April 17, 2012
ARAGIE WOLDE-MESKEL, PLAINTIFF-APPELLANT,
PETER KLAUSZ; CHRISTOPHER M. FENIMORE; PHILLIP CLARK; ERIK LUGASHI;*FN1 JONATHAN BAIGE;*FN2 WILLIAM REILLY; DARIO A. FENIMORE, CO-SIGNOR), DEFENDANTS-RESPONDENTS. ARAGIE WOLDE-MESKEL, PLAINTIFF-RESPONDENT,
PETER KLAUSZ, DEFENDANT-APPELLANT, AND CHRISTOPHER M. FENIMORE; PHILLIP CLARK; ERIK LUGASHI; JONATHAN BAIGE; WILLIAM REILLY; DARIO A. FENIMORE, DEFENDANTS.
On appeal from the Superior Court of New Jersey, Law Division, Essex County, Docket No. L-3691-06.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted February 14, 2012
Before Judges Grall and Alvarez.
Plaintiff Aragie Wolde-Meskel rented a house in South Orange to six college students: Peter Klausz, Christopher M. Fenimore, Phillip Clark, Erik Lugashi, Jonathan Baige, and William Reilly. After their eviction, plaintiff filed an action against the six, in addition to Christopher Fenimore's father, Dario A. Fenimore, who also signed the lease, to compel payment of back rent and for alleged damages to the premises. A directed verdict was entered in favor of all the defendants except one, Peter Klausz, at the close of plaintiff's case. Plaintiff appeals.
Pre-trial, plaintiff obtained a default judgment against Klausz. Post-trial, Klausz claims when he learned about the directed verdict as well as the default judgment entered against him, he filed a motion seeking to vacate the default and dismiss the proceeding, on the basis that the precise facts warranting dismissal of plaintiff's cause of action applied to him. That motion was denied, and Klausz appeals.
We consolidate the two appeals for the purpose of rendering a decision. We deny plaintiff's appeal and affirm the judgment granting defendants a directed verdict. We vacate the default judgment entered against Klausz, and dismiss the proceeding against him because we affirm the trial judge's award of a directed verdict.
Before discussing plaintiff's appeal, we note that his brief does not conform to the requirements of Rule 2:6-2(a)(5), which states that an appellant's brief must contain legal arguments, divided into appropriate point headings. Plaintiff's legal argument repeats the procedural history virtually word-for-word, simply adding underlining and bold type for emphasis, and citations to the transcript. Plaintiff does not raise any claims of legal error, or cite statutes or case law. He merely directs our attention to portions of the testimony, including the comments of counsel and the judge's questions.
Plaintiff contends that the directed verdict must be reversed and offers in support of the proposition four factual disputes, all of which were resolved against him. Plaintiff also complains that the court dismissed the jury in an untimely fashion, that the audio system was broken by the secretary, that the judge lost crucial exhibits over a weekend during the trial, and that defendants have "unclean hands" because they presented an altered lease to the court.
Plaintiff's brief's lack of compliance with rules, and general unintelligibility, make it tempting to dismiss the appeal outright. See, e.g., Mid-Atl. Solar Energy Indus. Assoc. v. Christie, 418 N.J. Super. 499, 508 (App. Div.), certif. denied, 207 N.J. 190 (2011); see also DeSoto v. Smith, 383 N.J. Super. 384, 395, n.1 (App. Div.), certif. denied, 187 N.J. 81 (2006). Because of the related Klausz appeal, however, we elect to review the trial judge's decision on the merits.
On May 9, 2006, plaintiff filed his complaint against Klausz, Fenimore, Clark, Lugashi, Baige, Reilly, Dr. Fenimore, and John Doe 1-7, for unpaid rent and damages. On July 18, 2006, Reilly filed an answer, defenses, and cross-claim. In his brief, the attorney for defendants Fenimore, Dr. Fenimore, Clark, Baige, and Reilly claims that this answer was actually filed on their behalf as well but somehow incorrectly entered as only being entered for Reilly. The answer is not included in plaintiff's appendix. Clark filed a separate answer, defenses, and crossclaims on August 2, 2007.
