LORRAINE SIMONS v. 253 EAST 33RD STREET, LLC.

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-2791-05T12791-05T1

LORRAINE SIMONS,

Plaintiff-Respondent,

v.

253 EAST 33RD STREET, LLC.

Defendant-Appellant.

______________________________

 

Submitted July 19, 2006 - Decided August 10, 2006

Before Judges Fuentes and Graves.

On appeal from Superior Court of

New Jersey, Law Division, Passaic

County, Docket No. L-1949-04.

Friedman, Sherwin & Scarola, attorneys

for appellant (Keith O. Evans, on the

brief).

Daniel C. Kleeman, attorney for

respondent.

PER CURIAM

Defendant 253 East 33rd Street, LLC, appeals from the order of the Law Division denying its application to vacate a judgment against it obtained by plaintiff Lorraine Simons in connection with injuries she sustained as a result of an accident on defendant's property. We now reverse.

The accident allegedly occurred on May 16, 2003. The record is clear that defendant took reasonable steps to secure liability insurance coverage for the property by paying its insurance agent $900 on January 15, 2003. The agent, J. Prince Agency, Inc., ("Prince Agency") gave defendant a receipt for this payment, and on the same date, faxed a letter to FTP, Inc., the carrier's insurance broker, directing it to issue an endorsement to add the property at issue to an existing policy insuring defendant.

In or about June of 2003, defendant received a written notice from plaintiff's counsel formally advising it of the accident. In response, the Prince Agency prepared a formal "General Liability Notice of Occurrence" dated July 1, 2003, containing all of the pertinent information about the claim. Defendant assumed that this notice was sent to the carrier for follow up action.

The next notice defendant received in connection with the accident was a letter from plaintiff's counsel dated December 22, 2004, advising it of a proof hearing scheduled for January 7, 2005. Defendant immediately conveyed this information to the Prince Agency, who in turn faxed a copy of the letter to the claims department of FTP, Inc., stating "please find copy of letter received by the above-captioned insured [defendant] as per previously reported claim." The fax transmittal sheet concluded by requesting that FTP, Inc. give the matter "the necessary attention."

Defendant did not discover that no action had been taken to represent and protect its interests in plaintiff's law suit, until April 2005. A judgment search conducted in connection with the sale of the property revealed that an $87,000 default judgment had been entered against it. Once again, defendant contacted the Prince Agency. This prompted the following fax from Prince to the carrier's broker:

My records indicate that this claim had been submitted to your office upon receipt of original letter for claims from the claimant's attorney.

In as much as this is the first notice that I have had that there was no representation of the insured on this case I am quite concerned. [sic] My records indicate that this, was added to the insured's policy well before the date of loss via fax to Maureen Norton [broker's representative] and that copies of same were followed up on numerous occasions by my office.

After some initial confusion in ascertaining the location of the accident, FTP, Inc., sent a short response simply stating that "the effective date of the endorsement (adding location on) was after the date of loss (5/16/03)." Left with no other recourse, defendant filed a negligence claim against the Prince Agency and FTP, Inc., and a declaratory action against the carrier, Evanston Insurance Company. Thereafter, defendant moved to vacate the default judgment and consolidate plaintiff's action with its coverage claim.

Plaintiff opposed the motion arguing that defendant had not met the standard for relief. Without the benefit of oral argument, the trial court denied defendant's motion to vacate the default judgment, simply stating on the order: "Application is denied. Excusable neglect not demonstrated why defendant allowed default judgment to be entered [and] then waited approximately 1 year before bringing this motion."

Defendant grounded its motion to vacate the default on the provisions of Rule 4:50-1(a) (excusable neglect) and (f) ("any other reason justifying relief from the operation of the judgment"). Rule 4:50-2 limits the availability of the excusable neglect provision to motions brought within one year of the entry of the default judgment. Here, the default judgment was entered on February 28, 2005. Defendant's motion to vacate was sent to the court for filing on December 27, 2005, and was made returnable on January 20, 2006. Thus, as the motion judge implicitly recognized, defendant was legally entitled to have its motion reviewed and considered under the excusable neglect standard.

Under the excusable neglect standard, it is well settled that a trial court is obligated to review a motion to vacate a default judgment "with great liberality, and should tolerate "every reasonable ground for indulgence . . . to the end that a just result is reached." First Morris Bank & Trust v. Roland Offset Serv. Inc., 357 N.J. Super. 68, 71 (App. Div.) (quoting Mancini v. E.D.S., 132 N.J. 330, 334 (1993)), certif. denied, 176 N.J. 429 (2003). We review the denial of such a motion under the mistaken exercise of discretion standard. M & D Assocs. v. Mandara, 366 N.J. Super. 341, 350 (App. Div.), certif. denied, 180 N.J. 151 (2004).

We are satisfied that defendant's failure to respond to plaintiff's suit was justified under the circumstances. The record shows that defendant acted with reasonable dispatch every time he received a notice of any pending action in connection with plaintiff's claim. Defendant was entitled to rely on the representations made by the Prince Agency assuring it that plaintiff's complaint had been reported to the carrier for representation and, if warranted, indemnification. The reason owners of real property purchase liability insurance is to avoid this precise risk. The record is clear that defendant did everything reasonably expected under the circumstances.

The order of the Law Division denying defendant's motion to vacate plaintiff's default judgment is reversed. The matter is remanded for such further proceedings as may be required.

 

(continued)

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6

A-2791-05T1

 

August 10, 2006