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NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION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.
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, ...