reason justifying relief from the operation of the judgment or order." He argues that the motion judge erred in failing to vacate the judgment because he was not legally responsible for KMG's business debts.
"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). "[T]he opening of default judgments should be 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). Further, any doubts should be decided in favor of the party seeking to vacate the judgment. Mancini v. EDS ex rel. N.J. Auto. Full Ins. Underwriting Ass'n, 132 N.J. 330, 334 (1993).
Nonetheless, a trial court's decision to grant or deny an application to vacate a default judgment is accorded substantial deference and will not be disturbed absent a "clear abuse of discretion." Hous. Auth. of Morristown, supra, 135 N.J. at 283; Mancini, supra, 132 N.J. at 334; Pressler & Verniero, Current N.J. Court Rules, comment 1 on R. 4:50-1 (2011).
"[R]elief under Rule 4:50-1(f) is available only when 'truly exceptional circumstances are present.'" Hous. Auth. of Morristown, supra, 135 N.J. at 286 (quoting Baumann v. Marinaro, 95 N.J. 380, 395 (1984)). A movant relying on Rule 4:50-1(f) must ordinarily show "that enforcement of the order or judgment would be unjust, oppressive, or inequitable." Piscitelli v. Classic Residence by Hyatt, 408 N.J. Super. 83, 102-03 (App. Div. 2009).
When a party seeks to vacate a default judgment, we have said that Rule 4:50-1(f) "is applied more liberally." Nowosleska v. Steele, 400 N.J. Super. 297, 304 (App. Div. 2008). However, it is clear from the record that Kenneth is 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 and the necessity of proving "excusable neglect." As the motion judge noted, Kenneth did not deny service, nor did he specifically deny knowing about the suit or the judgment prior to his attempt to refinance his house. His certification is very carefully drafted in that regard, and his failure to rely on Rule 4:50-1(a) or (d) is also telling.
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). It would be contrary to the rules of court to allow the "any other reason" catch-all of subsection (f) to include every failure to answer due to "mistake, inadvertence, surprise, or excusable neglect," under Rule 4:50-1(a).
In Nowosleska, supra, 400 N.J. Super. at 304, we concluded that permitting the default to stand "may result in a grave injustice" because "defendants may have been the victims of predatory lending practices." We found that to be an exceptional circumstance permitting application of Rule 4:50- 1(f), which "is applied 'sparingly, in exceptional situations' to prevent grave injustice." Id. at 303-04 (citation omitted). The circumstances of this case do not rise to that level. There is nothing "truly exceptional" about the circumstance of a defendant who, despite having a colorable defense to the cause of action, ignored service of a complaint until the resulting judgment became inconvenient and only then seeks to set the resulting default judgment aside.