June 30, 2011
KARL KOCIAN, PLAINTIFF-APPELLANT,
KENNETH NAGROD, DEFENDANT-RESPONDENT.
KENNETH NAGROD, PLAINTIFF,
KARL KOCIAN AND JENNIFER CHAMBERS, DEFENDANTS.
On appeal from Superior Court, Law Division, Burlington County, Docket Nos. L-2394-08 and L-1309-09.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued: November 1, 2010
Before Judges Grall and C.L. Miniman.
Plaintiff Karl Kocian appeals from a February 19, 2010, order denying his application to vacate an earlier default judgment entered on defendant Kenneth Nagrod's counterclaim because plaintiff failed to appear for a proof hearing. Because we are satisfied that the judge mistakenly exercised his discretion in denying the motion to vacate the default judgment on the counterclaim, we reverse and remand for further proceedings consistent with this opinion.
On August 7, 2008, Kocian filed a complaint in Burlington County under Docket No. L-2394-08 against Nagrod. That complaint alleged that Nagrod attacked Kocian on August 12, 2006, stabbing him eight times in his chest, groin, and back. As a result of the knife attack, Kocian suffered permanent physical and psychological injuries for which he sought damages.
On August 14, 2008, Nagrod filed a complaint in Monmouth County under Docket No. L-3830-08 against Kocian and co-defendant Jennifer Chambers. Nagrod alleged that on August 14, 2006, Kocian trespassed on Nagrod's property, broke into his home, and assaulted Nagrod. He, too, alleged permanent physical injuries as a result of the attack.*fn1
Nagrod filed an answer and counterclaim against Kocian in the Burlington County action on October 6, 2008. Nagrod made the same allegations in his counterclaim that he did in his Monmouth County action, but this time alleged the trespass and assault took place on August 12, 2006. Chambers was not added as a third-party defendant in this pleading. On April 3, 2009, a Monmouth County judge consolidated Nagrod's complaint with Kocian's Burlington County action; a new docket number, L-1309-09, was assigned to Nagrod's complaint; and the matter proceeded thereafter in Burlington County.
On May 28, 2009, the Burlington County judge, on motion of Nagrod, dismissed Kocian's complaint and struck his answer to Nagrod's counterclaim due to Kocian's failure to provide discovery. Then, on October 29, the judge dismissed Kocian's complaint with prejudice, denying Kocian's cross-motion to dismiss Nagrod's counterclaim.
A proof hearing was scheduled on Nagrod's counterclaim for January 4, 2010. Kocian and Chambers contacted the court to advise it that they would be out of town on January 4 and asked for a new date. One was not assigned at the time. However, the court sent a notice to Kocian dated December 28, 2009, which was mailed on December 31, advising him that the hearing had been rescheduled for January 11, 2010, at 9:00 a.m.
Unaware of the new date, Kocian boarded a Continental Airlines flight on December 31, 2009, and did not return from the Dominican Republic until late in the evening of January 10, 2010. As a consequence, Kocian did not receive the notice of trial until he received his mail late in the day on January 11. By that time, the Burlington County judge had entered a judgment on January 11, finding that Kocian did not appear and his complaint had been dismissed with prejudice on October 29, 2009. Accordingly, the judge entered judgment in favor of Nagrod on the counterclaim for $35,000 in compensatory damages, and $15,000 in punitive damages, for a total award of $50,000.
Upon learning of the entry of judgment, Kocian filed a motion to vacate the January 11 order, making the motion returnable on February 19. In his certification, Kocian set forth the facts surrounding his request for an adjournment of the trial and his trip to the Dominican Republic and complained that Nagrod's counsel did not telephone him to apprise him of the new date. He assured the court that he had not been trying to avoid his responsibility in the matter and that his failure to appear was a simple mistake.
Kocian further asserted that Nagrod's claims were baseless and false. He certified that the altercation on August 12, 2006, did not occur on Nagrod's property, as Nagrod alleged, but rather at Chambers's home. Further, he asserted that the claims against him were subject to a one-year statute of limitations, which had expired long before Nagrod had filed his claims. In conclusion, he asked that the judgment be vacated and a new date scheduled. While Kocian's motion was pending, and after securing a judgment on his counterclaim, Nagrod voluntarily dismissed his complaint against Kocian and Chambers.
In opposing the motion to vacate the default, counsel for Nagrod argued, "Kocian's failure to appear is not excusable, but rather consistent with his actions throughout this litigation." Further, he urged that Kocian could not demonstrate a meritorious defense because his complaint and answer to the counterclaim had been dismissed. He opined that it was "difficult to accept that Kocian was surprised by the entry of the judgment as he acknowledges receipt of the trial notice." Counsel for Nagrod argued that an error in the proceedings did not entitle Kocian to vacate the judgment because "[t]he issue is not the rightness o[r] wrongness of the original determination at the time it was made, but what has transpired or been learned to render its enforcement inequitable." He argued that "Nagrod [had] complied with every step of the process necessary to obtain [his] judgment" and that vacating same would be inequitable.
