August 14, 2013
HOLLY LANZARO, Plaintiff-Respondent,
EUGENE LANZARO, Defendant-Appellant.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted February 26, 2013
On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Monmouth County, Docket No. FM-13-1873-11.
James J. McGuire, Jr., attorney for appellant (Mr. McGuire and Philip C. Pyle, on the brief).
Keith, Winters & Wenning, attorneys for respondent (Brian D. Winters, on the brief).
Before Judges Ostrer and Kennedy.
Defendant Eugene Lanzaro appeals from a final judgment of divorce by default entered on October 6, 2011, after eight years of marriage. He argues the court erred in denying his counsel's oral request to vacate default, made at the hearing held following plaintiff's notice for final judgment under Rule 5:5-10. He also asserts error in the court's conduct of the hearing. Having considered his arguments in light of the record and applicable law, we affirm.
Plaintiff filed her complaint for divorce on May 24, 2011, and served defendant on July 1, 2011. Plaintiff had previously obtained a domestic violence restraining order against defendant. On July 22, 2011, the court granted plaintiff's motion for sale of the marital home, to which defendant had not responded. The court also ordered defendant to contribute to roof expenses, restrained the parties from the dissipation of marital assets, and awarded plaintiff counsel fees.
In response to plaintiff's request pursuant to Rule 4:43-1, the court, on August 10, 2011, entered defendant's default on the docket based on his failure to answer the complaint or otherwise defend the action. Also in August, plaintiff filed multiple applications for relief regarding the marital home, which were served on defendant. Although some applications were denied, the court in early September granted plaintiff's motion in aid of litigant's rights, granting her power of attorney for the limited purpose of selling the marital home, and for counsel fees.
On September 15, 2011, she filed a notice of proposed final judgment of divorce pursuant to Rule 5:5-10, and served defendant. She sought equitable distribution, but not alimony. The parties had no children together. The court scheduled the hearing for October 6, 2011.
On October 4, 2011, defense counsel wrote to the court requesting an adjournment "to permit me to file an answer" and to stop the distribution of assets in which defendant had an interest. He stated he was "[r]ecently asked to commit to the captioned matter by the family of the defendant, " his client was incarcerated in the county jail, and had been grappling with substance abuse issues. Counsel previously represented defendant in connection with criminal charges against him. Plaintiff opposed the request, and the court denied it.
On October 6, 2011, the court held a hearing at which plaintiff and both counsel appeared. It is unclear whether defendant appeared, although we infer he did, because his counsel sought unsuccessfully to call him as a witness. Defense counsel renewed his request for an adjournment, asserting his client had either been incarcerated or hospitalized for sixty of the previous ninety days. Counsel conceded he did not file a formal motion to vacate default. However, he asked the court to accept his oral "application to vacate the default" and allow defendant to conduct discovery and attempt to settle the case.
Judge Dennis R. O'Brien rejected the request, noting that defendant's behavior to that point had been "contemptuous towards the entire process, " there was no excusable neglect to justify his failure to participate in the proceedings or his failure to file a formal motion to vacate, and he had presented no meritorious defense.
At the proof hearing, the court heard testimony from plaintiff, who was subject to cross-examination, and rejected counsel's request to present testimony from defendant. Plaintiff requested divorce based on irreconcilable differences. Consistent with her proposed judgment, she sought a provision that neither side receive alimony, nor provide health or life insurance for the other, as neither possessed insurance, and their incomes were roughly equivalent. She stated she earned $500 to $600 weekly plus tips as a hairdresser, and he earned $600 to $700 weekly as a salesperson.
She sought equal division of the net proceeds of the home, after deduction of amounts due from defendant. Plaintiff admitted defendant owned the marital home before the marriage, but she stated the parties tore it down and re-built it with the help of her $130, 000 contribution from an inheritance.
She sought to exclude from distribution her share of her hair salon business, which she purchased with $15, 000 in savings from marital earnings. She argued defendant retained a similar amount in marital earnings for his personal use. She requested that defendant be compelled to return a vehicle titled in her name, purchased during the marriage. She alleged he had accumulated numerous fines and toll charges in connection with the vehicle.