Mandatory arbitration was ordered for July 26, 2007. For reasons we cannot discern from the record, defendants did not appear. As a result default was entered against Fenimore, Klausz, Clark, Baige, and Dr. Fenimore.*fn3
Again, for reasons we cannot discern from the record, the complaint was dismissed as to Lugashi, and on September 7, 2007, Judge Walter Koprowski, Jr., denied an application to vacate the dismissal. In seeming contradiction to Lugashi's status as a dismissed party, he ordered Lugashi to "identify" interrogatories and "request[ed] [p]laintiff to answer within seven days[,]" and directed plaintiff to file a motion to vacate dismissal within thirty days. On October 2, 2007, Lugashi filed a motion to dismiss plaintiff's complaint for failing to comply with the order of September 7, but two days later, on October 4, plaintiff filed a motion to vacate the dismissal. The Law Division heard the matter on November 16, 2007, and plaintiff finally answered Lugashi's interrogatories on November 23, 2007.
Plaintiff's answers were deficient, however, and he did not supplement them until December 10, 2007. Finally, on January 14, 2008, to add to the confusion, the court denied Lugashi's motion to dismiss, and granted plaintiff's motion to vacate the dismissal. All the information about this confused procedural history between Lugashi and plaintiff we glean from a January 14, 2008 letter written by Judge Koprowski to plaintiff and Lugashi's lawyer.
On May 4, 2009, the parties were unable to reach a settlement at a conference conducted by Judge Sebastian P. Lombardi, who ultimately tried the matter. He denied defendants' motion to dismiss the complaint on July 30, 2009.
Trial was held on August 5, 6, and 10, 2009. On August 10, 2009, the court dismissed the jury after plaintiff rested, and granted a directed verdict in favor of defendants. The actual order for directed verdict was signed on September 24, 2009.
The one-year lease between plaintiff and the tenants began July 1, 2003, and ended June 30, 2004. At trial, plaintiff and the defendants who participated disagreed about the lease terms. Plaintiff claimed the lease called for a $6000 security deposit and monthly rent of $4000, while defendants claimed the lease provided for a $3000 security deposit and monthly rent of $3000. The lease named Klausz, Fenimore, Clark, Lugashi, Baige, and Reilly as tenants. Dr. Fenimore was sued because, as Fenimore's father, he had co-signed the lease.
A South Orange township ordinance requires "certificates of habitability" for all rental properties. South Orange, N.J., Ordinance § 117-12 (Mar. 22, 1999). The certificate, requiring the signature of the landlord, the tenant, and an inspector, is filed with the code enforcement office. The signatories acknowledge that the unit has been found to be in compliance with applicable health and housing standards, and that the maximum allowable occupancy is six persons. That indication appears on the face of the document in accord with another township ordinance, which requires such certificates to state the premises comply with the municipal code as to the "maximum number of persons that may lawfully occupy the premises . . . ." South Orange, N.J., Ordinance § 117-15 (Mar. 22, 1999).
A senior code enforcement officer, Inspector Lillian Black, testified that her office received two leases. Plaintiff submitted one on June 20, 2003, the date he applied for the certificate of habitability. That lease called for a $6000 security deposit and monthly rent of $4000. The second lease was submitted by Reilly on May 17, 2004. The second lease was altered and had different figures.
At trial, plaintiff initially testified that he alone signed the certificate of habitability. He later claimed, in a colloquy with the court, the contrary. In any event, the certificate clearly stated that the maximum allowable occupancy was six persons. Defendants claimed eleven people actually lived in the house at various points during the year, with plaintiff's knowledge.
