February 2, 2012
BELAL BHUIYAN, PLAINTIFF-RESPONDENT,
SHAHAB UDDIN, DEFENDANT-APPELLANT.
On appeal from the Superior Court of New Jersey, Law Division, Hudson County, Docket No. L-5685-09.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted January 23, 2012 -
Before Judges Sabatino and Fasciale.
In this breach of contract case, defendant Shahab Uddin appeals from a January 25, 2011 order denying his motion to vacate default judgment. We reverse, remand, and direct the judge to make additional findings of fact and conclusions of law after conducting a plenary hearing.
In 2004, the parties entered into what is alleged to be a joint venture agreement. As part of that agreement, defendant borrowed money from plaintiff and purchased abandoned real estate at a public auction. After certain improvements were made to the property, the parties disputed their ownership interests. Plaintiff contended that defendant agreed to pay him $577,751.50 but only paid him $411,848.01. As a result, plaintiff filed a complaint alleging breach of contract and seeking the alleged balance due of $165,903.50.
Plaintiff attempted to serve the complaint on defendant by transmitting it by certified and regular mail to an apartment on 88th Avenue, Jamaica, New York (Jamaica). The certified letter came back unclaimed but the regular mail was not returned. No answer was filed. Plaintiff then obtained default and filed a motion to enter default judgment. The court accordingly entered judgment against defendant in the amount of $165,903.50.
Defendant filed a motion to vacate default judgment and contended that he was not served with the complaint and had a meritorious defense. Defendant sought permission to file an answer and counterclaim out of time. Defendant alleged in his proposed counterclaim that he borrowed $200,000 from plaintiff, purchased the property for $400,000, and undertook the improvements without any further investment from plaintiff. As a result, he alleged in his counterclaim that plaintiff was not entitled to fifty percent of the profits. Defendant sought damages against plaintiff in the amount of $157,000, which represented the amount he allegedly overpaid plaintiff.
The judge denied the motion on the papers and provided the following reasons typed on the bottom of the order:
[Defendant] seeks vacation of [the] default [judgment] entered against him by claiming that he never received service of process. The regular mail was not returned and certified mail was returned "unclaimed." [Defendant] never states that he did not live at the service address. [The]
[p]roposed [a]nswer does not raise any meritorious defense to the contract-based claim[,] nor do the moving papers allude to any cognizable defense.
This appeal followed.
On appeal, defendant contends primarily that (1) pursuant to Rule 4:50-1(d) the judgment is void because service of the complaint was improper, and (2) the judge abused her discretion by denying his motion because he demonstrated a meritorious defense.
A motion for relief from judgment under Rule 4:50-1 should be granted sparingly, "in exceptional situations . . . in which, "were it not applied, a grave injustice would occur." Morristown Hous. Auth. v. Little, 135 N.J. 274, 289 (1994). When reviewing such motions we generally defer to the broad discretion afforded to the trial judge, whose determinations should be left undisturbed unless they result from a clear abuse of discretion. Id. at 283; see St. James AME Dev. Corp. v. Jersey City, 403 N.J. Super. 480, 487 (App. Div. 2008) (reversing misapplication of discretion); Del Vecchio v. Hemberger, 388 N.J. Super. 179, 186-87 (App. Div. 2006) (finding no abuse of discretion). "[A]lthough the ordinary 'abuse of discretion' standard defies precise definition, it arises when a decision is 'made without a rational explanation, inexplicably departed from established policies, or rested on an impermissible basis.'" Iliadis v. Wal-Mart Stores, Inc., 191 N.J. 88, 123-24 (2007) (quoting Flagg v. Essex Cnty. Prosecutor, 171 N.J. 561, 571 (2002)).
We begin our analysis by addressing defendant's argument that he is entitled to relief pursuant to Rule 4:50-1(d). He contends that the judgment is void because plaintiff served the complaint at the Jamaica address, not where defendant claims he lived at the time. Thus, defendant asserts that the judge erroneously concluded, without oral argument, that he lived at the service address.
