On appeal from the Superior Court of New Jersey, Law Division, Monmouth County, Docket No. L-668-09.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted September 27, 2011
Before Judges Messano and Yannotti.
Defendants 1928 Highway 35, L.L.C. (1928), Douglas B. Hanna, Esq., P.C. (Hanna P.C.), Douglas B. Hanna (Hanna), and Hanna and Anderson (H & A) appeal from an order entered by the Law Division on January 21, 2011, denying their motion to vacate the default judgment entered against them. We affirm the judgment as to 1928, Hanna P.C. and Hanna, reverse the judgment as to H & A, and remand the matter to the trial court for further proceedings.
On February 6, 2009, plaintiff TD Bank, N.A. filed a four-count complaint against defendants. In count one, plaintiff alleged that on March 31, 2006, 1928 delivered a promissory note to plaintiff in the principal amount of $850,000, which provided a rate of interest of 7.125% per annum on the unpaid balance. Plaintiff asserted that Hanna P.C. and Hanna executed documents in which they guaranteed payment of any monies due on the note. Plaintiff claimed that 1928 defaulted on the note and $828,518.90 was due and owing, which amount included accelerated principal, late fees and accrued interest. Plaintiff alleged that 1928, Hanna P.C. and Hanna were liable for that sum, plus additional interest, attorneys' fees, other legal expenses and costs of suit.
In count two of the complaint, plaintiff alleged that Hanna P.C. delivered to plaintiff a credit agreement in the amount of $10,000, which provided for interest at a rate of 14% per annum on the unpaid balance, with principal and interest to be paid on a monthly basis. Plaintiff asserted that Hanna had executed a document in which he personally guaranteed payment of the amounts due under the agreement. According to the complaint, plaintiff subsequently increased the amount of the credit agreement to $20,000. Plaintiff alleged that Hanna P.C. defaulted on the agreement, and $20,945.28 was due and owing, which amount consisted of accelerated principal of $20,000, plus late fees and accrued interest. Plaintiff sought judgment against Hanna P.C. and Hanna personally for that sum, plus additional interest, attorneys' fees, other legal expenses and costs of suit.
In addition, in count three, plaintiff asserted that Hanna and Robert Anderson had formed H & A, and Hanna had ceased operations of Hanna P.C. Plaintiff alleged, among other things, that H & A continued the business of Hanna P.C. and assumed its liabilities. Plaintiff claimed that Hanna and Hanna P.C. transferred the assets of Hanna P.C. to H & A "with the actual intent to hinder, delay or defraud [p]laintiff" and "without receiving reasonably equivalent value" for the transfers. Plaintiff asserted that H & A was liable for the amounts due under the note and credit agreement, totaling $849,464.18, plus additional interest, attorneys' fees, other legal expenses and costs of suit.
In count four of the complaint, plaintiff alleged that the aforementioned transfers from Hanna and Hanna P.C. to H & A violated the Uniform Fraudulent Transfer Act, N.J.S.A. 25:2-20 to -34. Plaintiff sought an order voiding the transfers, as well as an award of attorneys' fees, interest, costs of suit, and such other relief as the court deemed just and equitable.
It appears that initially the complaint was not served upon defendants. Accordingly, on August 21, 2009, the court entered an order dismissing the complaint for failure to prosecute. On October 30, 2009, the court entered a consent order reinstating the complaint and vacating the previously entered dismissal order.
The consent order provided that defendants would have thirty five days within which to file an answer or otherwise respond to the complaint. The consent order was signed by the attorneys for the parties. Defendants did not file an answer to the complaint within the time required by the consent order and on January 19, 2010, plaintiff requested entry of default.
On July 23, 2010, plaintiff filed a motion for entry of a default judgment against defendants, which was returnable on August 27, 2010. In support of the motion, plaintiff submitted a certification by George Guarino (Guarino), one of plaintiff's vice-presidents. In his certification, Guarino stated that plaintiff loaned 1928 $850,000 pursuant to the note, and Hanna and Hanna P.C. had guaranteed payment of the amounts due thereunder, along with the costs of collection.
Guarino said that 1928 failed to make the payment due in September 2008, resulting in the acceleration of all amounts due under the note. Guarino said that the total amount due and owing on the note as of July 22, 2010, was $1,041,214.86, plus additional interest and the cost of collection. Copies of the note and related guarantees were appended to Guarino's certification.
In addition, Guarino asserted that in October 2002, plaintiff entered into the credit agreement with Hanna P.C. in the amount of $10,000, which amount had thereafter been increased to $20,000. Guarino said that Hanna had guaranteed payment of monies due under the agreement, along with the costs of collection. Guarino stated that, excluding legal fees, $25,979.16, plus costs and interest were due from Hanna P.C. and Hanna, plus additional interest accruing ...