Plaintiff testified that he initiated eviction proceedings to collect unpaid rent and because defendants destroyed the property. When plaintiff initiated the eviction proceeding, he contacted Beinhaker, only Dr. Fenimore's attorney at the time, and eventual counsel of record for all defendants except Lugashi, and demanded $8000. Beinhaker, after consulting with Dr. Fenimore, agreed $6300 would be paid. After accepting the money, plaintiff said he faxed the "itemized cost" for damages to counsel, but received nothing further. Additionally, he did not receive April's rent, resulting in the eventual issuance of a warrant of removal.
Plaintiff admitted that he knew more than six people were living in the house at certain times. He insisted each individual paid $500 per month, which would total $3000 overall with six tenants, not the $4000 he claimed was the actual amount of monthly rent. He testified that:
Klausz is the one to collect the money from all parents and he collect[s] from everybody and he gave me one house check. They have house checks. And then sometimes he doesn't have - - some people didn't send a check, he give[s] me 2,000 and then he had three or four checks from other kids that he give[s] me and sometimes it balance[s] out even Christopher [Fenimore]'s mother one time indicate[d] that only one kid bounce[d] a check when you come up to give me $6,000 in checks.
After giving credit for the $6300 he received from the Fenimores and the $6000 security deposit, plaintiff claimed he was owed $9032 in unpaid rent.
Nancy Fenimore, Fenimore's mother, testified that she paid rent on behalf of her son in the amount of $500 a month. She also stated that more than six people lived in the house, though she was not sure exactly how many. This was corroborated by Black, who issued a summons for overcrowding on March 11, 2004. She said defendants complied, and when she returned only five or six people were in the house.
In addition to proffering his own testimony, plaintiff presented various exhibits. Some were excluded by the judge, notably his "proof" of damages, as the judge found no foundation was established for the admission of the documents.
Defendants moved for a directed verdict contending that the certificate of habitability and the township ordinance limited occupancy to only six people, and that plaintiff's own testimony established that more than six people resided there with his full knowledge and consent. In fact, if plaintiff always received rent checks in increments of $500 per tenant, then the rent paid by six tenants would total $3000, not the $4000 per month plaintiff demanded. Additionally, defendants pointed out that plaintiff's complaint was filed not only against individual named tenants, but seven unknown parties designated as "John Does." Defendants therefore argued that plaintiff knowingly violated the law and "stands before this [c]court with unclean hands."
The trial judge agreed. As he explained it, if six tenants owed $4000 per month, the amount each person owed would be $667 and no proof whatsoever was presented that any individual payment was ever made in that amount. The only proof was that the rental increments came in as multiples of $500. Therefore, in his opinion, it was reasonable to infer that:
[B]oth these tenants and [plaintiff] actually agreed that this would be rented to eight people at $500 apiece, but they agreed they wouldn't put the other people on the lease because that would be illegal, that the place was only approved under the township ordinance for six people, they all knew it. So they were going to make up a lease that would say 48,000, but it was understood that these six tenants and one or more of these tenants would collect rent from these unnamed people off the lease and give that extra $1,000 for two more people to [plaintiff].
The only alternative explanation was that some of the six tenants paid more rent - which conclusion was not supported by any of the testimony.
Accordingly, the trial judge concluded this was an unenforceable illegal lease. With regard to damages, the court found plaintiff's proofs to be wanting and made no award. He granted defendants' application for a directed verdict on September 24, 2009.
Plaintiff, on appeal from the directed verdict, raises the following singular point:
For the foregoing reasons, the decision of the August 10,[ ]2009 direct verdict need to remanded because the New [J]ersey land lord and tenancy law permit the land l[o]rd to collect for any rent owed by his tenant and be compensate for the vandalized/damaged Property by his tenants. Furthermore, these tenants were evicted and locked out after hearing in Essex County Land lord and tenants court with proper evidence presented and that these Tenants owed the Rent for several months and damage and vandalized the property costs Amounted in several thousands of dollars.
Under Rule 4:40-1, "[a] motion for judgment . . . may be made by a party . . . at the close of all the evidence offered by an opponent." The standard of review is the same as that for a motion for Rule 4:37-2(b) involuntary dismissal and Rule 4:40-2 judgment notwithstanding the verdict. Pressler & Verniero, Current N.J. Court Rules, comment 1 on R. 4:40-2 (2012).
