USA CONTRACTING & MAINTENANCE LLC v. EDNA STEWART

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

USA CONTRACTING & MAINTENANCE,

LLC,

Plaintiff-Respondent,

v.

EDNA STEWART and JAMEL R. BOYER

a/k/a JAMEL STEWART,

Defendants-Appellants.

____________________________________

October 20, 2014

Before Judges Yannotti and Hoffman.

On appeal from Superior Court of New Jersey, Law Division, Monmouth County, Docket No. L-4088-12.

Rashaan Williams, attorney for appellant.

Smith & Shaw, P.A., attorneys for respondent (Thomas J. Smith, III, on the brief).

PER CURIAM

Defendants Edna Stewart (Stewart) and Jamel Boyer (Boyer) appeal from an order entered on October 1, 2013, by the Law Division, denying their motion for reconsideration of orders previously entered by the court, which denied their request to set aside the default which had been entered against them, and which entered a judgment by default for plaintiff. We reverse.

On October 16, 2012, plaintiff USA Contracting & Maintenance, LLC filed a complaint alleging that, in June 2011, it entered into a contract with defendants to perform certain work at their home. According to the complaint, during construction, defendants ordered various upgrades in the home, at an additional cost. Plaintiff demanded $21,903.21, plus attorney's fees and court costs. The complaint was served personally upon defendants.

It appears that defendants did not answer the complaint and at some point, default was entered against them. On June 17, 2013, plaintiff filed a motion seeking entry of a judgment by default. Defendants opposed the motion and filed a cross-motion seeking to vacate the judgment, pursuant to Rule 4:50-1(c). We note, however, that a final judgment had not yet been entered.

In support of their cross-motion, defendants submitted certifications in which they indicated that, after they were served with the summons and complaint, they retained an attorney to represent them in the action. Stewart said that she called the attorney on several occasions in the first and second weeks of December 2012, and that she left several messages seeking "a status update" on the lawsuit. Her calls were not returned.

Stewart continued to call the attorney over the next thirty days, but he did not respond. Stewart stated that Boyer, who is her son, told her that counsel said he would contact her during the week of January 21, 2013, but she did not receive a telephone call or other communication from him.

Stewart also stated that on January 28, 2013, Boyer sent the attorney an e-mail requesting a status update regarding the litigation and copies of all paperwork submitted to the court on defendants' behalf. Shortly thereafter, the attorney's secretary informed Stewart that all relevant paperwork had been filed with the court, and that counsel would contact her after he had spoken with plaintiff's attorney.

Stewart said she first became aware that a responsive pleading had not been filed on her behalf in June 2013, when she received a copy of plaintiff's motion. She contacted her attorney but he refused to respond to her inquiries concerning the litigation. Defendants confirmed that a responsive pleading had not been filed, and they retained another attorney.

In a separate certification, Stewart disputed plaintiff's claim. She said that she had been led to believe that most of the agreed-upon changes to the work could be performed at the original contract price. She stated that she purchased many of the materials on her own to keep the costs at a minimum. According to Stewart, plaintiff never specified what the additional costs would be, and she did not believe she owed plaintiff the monies sought in the lawsuit.

In his certification, Boyer stated that in January 2013, he spoke with defendants' attorney, who told him he had been ill and had only recently returned to work. Counsel said he would call Stewart during the week of January 21, 2013, but he failed to do so. Boyer stated that, based on the representations that the attorney's secretary had provided to his mother, he believed all responsive pleadings had been filed with the court.

Like Stewart, Boyer stated that he only learned that a responsive pleading had not been filed when plaintiff's attorney provided him with a copy of plaintiff's motion. Boyer contacted defendant's attorney, but he refused to answer his calls or provide any information concerning the litigation.

The trial court did not entertain oral argument on the motions, although it had been requested, and entered an order dated July 30, 2013, denying defendant's motion to set aside default, noting on the order, "No evidence of excusable neglect or meritorious defense." On that same date, the court entered a judgment by default in favor of plaintiff in the amount of $23,333.21, which represented the $21,903.21 sought for the work, plus attorney's fees and costs of $1403.

On August 29, 2013, defendants filed a motion for reconsideration. In a supporting certification, defendants' new attorney stated that he had not received the court's July 30, 2013 orders until August 9, 2013. He said reconsideration of the prior orders was warranted because defendants had established excusable neglect and meritorious defenses. Plaintiff opposed the motion. The court did not entertain oral argument, even though it had been requested, and entered an order dated October 1, 2013, denying the motion. This appeal followed.

