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Arianna Holding Company, LLC v. Frank J. Cummings

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


July 11, 2011

ARIANNA HOLDING COMPANY, LLC, PLAINTIFF-APPELLANT,
v.
FRANK J. CUMMINGS, DEFENDANT-RESPONDENT.

On appeal from Superior Court of New Jersey, Chancery Division, Ocean County, Docket No. F-31268-08.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued June 8, 2011

Before Judges Ashrafi and Kestin.

Plaintiff Arianna Holding Company, LLC, appeals from an October 15, 2010 order of the Chancery Division vacating default judgment of foreclosure on a tax sale certificate and a November 12, 2010 order denying its motion for reconsideration. We affirm.

Plaintiff's assignor, Phoenix Funding, Inc., purchased a tax sale certificate on the home of defendant Frank Cummings after he failed to pay $716.45 on property taxes due in 2005. In August 2008, Phoenix Funding filed a foreclosure complaint against Cummings and others. Counsel engaged the services of Guaranteed Subpoena Services, Inc. to serve the summons and foreclosure complaint, but Cummings was not served personally. Counsel then made inquiry of the United States Postal Service and determined that the address at which service was attempted remained the home address for Cummings.

In September 2008, counsel mailed the summons and complaint to Cummings by both certified and regular mail. The certified mailing was returned as "unclaimed," but the regular mailing was not returned to counsel. Cummings did not file an answer or otherwise respond to the foreclosure complaint. In February 2009, plaintiff's counsel requested entry of default. In a certification in support of service by mail in accordance with Rule 4:4-4(b)(1)(C), counsel recounted that personal service was attempted and could not be accomplished and also attached a form document from Guaranteed Subpoena Services that contained only the following notation about its attempts to serve Cummings: "made numerous attempts no one answers the door."

The court entered default against Cummings and subsequently set September 1, 2009, as the deadline and $7,429.17 plus $935.00 costs as the amount needed for redemption of the tax sale certificate. Counsel mailed to Cummings a copy of the order setting those conditions in July 2009.

On September 15, 2009, Arianna Holding Company, LLC, was substituted for Phoenix Funding as plaintiff in the foreclosure action. On the same date, final judgment by default was entered against Cummings and others for foreclosure of the premises.

One year later, in September 2010, Cummings filed a motion to vacate the default judgment. In a certification in support of the motion, Cummings stated he is a single man, forty-nine years old, and he purchased his two-bedroom condominium in 2001 with funds inherited from his mother. He stated that for about five years, he has been suffering from depression and alcohol abuse. His condition caused him to neglect bills, to the extent that he had been living in his condominium without utilities. He said his mailbox was moved to a central location rather than near his home, and he stopped picking up mail. He first became aware of the foreclosure action when an eviction notice was posted on his door a few weeks before he filed the motion.

Cummings stated he was now receiving help to solve his problems, including treatment for his depression and financial advice to pay his delinquent bills. With the aid of relatives, he was prepared to pay in full any delinquent lien on the property so that he might redeem the tax sale certificate and retain ownership of his home.

At oral argument on Cummings's motion, his attorney noted the disparity between the amount Cummings owed on the tax certificate, about $8,000, and the market value of the mortgage-free condominium, approximately $120,000. Invoking due process requirements when the property owner stood to lose substantial equity through foreclosure, counsel asserted that plaintiff had not adhered strictly to the requirements for substituted service of process by mail. He argued that the bare notation provided by Guaranteed Subpoena Services was not sufficient to establish under Rule 4:4-4(b)(1) "that despite diligent effort and inquiry personal service cannot be made."

The Chancery Division agreed, stating that affidavits of diligent inquiry typically include the dates and times of attempted personal service and the circumstances of failure. The court ruled: "[T]he initial affidavit of service submitted to the court asking for substituted service was deficient as a matter of law. The court should not have accepted that, permitting [plaintiff] to provide substituted service and, therefore, substituted service is inappropriate." Disclaiming reliance on Cummings's personal circumstances, the court granted his motion to vacate the default judgment.

Plaintiff filed a motion for reconsideration, submitting a new affidavit from Guaranteed Subpoena Services. The new affidavit stated the dates, times, and circumstances of the five failed attempts to serve Cummings personally from September 4 through 10, 2008. At oral argument, the Chancery Division commented that the new affidavit would have been sufficient to show diligent effort in accordance with Rule 4:4-4(b)(1), but that the original deficiency of service could not be corrected after the fact. The court confirmed its prior ruling, but it also required that Cummings pay a total of $9,963.56 as a condition of vacating the judgment. That amount was in addition to the amount required to redeem the tax sale certificate, and it included $5,178.07 in attorney's fees payable to plaintiff for the foreclosure litigation. Plaintiff filed a notice of appeal.

We affirm the orders of the Chancery Division essentially for the reasons stated orally by Judge Buczynski at the time of oral argument on the motions. We briefly add the following.

We reject plaintiff's argument that due process and the requirements of Rule 4:4-4(b)(1)(C) for substituted service by mail are satisfied if the facts later show that the defendant actually resided at the address to which process was mailed. "'[S]ubstantial deviation from service of process rules' typically makes a judgment void." M & D Assocs. v. Mandara, 366 N.J. Super. 341, 352-53 (App. Div.) (quoting Jameson v. Great Atlantic and Pacific Tea Co., 363 N.J. Super. 419, 425 (App. Div. 2003)), certif. denied, 180 N.J. 151 (2004). The court lacks jurisdiction to enter a judgment when there is violation of the rules pertaining to mailed service of process. Sobel v. Long Island Entertainment Products, Inc., 329 N.J. Super. 285, 293 (App. Div. 2000); see also Driscoll v. Burlington-Bristol Bridge Co., 8 N.J. 433, 493 ("The requirements of the rules with respect to service of process go to the jurisdiction of the court and must be strictly complied with. Any defects . . . are fatal and leave the court without jurisdiction and its judgment void."), cert. denied, 344 U.S. 838, 73 S. Ct. 25, 97 L. Ed. 652 (1952). Moreover, our courts have for many years strictly construed the procedural requirements for obtaining a judgment of foreclosure in tax sale cases. See, e.g., State v. Landis Twp., 50 N.J.L. 374, 379 (Sup. Ct. 1888).

The purpose of the rule requiring an affidavit of diligent inquiry is to assure the court that it has personal jurisdiction to enter judgment and that the defendant's right to due process has not been violated. See M & D Assocs., supra, 366 N.J. Super. at 353-54. The court must carefully scrutinize the affidavit of diligent inquiry for sufficiency of its factual averments. Id. at 353. Permitting correction of defective service of process after the fact would weaken the purpose of the rule and risk violation of due process rights of foreclosure defendants.

Here, Judge Buczynski scrutinized the affidavit of diligent inquiry, together with its attachments, and he found appropriately that the original document from Guaranteed Subpoena Services was not sufficient to show diligent effort to effectuate personal service. There was no mistaken exercise of discretion in the judge's application of the law to the facts he found. See id. at 354 (applying abuse of discretion standard of review to trial court's ruling on adequacy of affidavit of diligent inquiry).

Affirmed.

20110711

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