In his response to the opposition, Kocian argued that Nagrod created confusion by suing him in two different counties. Kocian pointed out that one of the cases cited by Nagrod, Marder v. Realty Construction Co., 84 N.J. Super. 313, 319 (App. Div.), aff'd, 43 N.J. 508 (1964), actually supported his motion, urging that the default judgment should be set aside in order to achieve a just result. He pointed out that his failure to appear was excusable because he and Chambers did not know of the January 11 court date since they were out of the country at the time the notice was issued. He reiterated the meritorious defense he had to Nagrod's allegations and urged that the court vacate the default judgment and deny Nagrod's application for attorney's fees in the event the default judgment was set aside.
On February 19, 2010, the judge denied the motion to vacate the default judgment and attached a statement of reasons to the order. In his decision, the judge made the following findings of fact:
On December 17, 2009, . . . Kocian wrote a letter to chambers requesting an adjournment. On December 28, 2009, . . . Chambers contacted Meghan Finkbinder in the Civil Case Management office. She informed Ms. Finkbinder that she and . . . Kocian were set to travel abroad and would not be back in time for the hearing. Ms. Finkbinder requested proof of travel to grant the adjournment of the hearing. [Kocian and Chambers] faxed to her Apple Vacation document slips showing that . . . [they] would return to the count[r]y on January 6, 2010.
Ms. Finkbinder adjourned the matter to January 11, 2010[,] and notice was sent out reflecting this change.
The judge determined that there was no excusable neglect or exceptional circumstances under Rule 4:50-1(a) or (f) because Kocian and Chambers represented to the court "that they would be back in the country on January 6[,] which would give [them] five (5) days to prepare for the hearing." He determined that their decision to extend their vacation was neither neglectful nor exceptional "when they were told by Case Management of the new date." Additionally, he found that there could be no meritorious defense because Kocian and Chambers "did not participate in discovery either providing answers to interrogatories or producing documents." Because Kocian's case was dismissed, the judge determined that he had no meritorious defense. Additionally, he concluded that Kocian had provided no proof to refute Nagrod's assertions:
The [c]court is required to review documentation of proof, make determinations of amounts due, and any other interest, penalties, or charges. N.J. Mort[g]. & [Inv.] Corp. v. Young, 134 [N.J. Super.] 392 (Law Div. 1975). These proofs must be competent and persuasive. Morales v. Santiago, 217 [N.J. Super.] 496, 505 (App. Div. 1987).
An opposing party's participation in a proof hearing is limited under the rule. Default was already entered and as such, discussions regarding liability are considered over. See Perry v. Crunden, 79 [N.J. Super.] 285 (Cty. Ct. 1963) (default entered for lack of discovery). A party may present limited evidence to rebut the damage claim and this is only done with permission from the [c]court. Beech Forest Hills, Inc. v. [Borough of] Morris Plains, 127 [N.J. Super.] 574, 581 (App. Div. 1974).
[Kocian] had the opportunity to rebut [Nagrod's] assertions as to the amount owed. [Kocian and Chambers] were properly noticed and were awar[e] of the hearing date. They elected not to appear and final judgment was entered based upon credible and persuasive proofs. To date, [Kocian and Chambers] have not shown through any submission to the court that [Nagrod's] injuries did not require the amount awarded. They ha[d] an opportunity to be heard and chose not to appear. Therefore, they have not shown any reason to vacate the judgment or provided any proof which would be admissible in a proof hearing to reduce the amount of damages awarded.
This appeal followed. Kocian urges first that the judge abused his discretion when he denied Kocian's motion to vacate the judgment because such motions should be viewed with great liberality to ensure a just result. Second, he asserts that numerous fact-findings had no support in the record. Last, he contends that the judge abused his discretion by not equitably evaluating the motion to vacate.
Where a trial judge has had occasion to exercise discretion in granting or denying relief, as here, we must determine "whether the trial court abused its discretion, a standard that cautions appellate courts not to interfere unless an injustice appears to have been done." Abtrax Pharm., Inc. v. Elkins-Sinn, Inc., 139 N.J. 499, 517 (1995).
Judicial discretion, sound discretion guided by law so as to accomplish substantial justice and equity, is a magisterial, not a personal discretion. It is legal discretion, in which the judge must take account of the applicable law and be governed accordingly. If the judge misconceives or misapplies the law, his discretion lacks a foundation and becomes an arbitrary act.
When that occurs, the reviewing court should adjudicate the matter in light of applicable law to avoid a manifest denial of justice. [Cosme v. Borough of E. Newark Twp. Comm., 304 N.J. Super. 191, 202 (App. Div. 1997) (internal quotation marks omitted), certif. denied, 156 N.J. 381 (1998).]