She also proposed that the parties retain their personal bank accounts, including hers at the Royal Bank of Canada, which included some pre-marital funds. She estimated the value of the account at $66, 000, but stated she was unable to estimate exactly how much was premarital. She said defendant also had an account at the bank and, during the marriage, equal contributions were made to the parties' respective accounts. Defense counsel on cross-examination sought additional details of the account, but the court sustained plaintiff's objection that defendant was not entitled to discovery.
Plaintiff also sought $3000 in attorney's fees, incurred in filing several motions and for a restraining order.
At the conclusion of plaintiff's testimony, Judge O'Brien supplemented his reasons for denying defendant's oral request to vacate the default. He found no basis to excuse defendant's failure to respond. Although noting counsel's assertion that defendant was incarcerated or hospitalized, the judge earlier had observed he had no evidence before him regarding the reasons for defendant's incarceration. Regarding the hospitalization, the judge stated, "I don't know what that was for. I don't have anything in front of me to show that."
He found defendant had failed to cooperate with the court. "There were motions that have been gone through in trying to put the marital home on the market that the defendant has failed to cooperate in any way, shape or form[.]" He noted the absence of a presentation of meritorious defenses.
The court then granted a judgment of divorce in accordance with plaintiff's proposed final judgment, noting that it was fair and consistent with the proofs presented. On November 21, 2011, defendant filed a notice of appeal. He argues the court erred in refusing to vacate the entry of default, asserting that he demonstrated excusable neglect and a meritorious defense, and the court's denial violated the Canons of Judicial Conduct. He also argues the court inappropriately interjected itself in the examination of the plaintiff, curtailed cross-examination, and barred defendant from testifying. He also asserts default should have been vacated because service was defective.
We consider first defendant's argument that the court erred in denying his oral request to vacate default. Rule 4:43-3 requires a party seeking vacation of a default to file a motion "accompanied by (1) either an answer to the complaint and Case Information Statement or a dispositive motion pursuant to R. 4:6-2, and (2) the filing fee for an answer or dispositive motion, which shall be returned if the motion to vacate the entry of default is denied." The court may vacate entry of default upon "good cause shown."
"[T]he requirements for setting aside a default under Rule 4:43-3 are less stringent than . . . those for setting aside an entry of default judgment under Rule 4:50-1." N.J. Mfrs. Ins. Co. v. Prestige Health Grp., LLC, 406 N.J.Super. 354, 360 (App. Div.) (citation omitted), certif. denied, 199 N.J. 543 (2009). Trial courts should view motions to vacate "with great liberality, and every reasonable ground for indulgence is tolerated to the end that a just result is reached." Marder v. Realty Constr. Co., 84 N.J.Super. 313, 319 (App. Div.) (addressing motion to vacate default judgment), aff'd, 43 N.J. 508 (1964). Nevertheless, a trial court's ruling on a motion to vacate a default will not be disturbed absent an abuse of discretion. Cf. U.S. Bank Nat'l Ass'n v. Guillaume, 209 N.J. 449, 467 (2012) (motion to vacate default judgment under Rule 4:50-1).
"A mere showing of good cause is required for setting aside an entry of default." N.J. Mfrs. Ins. Co., supra, 406 N.J.Super. at 360. In considering whether good cause exists, courts "typically cite three factors . . . [w]hether the default was willful or culpable; [w]hether granting relief from the default would prejudice the opposing party; and [w]hether the defaulting party has a meritorious defense." James W. Moore, et al., 10 Moore's Federal Practice - Civil § 55.70[a] (3d ed. 2013) (reviewing comparable Fed.R.Civ.P. 55(c), which states "[t]he court may set aside an entry of default for good cause").
The Court considered two of these three factors — the movant's lack of willfulness and the presence of a meritorious defense — in determining that vacating default was appropriate in O'Connor v. Altus, 67 N.J. 106, 129 (1975). "[T]he presence of a meritorious defense worthy of judicial determination . . . and the absence of any contumacious conduct on the part of Altus . . . are sufficient to constitute 'good cause' within the contemplation of R. 4:43-3[.]" Ibid.