In deciding the motion, the court "must accept as true all evidence supporting the position of the party defending against the motion and must accord that party the benefit of all legitimate inferences which can be deduced [from the evidence]." Besler v. Bd. of Educ. of West-Windsor Reg'l School, 201 N.J. 544, 572 (2010) (quoting Lewis v. Am. Cyanamid Co., 155 N.J. 544, 567 (1998)). If reasonable minds could reach different conclusions, the motion must be denied. Rena, Inc. v. Brien, 310 N.J. Super. 304, 311 (App. Div. 1998) (citing Brill v. Guardian Life. Ins. Co. of America, 142 N.J. 520, 535-36 (1995)).
If the evidence is so one-sided, however, that one party must prevail as a matter of law, then a directed verdict is appropriate. Frugis v. Bracigliano, 177 N.J. 250, 269 (2003) (quoting Brill, supra, 142 N.J. at 536). The trial judge may not consider issues of witness credibility in making the determination. See Rena, supra, 310 N.J. Super. at 312.
We utilize the same standard that governed in the trial court. Frugis, supra, 177 N.J. at 269. If the evidence was such that, with all reasonable inferences being given to plaintiff, reasonable minds could not differ, then the directed verdict in favor of defendants must be affirmed. See id. at 269-71.
The trial judge, in deciding the motion for a directed verdict, clearly attempted to give all reasonable inferences to plaintiff. He stated that he tried to infer from the evidence that the six tenants agreed among themselves to pay different amounts depending on the size of their rooms, but found no evidence to support this. Instead, the evidence, including the testimony of three witnesses: plaintiff, Nancy Fenimore, and Black; the fact that John Does were listed on the complaint; and the denominations on all the checks received indicate that the only reasonable inference is that defendants and plaintiff agreed that more than six people would live in the house.
Given these findings, we now turn our attention to the question of whether the judge's conclusion that the township ordinances limiting occupancy to six, as certified in the certificate of habitability, make this an illegal agreement.
Where both parties have engaged in wrongdoing, the defendant's position is stronger. See, e.g., Stella v. Dean Witter Reynolds, Inc., 241 N.J. Super. 55, 73 (App. Div.), certif. denied, 122 N.J. 419 (1990). "[C]courts will not enforce an illegal contract and . . . no party can recover in any action where it is necessary for him to prove an illegal contract in order to make out his case." Ibid. (quoting Black's Law Dictionary 1004 (5th Ed. 1979)). See also Bondi v. Citigroup, 423 N.J. Super. 377, 404 (App. Div. 2011) (citing Marx v. Jaffe, 92 N.J. Super. 143, 146 (App. Div.), certif. denied, 48 N.J. 140 (1966)).
Here, because the parties agreed to violate the law, thus entering into an illegal contract, the lease was unenforceable. Plaintiff's proofs establish the existence of an agreement to violate the township zoning ordinance, rendering the lease illegal. Plaintiff should not be permitted to benefit from this illegal contract. Accepting as true all of plaintiff's evidence, it is clear as a matter of law that the entry of a directed verdict is appropriate because of the illegal nature of the agreement he entered into with the defendant tenants.
The appeal of the entry of default against Klausz is equally confusing and requires a separate discussion. On October 23, 2006, plaintiff filed a motion for entry of default judgment against Klausz. Klausz claims that Dore Beinhaker, Esquire, his present attorney, who then represented only the Fenimores, Reilly, Clark, and Baige, was mistakenly listed as his lawyer. He contends that may have contributed to the fact he was never served with either plaintiff's complaint, his motion to enter default, or the final judgment.
Initially denied on November 17, 2006, default was entered against Klausz on May 30, 2007. Default judgment was entered on July 26, 2007, in the amount of $24,299.75. Plaintiff was ordered to serve Klausz a copy of the order within ten days. Klausz claims this did not occur. Beinhaker, then acting merely, as he describes it, "as an officer of the [c]court," moved to vacate the judgment against Klausz, because since he did not represent Klausz, Klausz had never been served with either the complaint or judgment.
