On appeal from Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-6433-09.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Fuentes,Ashrafi and Newman.
Defendants Patricio Milligan and Lily Milligan appeal from court orders denying a motion to vacate an arbitration award and reinstate pleadings, denying a motion to reconsider vacation of the arbitration award, and denying reinstatement of their answer, counterclaims and third-party complaint. We are persuaded that defendants made a showing of good cause and a good faith presentation of a meritorious defense to warrant the vacation of the arbitration award and reinstatement of their answer, counterclaims, and third-party complaint. We therefore reverse and remand to the trial court for further proceedings.
This litigation arose out of a suit filed on July 23, 2009, by plaintiff, The Boulders of Edgewater Condominium Association, Inc. (plaintiff or the Association), for non-payment of condominium monthly common expense assessments, two separate special assessments, late charges, interest, and attorneys' fees incurred during the collection process.
Defendants disputed the amount owed and provided checks verifying payment of common expense assessments that were concededly properly charged. Discovery had been completed and the matter was scheduled for a pretrial mandatory non-binding arbitration on March 23, 2010.
Neither defendants' then attorney nor defendants appeared at the arbitration. Defendants, who are in their eighties, live in Albuquerque, New Mexico. Although the arbitration was scheduled for 11:00 a.m., the arbitrator and plaintiff's attorney waited for an hour and made several efforts to contact defendants' attorney by telephone. They were unsuccessful. Due to the non-appearance of the party defending against the claim, the arbitration proceeded pursuant to Rule 4:21A-4(f). Defendants' pleadings were struck. Plaintiff's counsel presented proofs, and an award was entered for plaintiff in the amount of $44,522.35.
Three days later, defendants' attorney filed a motion to vacate the award and reinstate defendants' pleadings. Plaintiff filed a cross-motion to confirm the arbitration award. In support of the motion to vacate the arbitration award, defendants' attorney certified that he discovered on March 25, 2010 that an arbitration had taken place on March 23, 2010, but stated he had not received notice of the arbitration hearing. Defendants' attorney pointed out that he moved his office and mail forwarded to him was inconsistent. Had he received notice, he certified that he would have certainly appeared, knowing how anxious his clients were to have this matter heard. He also pointed out that he had had "serious difficulties at my new office and the fax machine and phone had been disconnected." Defendants' adversary refused to consent to vacate the award and restore the pleadings, although defendants' counsel consented to vacate the default that had been entered against plaintiffs when "they failed to file a timely answer to the [counterclaim] and [t]hird-[p]arty [c]omplaint."
In opposing the motion to vacate, counsel for plaintiff certified that he served a copy of plaintiff's arbitration memorandum as required by Rule 4:21A-4 via U.S. Mail and electronic mail. He further stated that neither were returned as undeliverable. In addition, Travelers Insurance, the insurance company for the Association, attempted to reach out to defendants' counsel via e-mail to discuss a settlement offer submitted by defendants, which was also not returned as undeliverable. That letter included the arbitration date.
The trial court scheduled oral argument for 8:30 a.m. on April 16, 2010, but defendants' attorney failed to appear at that time. Defendants' attorney claimed that he appeared later that same morning after the motion had already been heard. In denying the motion to vacate the arbitration award, the court concluded that defendants/third-party plaintiffs "have not established good cause or meritorious defense. The records reflect that [they] were made aware of the scheduled arbitration hearing on at least [three] separate occasions and . . . for whatever reason, failed to appear." Nowhere in the moving papers, the trial court noted, have the Milligans sought to establish a meritorious defense, citing SWH Funding Corp. v. Walden Printing Co., 399 N.J. Super. 1 (App. Div. 2008).
The trial court granted plaintiff's cross-motion and confirmed the arbitration award, entering final judgment in favor of the Association in the sum of $44,522.35, plus post-judgment interest from March 23, 2010. The trial court, in the same order of April 16, 2010, dismissed defendants' counterclaims and third-party complaint with prejudice. Defendants then moved for reconsideration of the motion to vacate the arbitration award and restore their pleadings.
In more extensive certifications dated April 27, 2010, defendants' attorney admitted he has "suffered some serious personal problems that have impacted my ability to properly represent my client in this matter." He acknowledged that he failed to respond to the cross-motion to confirm the arbitration award. He further indicated that his late appearance on April 16, 2010 was the result of his "serious personal problems" or to "call the court to ascertain the time of oral argument."
Defendants' attorney stated he had gone through a divorce and experienced "a semi[-]breakdown." He certified that defendants were never notified of the arbitration scheduled by the court and "were unaware of the arbitration." He admitted that he did not return calls and did not advise them of his personal problems and "led them to believe they had competent counsel." His finances suffered, leading to his not carrying ...