CATHEDRAL HEALTHCARE SYSTEM, INC. v. JAMES WOLFE et al.

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-3014-05T33014-05T3

CATHEDRAL HEALTHCARE SYSTEM, INC.,

Plaintiff-Respondent,

v.

JAMES WOLFE and JAMES H. WOLFE, III,

Defendants-Appellants.

________________________________________________________________

 

Submitted October 4, 2006 - Decided October 26, 2006

Before Judges Skillman and Holston, Jr.

On appeal from Superior Court of New Jersey, Law Division, Essex County, Docket No. L-4430-02.

Rashidah N. Hasan, attorney for appellants.

Richard J. Kozel, attorney for respondent.

PER CURIAM

Defendant, James H. Wolfe, III, (J.H.W.), appeals the Law Division's December 2, 2005 order denying his motion to vacate a default judgment and the Law Division's January 22, 2006 order denying his motion for reconsideration. We reverse.

On May 6, 2002, plaintiff, Cathedral Healthcare Systems, Inc., filed a complaint for $206,491.47 alleged to be due and owing on a book account for health care services rendered to defendant, James Wolfe (J.W.). Prior to his death on April 6, 2005, J.W. was a resident of the Pope John Pavilion, a long-term healthcare facility operated by plaintiff. Defendant, J.H.W., J.W.'s son, was also sued. The complaint alleged that J.H.W. was liable to plaintiff because J.H.W. signed a written guarantee of payment for all goods and services rendered to J.W. Counsel for plaintiff and counsel for defendants agreed to a consent order that was entered and filed by the court on December 6, 2002, "vacating any default judgment entered against defendants," and permitting defendants twenty days to file an answer to the complaint. On December 16, 2002, without notice to defendant, the court entered a Final Judgment by Default against defendants in the amount of $234,468.07 on the basis that defendants failed to file an answer. On December 20, 2002, within the twenty-day window provided by the December 6, 2002 consent order, defendants' answer was filed with the court. The answer specifically denied the allegations of the fifth count of the complaint alleging that J.H.W. signed a written guarantee of payment for goods and services provided to J.W.

By letter dated May 23, 2005, plaintiff's substituted counsel forwarded to J.H.W., for the first time, a copy of the Final Judgment by Default, which had been entered against defendants. The letter requested that J.H.W. advise plaintiff's counsel how he intended to pay the judgment. On July 19, 2005, plaintiff served an information subpoena on J.H.W. When J.H.W. failed to answer or request an extension of time to answer the information subpoena, plaintiff's counsel filed a motion to compel answers or for a finding that J.H.W. was in violation of litigant's rights. J.H.W. cross-moved for vacation of the default judgment and for an order barring plaintiff from executing on the judgment.

The motion judge granted plaintiff's motion and denied defendants' cross-motion to vacate the default judgment. The motion judge found defendant had not established "good cause" to vacate default judgment because defendant had done nothing in the three years since the default judgment was entered to vacate judgment. The court found defendant had not exercised "due diligence" because he failed to follow up on interrogatories demanded of plaintiff in defendants' answer. On January 20, 2006, defendant's motion for reconsideration was denied. This appeal followed. We reverse.

Rule 4:43-3 provides. "For good cause shown, the court may set aside an entry of default and, if a judgment by default has been entered, may likewise set it aside in accordance with Rule 4:50." Rule 4:50-1 in applicable part provides: "On motion . . . and upon such terms as are just, the court may relieve a party . . . from a final judgment or order for the following reasons: (a) mistake." Rule 4:50-2 requires that "[t]he motion shall be made within a reasonable time, and for reason[] (a) . . . of Rule 4:50-1 not more than one year after the judgment . . . was entered."