On January 26, 2009, Judge Eugene J. Codey, Jr., issued a writ of execution against Klausz in the amount of $24,299.75. On June 26, 2009, a judge of the Special Civil Part denied Beinhaker's motion to vacate the judgment entered against Klausz. In September, 2009, Klausz filed a notice of motion to vacate the default judgment and dismiss the complaint. On January 8, 2010, the same judge denied Klausz's motion.
Klausz alleges he learned of the directed verdict only from the other tenants after the trial was over. He certified to the court that he "never received any communications of any kind from the [c]courts or the [p]laintiff with regard to this matter, including a copy of a judgment."
Plaintiff's appendix includes a certified mail receipt signed by Klausz on May 17, 2004, another receipt signed on June 6, 2006, and a certified mailing that was sent to Klausz on July 29, 2007 and returned to plaintiff in August 2007. Klausz's appendix also includes a certified mailing on which the date of mailing was unclear, but which was returned to plaintiff on April 26. Although no year is included, it is almost certainly from 2007, as Klausz notes that plaintiff attempted to send a certified mailing on April 23, 2007, which was returned because he did not sign for it.
Klausz's motion to vacate the default judgment and dismiss the complaint was denied on January 8, 2010. The judge explained that:
Default judgment was entered by Judge Koproswki on 7/26/07 and never appealed. A prior motion for the same relief was denied by the court May 7, 2009 and never appealed - no grounds to vacate the judgment 2 and 1/2 years after judgment have been supplied. There is no newly discovered evidence.
Klausz argues the following:
POINT I: The Judgment entered against Peter Klausz should be vacated because he was never served with the Complaint or in the alternative the default was entered without serving a notice of motion.
POINT II: The Judgment entered against Peter Klausz should be vacated because he was never served with a copy of the Judgment as expressly set forth in the Judgment.
POINT III: The Complaint against Peter Klausz should be dismissed because the Honorable Sebastian Lombardi, J.S.C. entered an Order for a Directed Verdict in favor of all of the other Defendants.
As to Klausz's appeal, under Rule 4:4-3, a defendant must be served with a summons and a copy of the complaint. Where service of process is defective, grounds are thereby established which warrant setting aside a default judgment. See Berger v. Paterson Veterans Taxi Serv., 244 N.J. Super. 200, 205 (1990).
Service upon an out-of-state party, such as Klausz, may be accomplished whenever necessary via mailing if the plaintiff:
(1) mails a copy of the summons and complaint by registered or certified mail, and (2) mails a copy by ordinary mail. R. 4:4-4(b)(1)(C). The plaintiff must file an accompanying affidavit of inquiry, in accordance with Rule 4:4-5(b), setting out why, "despite diligent effort and inquiry[,]" personal service could not be made in accordance with Rule 4:4-4(a). R. 4:4-4(b)(1).
Plaintiff's appendix does not include any affidavits of mailing filed simultaneously with certified mail receipts. See R. 4:4-5(b). Klausz signed a certified mail receipt on June 6, 2006, but the contents obviously are in dispute - Klausz claims he never received a copy of the complaint, while plaintiff asserts a copy of the complaint, and presumably the summons, was enclosed. Without an affidavit of mailing, of course, we cannot determine if any ordinary mailing was accomplished in addition to certified mail. In any event, we conclude the initial service of process was inadequate, thereby voiding the default judgment. See R. 4:4-4(b)(1). Moreover, the failure to file an affidavit of inquiry is a separate jurisdictional flaw which renders service deficient. See Pressler & Verniero, Current N.J. Court Rules, comment on R. 4:4-5 (2012).
The entry of default is a nullity for separate reasons, pursuant to Rule 1:6-3. Id., comment 1 on R. 4:43-1. A notice of motion for entry of default judgment must be provided to a defendant within sixteen days of the specified return date. R. 1:6-3(a). Furthermore, the plaintiff must file an affidavit reciting the service of process and complaint on the defendant, the date of service, and the time within which a defendant may answer. R. 4:43-1. That did not occur in this case either.
