KONDAUR CAPITAL CORPORATION v. JAMES C. THOMAS

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

KONDAUR CAPITAL CORPORATION,

AS SEPARATE TRUSTEE FOR THE

MATAWIN VENTURE TRUST SERIES

2012-3,

Plaintiff-Respondent,

v.

JAMES C. THOMAS, MRS. JAMES C.

THOMAS, HIS WIFE, ARBRET MICHELLE

THOMAS, MR. THOMAS, HUSBAND OF

ARBRET MICHELLE THOMAS,

Defendants-Appellants,

and

REGIONAL MUSIC SERVICE,

Defendant.

_______________________________________

December 31, 2014

Argued December 9, 2014 Decided

Before Judges Fisher and Accurso.

On appeal from Superior Court of New Jersey, Chancery Division, Atlantic County, Docket No. F-017123-13.

Louis A. Simoni argued the cause for appellants.

Vladimir Palma argued the cause for respondent (Phelan, Hallinan & Diamond, PC, attorneys; Mr. Palma, on the brief).

PER CURIAM

Defendants James C. Thomas and Michelle Arbret Thomas appeal from a November 8, 2013 order denying their motion to set aside a default in this mortgage foreclosure action, leading to the entry of final judgment of foreclosure.1 Because we conclude that the default should have been set aside and defendants allowed to file an answer, we reverse.

After being served with the foreclosure complaint, defendants paid a $2000 retainer to a lawyer to file an answer on their behalf. The lawyer kept the retainer but failed to file the answer. When their counsel failed to respond to their inquiries about the case, defendants retained a second lawyer, but by then plaintiff had entered default and filed a motion for final judgment in the Foreclosure Unit. New counsel cross-moved promptly to vacate entry of default under R. 4:43-3. After hearing argument, the General Equity judge denied defendants' motion. In a cogent decision delivered from the bench, the judge determined that defendants could not demonstrate a meritorious defense to the foreclosure. This appeal followed.

Rule 4:43-3 requires only a showing of good cause for setting aside the entry of default. N.J. Mfrs. Ins. Co. v. Prestige Health Grp., LLC, 406 N.J. Super. 354, 360 (App. Div.), certif. denied, 199 N.J. 543 (2009). Although the trial court was undoubtedly correct that courts have traditionally considered the presence of a meritorious defense in assessing good cause, see James W. Moore, et al., 10 Moore's Federal Practice - Civil 55.70[2][a] (3d ed. 2013) (reviewing Fed. R. Civ. P. 55(c)), our cases have long counseled that "the opening of default judgments should be viewed 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.), aff'd, 43 N.J. 508 (1964). We upheld the setting aside of a default judgment in Marder although defendant, while alleging a meritorious defense, never said what it was. Id. at 318-19. As the Supreme court recently reiterated, in the context of a foreclosure case, the standard for setting aside the entry of a default is decidedly less stringent than that of setting aside a default judgment. US Bank Nat'l Ass'n v. Guillaume, 209 N.J. 449, 467 (2012) (citing Pressler & Verniero, Current N.J. Court Rules, comment on R. 4:43-3 (2012)).

This is not a case in which homeowners were attempting to reopen a foreclosure months or years after entry of the judgment. The delay here could be fairly measured in weeks. Defendants paid a retainer to a lawyer, who sadly failed to file an answer on their behalf. We are, of course, aware of the enormous demands placed on our General Equity judges by the staggering number of foreclosures on their dockets, and that the only material issues in each of these cases are the validity of the mortgage, the amount due, and the right of the mortgagee to resort to the mortgaged premises. Great Falls Bank v. Pardo, 263 N.J. Super. 388, 394 (Ch. Div. 1993), aff'd, 273 N.J. Super. 542 (App. Div. 1994). The narrowness of the claims, and thus the defenses, in a foreclosure should not work to impose a greater burden on defendants in these matters than in others. Because we conclude that the General Equity judge engaged in a mistaken exercise of discretion in denying defendants' motion to vacate the entry of default under the circumstances presented, we reverse and remand for entry of an order granting defendants leave to file a responsive pleading.

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

1 The Sherriff's sale was stayed pending appeal on defendants' posting of a supersedeas bond.