Notice is a basic procedural necessity to ensure that a party's due process rights are enforced. Mettinger v. Globe Slicing Mach. Co., 153 N.J. 371, 389 (1998) (citing Mullane v. Cent. Hanover Bank & Trust Co., 339 U.S. 306, 313, 70 S. Ct. 652, 656-57, 94 L. Ed. 865, 873 (1950)). "'An elementary and fundamental requirement of due process in any proceeding which is to be accorded finality is notice reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections.'" O'Connor v. Altus, 67 N.J. 106, 126 (1975) (quoting Mullane, supra, 339 U.S. at 314, 70 S. Ct. at 657, 94 L. Ed. at 873); Jameson v. Great Atl. & Pac. Tea Co., 363 N.J. Super. 419, 425 (App. Div. 2003) (quoting Davis v. DND/Fidoreo, Inc., 317 N.J. Super. 92, 97 (App. Div. 1998), certif. denied, Davis v. Surrey Downs/Fidoreo, Inc., 158 N.J. 686 (1999)), certif. denied, 179 N.J. 309 (2004).
Here, it is unclear whether defendant was afforded the notice he was due. Plaintiff attempted to serve defendant with the complaint pursuant to Rule 4:4-4(b)(1)(C), which provides that a plaintiff may effect service by "mailing a copy of the summons and complaint by registered or certified mail, return receipt requested, and, simultaneously, by ordinary mail to: (1) [defendant's] . . . dwelling house or usual place of abode." Although the judge indicated that defendant "never state[d] that he did not live at the [Jamaica] address," defendant certified, in support of his motion to vacate, that "I no longer live at that Jamaica address[.]" It is unclear to us where defendant lived when plaintiff served the complaint.
When service is defective or non-existent and a default judgment results, the judgment is generally void. Rosa v. Araujo, 260 N.J. Super. 458, 462 (App. Div. 1992), certif. denied, 133 N.J. 434 (1993). "A default judgment will be considered void when a substantial deviation from service of process rules has occurred, casting reasonable doubt on proper notice . . . . Such a judgment will usually be set aside under R. 4:50-1(d)." Jameson, supra, 363 N.J. Super. at 425 (citations omitted). In cases where a defendant asserts defects in service of process, due process may be implicated, and further showings, such as that of a meritorious defense, may not be required. Pressler & Verniero, Current N.J. Court Rules, comment 5.4.2 on R. 4:50-1(d) (2012) (citing Peralta v. Heights Med. Ctr., Inc., 485 U.S. 80, 108 S. Ct. 896, 99 L. Ed. 2d 75 (1988)). On remand, we direct the judge to make findings of fact and conclusions of law, following a plenary hearing, regarding the location of defendant's dwelling house or usual place of abode when plaintiff served the complaint. R. 1:7-4(a). If service was improper, the judgment is void and should be vacated.
Next, we turn to defendant's contention that he demonstrated a meritorious defense and is entitled to vacate the judgment. Rule 4:50-1(a) allows the court to vacate a final judgment for "mistake, inadvertence, surprise, or excusable neglect." "Generally, a defendant . . . must show that the neglect to answer [the complaint] was excusable under the circumstances and that he [or she] has a meritorious defense." Marder v. Realty Constr. Co., 84 N.J. Super. 313, 318 (App. Div.), aff'd, 43 N.J. 508 (1964). "Excusable neglect" under Rule 4:50-1(a) has been defined as carelessness "attributable to an honest mistake that is compatible with due diligence or reasonable prudence." Mancini v. EDS, 132 N.J. 330, 335 (1993).
Although the judge stated that the "[p]roposed [a]nswer does not raise any meritorious defense to the contract-based claim[,] nor do the moving papers allude to any cognizable defense," there appears to be a bona fide dispute concerning the terms of the agreement to purchase the property and repay the loan. Moreover, there appears to be a genuine dispute regarding whether plaintiff is entitled to share in the profits and, if so, how to calculate the amount owed to plaintiff. If the judge determines that plaintiff properly served the complaint on defendant, we direct the judge to revisit defendant's contention that he demonstrated a meritorious defense, make sufficient findings of fact and conclusions of law, and determine whether defendant is entitled to vacate the judgment.
We have reviewed the record and the briefs of counsel and conclude that defendant's remaining arguments are without sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).
Reversed and remanded. We do not retain jurisdiction.
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