Our case law is clear. An application to vacate a default judgment is "viewed with great liberality, and every reasonable ground for indulgence is tolerated to the end that a just result is reached." Marder v. Realty Construction Co., 84 N.J. Super. 313, 319 (App. Div.) aff'd, 43 N.J. 508 (1964); see also Pressler, Current N.J. Court Rules, comment 4 on Rule 4:50-1 (2006). "Nevertheless, a default judgment will not be disturbed unless the failure to answer or otherwise appear and defend was excusable under the circumstances and unless the defendant has a meritorious defense; either to the cause of action itself or if liability is not disputed, to the quantum of damages assessed." Ibid.

Defendant filed an answer to plaintiff's complaint on December 20, 2002, well within the twenty days permitted for filing an answer under the consent order "vacating any default judgment," which was agreed to by the parties and entered by the court on December 6, 2002. Additionally, after the default judgment was mistakenly entered on December 16, 2002, plaintiff failed to serve the default judgment on defendant as required by Rule 4:43-2(c). The rule provides: "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, as required by Rule 1:5-2 except that service may be made by ordinary mail." Ibid.

In Farrell v. Tele-Communications, Inc. of Northern New Jersey, 378 N.J. 341 (App. Div. 2005), we determined that Rule 1:5-1, as a rule of general applicability, is applied to Rule 4:50-1. Id. at 354. We noted that Rule 1:5-1 provides that in all civil actions judgments shall be served by the party obtaining the judgment on all attorneys appearing of record in the action and upon parties appearing pro se within seven days after the date the judgment was signed unless the court otherwise orders. Ibid. We held that the time requirement contained in Rule 4:50-2 runs from the date the proponent of an order makes service upon the party adversely affected or from the date the adversely affected party had actual knowledge of the order. Ibid.

In Farrell, plaintiff's counsel was never served with the order that mistakenly dismissed the plaintiff's complaint for the plaintiff's failure to appear for mandatory arbitration. Id. at 345. We reversed the motion judge's denial of the plaintiff's motion to restore the plaintiff's case to the trial calendar. We determined that the plaintiff's motion for restoration was made within one year of the plaintiff's counsel receiving actual notice of the court's entry of the dismissal order even though the dismissal order had been entered two years and three months earlier. Id. at 354. We noted that "the purpose of the notice requirement is to apprise a party of some fact that he or she has a right to know and that the communicating party has a duty to communicate." Id. at 351 (quoting America's Pride Constr. v. Farry, 175 N.J. 60, 63-64 (2002)).

In this case, defendant filed a timely answer to plaintiff's complaint and plaintiff did not give defendant notice of the December 16, 2002 entry of the default judgment until May 23, 2005, two years and five months after its entry. Service of the judgment was clearly in violation of the mandatory seven day service requirement of Rule 4:43-2(c).

While a meritorious defense requirement is generally imposed as a condition to the setting aside of default judgment, we are convinced that the requirement is not applicable here, since defendants' answer was timely filed and default judgment was mistakenly entered. See Peralta v. Heights Med. Ctr., Inc., 485 U.S. 80, 86, 108 S. Ct. 896, 900, 99 L. Ed. 2d 75, 82 (1988) (holding that the meritorious defense condition for the setting aside of a default judgment may not be imposed, as a matter of due process, if the default was procured on the basis of defective service of process); Pressler, Current N.J. Court Rules, comment 4.2 on R. 4:50-1 (2006) ("while the motion may be made on any of the six grounds specified by the rule, relief from default judgment may also be warranted by special circumstances.")

We are convinced that the motion judge's denial of defendant's motion to vacate the default judgment was a mistaken exercise of the judge's discretion. Accordingly, we reverse the denial of defendant's motion and remand to the trial court for the entry of an order vacating the default judgment and

restoring the case to the trial calendar. We do not retain jurisdiction.

Reversed and remanded.

 

The complaint should have named the Estate of James Wolfe and not James Wolfe as defendant.

The consent order is dated December 6, 2002 but is date stamped as filed by the judge on December 5, 2002.

The reference to defendant refers to J.H.W. only.

The date for arbitration had not been noticed to either the plaintiff or the defendant.

(Continued)

(continued)

8

A-3014-05T3

 

October 26, 2006