Defendants argue that the trial court erred by refusing to reconsider the orders entered on July 30, 2013. Defendants contend that they established grounds to set aside the default entered against them. Defendants argue that their prior attorney's errant handling of the case represents excusable neglect. They also argue that they established a meritorious defense. In addition, defendants maintain that the court erred by refusing to grant their requests for oral argument on their motions.

As we have explained, when plaintiffs filed their motion for entry of a judgment by default, defendants countered with a motion to set aside default and permit them to file an answer out of time. Rule 4:43-3 provides in part that the trial court may vacate the entry of default for good cause shown, and if a judgment by default has been entered, the court may set aside that judgment pursuant to Rule 4:50. The showing required to set aside a default, is less stringent than the standard imposed by Rule 4:50 for vacating a default judgment. U.S. Bank Nat'l Ass'n v. Guillaume, 209 N.J. 449, 466-67 (2012).

In Court Inv. Co. v. Perillo, 48 N.J. 334, 336 (1966), the Court considered whether the trial court erred by re-opening a default judgment obtained by the plaintiff. The Court found that the judgment had been improperly obtained on a claim that was time-barred. Id. at 347. The Court stated that, although the defendants had an absolute defense to the claim,

[T]hey were unfortunate enough to get into the hands of a member of the bar who was facing serious disciplinary proceedings. He failed them after advising that the matter had been taken care of satisfactorily. They had every reason to believe him for many years thereafter, until the default judgment fortuitously appeared on the scene. Their new attorney then undertook to clear up the matter.

[Ibid.]

The Court held that the trial court had properly granted the defendants relief from the default judgment. Ibid.

In this case, there is no indication that defendants' first attorney was facing serious disciplinary proceedings, and there is no explanation for counsel's failure to file an answer to the complaint, although there is some indication that counsel had health problems which might have been the cause of his inattention to the case. Nevertheless, here, as in Perillo, defendants were assured that the matter was being handled appropriately, only to learn, when they received a motion for entry of a default judgment, that this was not so. Defendants retained a new attorney, who acted promptly to address the situation.

We are convinced that, under the circumstances, defendants' failure to file a timely answer to the complaint was excusable. Our conclusion is consistent with the principle that "courts should be reluctant to penalize a blameless client for the mistakes of the attorney." Familia v. Univ. Hosp. of UMDNJ, 350 N.J. Super. 563, 567-68 (App. Div. 2002) (holding that client should not be penalized where attorney delayed in seeking restoration of case following dismissal for failure to provide discovery) (citing Jansson v. Fairleigh Dickinson Univ., 198 N.J. Super. 190, 196 (App. Div. 1985)).

Furthermore, defendants proffered what could be a meritorious defense. They claimed that plaintiff violated the New Jersey Contractors' Registration Act, N.J.S.A. 56:8-136 to -152, specifically N.J.S.A. 56:8-151(a), which provides that "every home improvement contract for a purchase price in excess of $500 and all changes in the terms and conditions of the contract, shall be in writing." This requirement is also reflected in a section of the Home Improvement Practices regulations adopted by the Division of Consumer Affairs. N.J.A.C. 13:45A-16.2(a)(12); see also Murnane v. Finch Landscaping, LLC, 420 N.J. Super. 331, 339 (App. Div. 2011), certif. denied, 208 N.J. 600 (2011).

Here, plaintiff is seeking monies under a home improvement contract where the purchase price was greater than $500. Defendants claim, however, that changes were made to the original agreement, which were not in writing and not signed by all of the parties, as required by N.J.S.A. 56:8-151(a) and N.J.A.C. 13:45A-16.2(a)(12).

Defendants contend that, under the circumstances, plaintiff may not assert a claim for the monies allegedly due for the additional work. Furthermore, defendants claim that plaintiff agreed that the changes or upgrades to the initial contract would be performed at the agreed-upon contract price. If supported by sufficient proof, defendants' contentions may be a meritorious defense to plaintiff's claim.

Therefore, we conclude that the trial court erred by refusing to vacate the default entered against defendants and by entering a default judgment against them. We therefore reverse the orders entered on July 30, 2013, and remand the matter to the trial court for further proceedings.

In view of our decision, we need not address defendants' argument that the court erred by failing to conduct oral argument on its motions.

Reversed and remanded to the trial court for further proceedings in conformity with this opinion. We do not retain jurisdiction.