A trial court decision will constitute an abuse of discretion where "the 'decision [was] made without a rational explanation, inexplicably departed from established policies, or rested on an impermissible basis.'" United States v. Scurry, 193 N.J. 492, 504 (2008) (quoting Flagg v. Essex Cnty. Prosecutor, 171 N.J. 561, 571 (2002)).
An application to set aside a judgment is governed by Rule 4:50-1. The grounds for relief include, but are not limited to, "mistake, inadvertence, surprise, or excusable neglect"; "fraud . . . , misrepresentation, or other misconduct of an adverse party"; and "any other reason justifying relief from the operation of the judgment or order." R. 4:50-1(a), (c), (f).
An application to vacate a judgment by default is "viewed with great liberality, and every reasonable ground for indulgence is tolerated to the end that a just result is reached." Marder, supra, 84 N.J. Super. at 319; accord Morristown Hous. Auth. v. Little, 135 N.J. 274, 283-84 (1994); Mancini v. EDS, 132 N.J. 330, 334 (1993); Prof'l Stone, Stucco & Siding Applicators, Inc. v. Carter, 409 N.J. Super. 64, 68 (App. Div. 2009); Nowosleska v. Steele, 400 N.J. Super. 297, 303 (App. Div. 2008). Nonetheless, relief will not be granted unless the failure of defendant was excusable under the circumstances and the defendant has a meritorious defense, Mancini, supra, 132 N.J. at 334; Goldhaber v. Kohlenberg, 395 N.J. Super. 380, 391 (App. Div. 2007); Marder, supra, 84 N.J. Super. at 318-19, either to the cause of action or the quantum of damages, Haber v. Haber, 253 N.J. Super. 413, 417 (App. Div. 1992).
Here, defendant's certification established at least a prima facie claim of excusable neglect in that Kocian and Chambers did not know of the January 11 date until after they returned from vacation. That claim was not refuted by any evidence in the record. Finkbinder did not offer testimony on the record to impeach defendant's sworn statements. The judge's fact-finding--that Finkbinder advised Chambers during a telephone call on an unspecified date before Kocian and Chambers left on vacation that the proof hearing would be relisted for January 11--has no support in the record. As such, it was a mistaken exercise of discretion to deny relief from the judgment under Rule 4:50-1(a).
With respect to the judge's finding that Kocian had no meritorious defense because his defenses had been stricken with prejudice, the entry of judgment by default is governed by Rule 4:43-2. Where a claim for unliquidated damages is made, a proof hearing is required. R. 4:43-2(b). The judge has the discretion to require proof of the right to relief in addition to the quantum of damages. Douglas v. Harris, 35 N.J. 270, 276-77 (1961); Heimbach v. Mueller, 229 N.J. Super. 17, 20-21 (App. Div. 1988). He is not required to do so. Heimbach, supra, 229 N.J. Super. at 21.
The judge also has the discretion to permit the defaulting party to cross-examine the opposing party's witnesses in appropriate circumstances and to otherwise participate on a limited basis in the proof proceedings. Compare Perry, supra, 79 N.J. Super. at 292-93 (allowing cross-examination), with Fox v. Fox, 76 N.J. Super. 600, 603 (Ch. Div. 1962) (barring cross-examination).
"Even though a defendant who has defaulted has relinquished the right to present affirmative proofs in the matter, the right to challenge a plaintiff's showings in a proof hearing by way of cross-examination and argument should not ordinarily be precluded." Chakravarti v. Pegasus Consulting Group, Inc., 393 N.J. Super. 203, 210-11 (App. Div. 2007); see also Jugan v. Pollen, 253 N.J. Super. 123, 129-31 (App. Div. 1992).
Although Kocian's defenses to the counterclaim were suppressed, he nonetheless has demonstrated that, had he been given an opportunity to cross-examine Nagrod, he might well have established that Nagrod was perpetrating a fraud on the court by advancing the claims he made. The judge did not directly address Kocian's claim that Nagrod was lying. Of course, if a party perpetrates a fraud on the court, that establishes a separate ground for relief under Rule 4:50-1(c). Pavlicka v. Pavlicka, 84 N.J. Super. 357, 365-66 (App. Div. 1964). Thus, we are satisfied that defendant has advanced the equivalent of a meritorious defense in the context of a case where his defenses were suppressed with prejudice for failure to provide discovery.
The gravamen of the judge's decision was his perception that Kocian was "properly noticed and w[as] awar[e] of the hearing date [but] elected not to appear." Because that perception was not supported by substantial evidence in the record, and because the record established that Kocian in fact was only notified of the new date at a time when the court knew that he would be on vacation and thus had no opportunity to "elect not to appear," the order denying Kocian's motion to vacate the default judgment is reversed, the judgment is vacated, and the matter is remanded for further proceedings consistent with this opinion.
Reversed and remanded for further proceedings.