"The giving of  notice . . . is considered a matter of fairness." Dynasty Bldg. Corp. v. Ackerman, 376 N.J. Super. 280, 285 (App. Div. 2005). The penalty for failing to serve notice turns on whether Klausz was prejudiced. Here, we have no indication that Klausz actually knew about plaintiff's motion.*fn4
As a result, final judgment was entered against him for $24,299.75, while the remaining defendants obtained a directed verdict. Klausz was clearly prejudiced by plaintiff's failure to provide notice. Vacation of the default and the judgment entered against him are therefore necessary.
It is also worth noting that the documents plaintiff did file were inadequate. Plaintiff included a certification of service in his appendix, which can serve as an appropriate substitute for an affidavit. R. 1:4-4(b). Unfortunately, the certification lacks essential information, specifically, the time in which Klausz may answer. This crucial omitted information provides additional support for setting aside the default judgment.
When default has been entered, the plaintiff may request that the clerk enter final judgment by default. "Within seven days after receipt of the executed judgment from the court, the proponent of the judgment shall serve a copy thereof on the defaulting defendant . . . ." R. 4:43-2(c). As noted above, inadequate service of process can be a basis for reversal of the default judgment, see Berger, supra, 244 N.J. Super. at 205, provided prejudice can be demonstrated. See Dynasty Bldg. Corp., supra, 376 N.J. Super. at 285.
There is no evidence that plaintiff sent Klausz a notice of motion regarding default judgment, the first deficiency. In fact, the parties do not agree as to whether a copy of the default judgment was ever even served on Klausz.
Plaintiff claims he mailed a copy to Klausz on July 29, 2007, but it was returned to him. This is not adequate service. Klausz's lack of notice resulted in him shouldering the full amount due on an illegal lease. Upon learning of the existence of the default judgment and the directed verdict, Klausz took prompt action. This particular aspect of the all-in-all defective service also merits vacating the default judgment.
Klausz further requests that we not remand the matter to the trial court, but decide the matter based on the directed verdict. He asserts that the doctrine of res judicata enables us to reach a decision on the merits once the default is vacated. Res judicata "serve[s] the important policy goals of 'finality and repose; prevention of needless litigation; avoidance of duplication; reduction of unnecessary burdens of time and expenses; elimination of conflicts, confusion and uncertainty; and basic fairness[.]'" First Union Nat. Bank v. Penn Salem Marina, Inc., 190 N.J. 342, 352 (quoting Hackensack v. Winner, 82 N.J. 1, 32-33 (1980)). It "insulates courts from the inefficiency of relitigating claims that have already been resolved," protecting the integrity of final judgments and parties from harassment. Bondi v. Citigroup, Inc., supra, 423 N.J. Super. at 422.
Res judicata has three elements:
(1) the judgment in the prior action must be valid, final, and on the merits; (2) the parties in the later action must be identical to or in privity with those in the prior action; and (3) the claim in the later action must grow out of the same transaction or occurrence as the claim in the earlier one. [Ibid. (quoting Watkins v. Resorts Int'l Hotel & Casino, Inc., 124 N.J. 398, 412 (1991)).]
In this case, the judgment in the prior action was valid, final, and on the merits. It was a directed verdict in favor of defendants based on the unenforceability of the lease. The parties in that prior action were identical; Klausz was a named defendant. Finally, the claim arose out of the same transaction or occurrence; it is exactly the same.
This case has already been fairly litigated and determined. The doctrine of res judicata applies if the default judgment was vacated, as it should be. Therefore, we agree that the trial court should dismiss the plaintiff's complaint against Klausz with prejudice.
Affirm as to the directed verdict in favor of defendants; reverse as to the denial of the motion to vacate the default judgment; and remand to the trial court to dismiss plaintiff's complaint as to Klausz.