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Healthquist, Inc v. Diagnostic Mobile Imaging

June 29, 2012


On appeal from the Superior Court of New Jersey, Law Division, Middlesex County, Docket No. L-4086-10.

Per curiam.


Submitted February 28, 2012 -

Before Judges Payne and Simonelli.

Defendant, Diagnostic Mobile Imaging, L.L.C. (Diagnostic), appeals from the court's order of November 12, 2010, denying Diagnostic's motion to vacate a default judgment entered against it in the amount of $34,382.48, and permitting it to file an answer to the complaint of plaintiff, Healthquist, Inc. out of time.

The record in the matter discloses that Diagnostic is a provider of medical diagnostic services that entered into a medical billing services agreement with Healthquist on October 25, 2005. The agreement stated that Diagnostic was located at 192 Washington Street, Perth Amboy, New Jersey. The agreement was executed on behalf of Diagnostic by Ernest Williams, its principal.

On April 21, 2010, counsel for Healthquist sent a "verification notice" to Diagnostic, at 40 New Brunswick Avenue, Perth Amboy, notifying it of a debt of $34,382.48 and stating: "If you notify us within 30 days, in writing, that the debt is disputed, we will mail to you verification of the original debt before proceeding." By letter dated May 18, 2010, Williams responded on behalf of Diagnostic, stating that it was disputing the validity of the debt and would be "retaining counsel to pursue charges against Healthquist, Inc." The letter also directed that any further correspondence be sent to 192 Washington Street, Perth Amboy.

Without further communication, Healthquist filed suit against Diagnostic, and on June 24, 2010, its complaint was left at 192 Washington Street with "a person authorized to accept service, e.g. managing agent, registered agent, etc." The person allegedly served was identified by the process server as "Cindy Williams, Authorized Agent," who was described as a female between the ages of 20 and 35, of a height between "5'4"-5'8,"" and a weight between "131-160 lbs.," with brown skin, black hair and glasses. The complaint was also faxed to Ernest Williams, and he has acknowledged receipt at his business location at 400 State Street, Perth Amboy.

No answer to the complaint was filed, and on July 28, 2010, Healthquist sought entry of default and then default judgment, which was entered on August 19, 2010 and served on Diagnostic on September 7, 2010.

By motion filed ten days later on September 17, 2010, Diagnostic sought to vacate the default judgment. In support of its motion, it filed a certification by Williams in which he claimed that service of process had been improper, since "[n]either Defendant nor any of its agents, directors, my wife or I are tenants or owners of the subject real property upon which service was made." Although Williams acknowledged that his wife was known as "Cindy," Williams stated that the physical description of the person served most closely matched that of his mother-in-law, Gladys E. Orengo. Additionally, Williams claimed that Diagnostic did not owe the money that Healthquist was claiming.

The motion was heard on October 15, 2010, at which time counsel for Diagnostic argued that excusable neglect in answering the complaint existed, that service had not been perfected, and that Diagnostic had a meritorious defense to Healthquist's claims. However, because no certification supporting the claim of excusable neglect had been filed and because Diagnostic had just received copies of the checks it alleged would demonstrate that its debt was paid, the court adjourned the matter for two weeks to permit supplementation of the record.

In a further certification dated October 13, 2010, Williams stated that Diagnostic had operated from 400 State Street, Perth Amboy, since January 2010. Prior to that, the business had its primary location at 40 New Brunswick Avenue, Perth Amboy. To ensure uninterrupted receipt of mail, Williams had used his mother-in-law's address as a mailing address for the receipt of correspondence.*fn1 Neither Williams nor his wife resided at that address, but instead, they lived in Amherst, New York, a matter that Williams sought to demonstrate by affixing a copy of his New York driver's license to his certification. Additionally, Williams certified that, after he received the faxed copy of the complaint, he called and sent Healthquist's counsel a letter disputing the debt, and he went to the courthouse to answer the complaint. However, he was informed that he could not appear for the corporation, and that a lawyer was required. Williams continued: "Unfortunately, I had to travel to Florida in July for a 3-week corporate training and was only able to consult and retain an attorney upon my return to New Jersey."

Further argument on the motion took place on October 29, 2010, at which time the court noted that the motion to vacate the default judgment had been filed "a relatively short period of time" after the judgment had been entered - a matter that Healthquist's counsel conceded. The court also referred the parties to our decision in Ammond v. Lafayette, 63 N.J. Super. 86 (App. Div. 1960), a case in which we held that service on an individual pursuant to R. 4:4-4(a) was defective when it was demonstrated to have been accomplished upon a woman who was not a member of defendant's family or a resident in his household. Id. at 89. Further, we held that the non-compliant service had not been cured by evidence that defendant had become apprised of the pendency of the action and had suffered no prejudice in the interim. Ibid. We held that court rules regarding service were to be strictly construed, and that proper service was a prerequisite to jurisdiction. Ibid. The court in the present matter characterized our opinion in Ammond by observing: "what it seems to say is that almost nearly acceptable service is not close enough." The court concluded argument by stating:

So, read the case over and come back and see me in 2 weeks. That's what I think that the - that the default judgment, I'm considering setting that aside. But I will write you a letter. I will ...

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