In particular, "the showing of a meritorious defense is a traditional element necessary for setting aside both a default and a default judgment[.]" Pressler & Verniero, Current N.J. Court Rules, comment on R. 4:43-3 (2013); see also 2 John H. Klock, N.J. Practice, Court Rules Annotated, R. 4:43-3 (6th ed. 2010) (a party applying for relief under this rule "must show good cause, that is that a meritorious defense against the claim exists"). As with a motion to vacate a default judgment, there is no point in setting aside an entry of default if the defendant has no meritorious defense. "'The time of the courts, counsel and litigants should not be taken up by such a futile proceeding.'"
U.S. Bank Nat'l Ass'n, supra , 209 N.J. at 469 (quoting Schulwitz v. Shuster, 27 N.J.Super. 554, 561 (App. Div. 1953)). But see N.J. Div. of Youth & Family Servs. v. M.G., 427 N.J.Super. 154, 171-72 (App. Div. 2012) (suggesting that whether movant can demonstrate a meritorious defense is an inappropriate consideration on a motion to vacate default).
In Jugan v. Pollen, 253 N.J.Super. 123, 135 (App. Div. 1992), we considered the willfulness and prejudice factors in deciding that setting aside default was not warranted. Default was entered against the defendant after he willfully refused to cooperate with discovery. He then participated in a proof hearing. We held the defendant could not satisfy the good cause requirement to vacate default in view of "the untimeliness of his demand and the commensurate prejudice to plaintiff[.]" Ibid.
Applying these principles, we discern no basis to disturb Judge O'Brien's exercise of discretion. Defendant did not comply with the prerequisites of the Rule. He filed no written motion, nor did he even present one to the court at the proof hearing. Defendant failed to comply with previous court orders. Judge O'Brien deemed his prior failure to respond to the complaint and to the court's prior order regarding the marital home to be contumacious. We find sufficient evidence in the record to support that finding.
We also do not differ with the court's conclusion that defendant failed to present a proposed answer or any other filing to demonstrate a meritorious defense to plaintiff's equitable distribution claims. Defense counsel's arguments that there were issues regarding the parties' respective contributions to the marital home, and plaintiff's business, do not suffice. A meritorious defense must be assessed on the basis of a proposed answer, see Rule 4:43-3 (requiring motion to vacate entry of default to be accompanied by an answer or dispositive motion, pursuant to Rule 4:6-2), or at the very least, cognizable evidence presented in the form of an affidavit. See R. 1:6-6. In some cases, the merit of a defense may be apparent on the face of the complaint. See Rosenberg v. Bunce, 214 N.J.Super. 300, 304 (App. Div. 1986). ("[W]e perceive from the face of the complaint, answer and other pleadings genuine issues as to liability and damages.") On the other hand, the bald denial of a plaintiff's complaint is usually insufficient to demonstrate that a meritorious defense exists. See Moore, supra, ¶ 55.70 ("While the burden is not high, mere denials or conclusory allegations are not sufficient." (footnote omitted)).
We turn to defendant's remaining arguments. To the extent defendant wished to contest the default based upon defective service of process, he was obligated to do so below. He cannot raise that issue for the first time on appeal. U.S. Bank Nat'l Ass'n, supra, 209 N.J. at 483; Nieder v. Royal Indem. Ins. Co., 62 N.J. 229, 234 (1973). In any event, his counsel appears to have conceded service at the default hearing.
We also find no error in the trial court's handling of the default hearing. The record does not reflect any inappropriate questioning by the court. The court's questions were neutral and directed at determining the source of the money plaintiff used to purchase her fifty percent share of a business.
In addition, the record reflects that defense counsel was permitted to cross-examine plaintiff regarding her proposed equitable distribution of assets, subject to appropriate limitations for a default hearing. Defendant had no right to testify and present affirmative evidence at the hearing. Chakravarti v. Pegasus Consulting Grp., Inc., 393 N.J.Super. 203, 210-11 (App. Div. 2007); Johnson v. Johnson, 92 N.J.Super. 457, 464 (App. Div. 1966).
Defendant's claim that the court violated the Canons of Judicial Conduct lacks sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).