CALLAHAN BAIL BONDS SENECA INSURANCE v. MATTHEW JEON, ESQ

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-5521-12T2

CALLAHAN BAIL BONDS, SENECA

INSURANCE and JAMES REAP,

Plaintiffs-Respondents,

v.

MATTHEW JEON, ESQ.,

Defendant-Appellant.

___________________________________

April 6, 2015

Submitted August 27, 2014 Decided

Before Judges Simonelli and O'Connor.

On appeal from Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-4251-12.

Wong Fleming, P.C., attorneys for appellant (Paul Yoon and Jonathan Jung, on the brief).

Joseph G. Monaghan, attorney for respondents.

The opinion of the court was delivered by

O'CONNOR, J.A.D.

Defendant Matthew Jeon, Esq., appeals from the June 7, 2013 Law Division order, which denied his motion for reconsideration of the April 8, 2013 order granting judgment in favor of plaintiff Callahan Bail Bonds (Callahan). We reverse.

I

Callahan is a bail agent for plaintiff Seneca Insurance Company. Plaintiff James Reap is an agent of Callahan. In 2011, Jeon, an attorney, represented defendant Zerui Huang in a criminal matter. On March 2, 2011, Callahan posted bail of $150,000 for Huang. Because Huang was a Chinese citizen, Callahan required that his passport be held by the court as a condition of posting bail. After Huang deposited his passport into court, a consent order was signed on March 21, 2011, permitting Jeon to take possession of the passport temporarily to enable Huang to renew his driver's license. The passport was returned to court on March 24, 2011.

According to plaintiffs' complaint, Jeon was aware before Callahan posted bail that Huang planned to return to China and that Huang could enter China by merely presenting a copy of his passport to border officials. On May 17, 2011, Huang left on a flight out of New York bound for China. When Huang failed to appear in court on June 2, 2011, his bail was forfeited. Plaintiffs' motion to vacate the bail forfeiture was denied.

Plaintiffs filed a complaint against Jeon and Huang, and alleged Jeon obtained the passport from the court on March 21, 2011, for the purpose of giving Huang a copy of his passport to enable him to enter China and, thus, evade prosecution here. The causes of action asserted against Jeon include, among other things, tortious interference with a contractual relationship, conspiracy to defraud, and breach of the implied covenant of good faith and fair dealing.

Plaintiffs served their summons and complaint upon Jeon on June 15, 2012.1 When he did not file an answer thirty-five days later, see Rule 4:6-1(a), the court entered default against him on August 2, 2012. See R. 4:43-1. On November 8, 2012, Jeon filed a notice of motion to vacate the entry of default. In his motion, Jeon asserted he had failed to timely file an answer due to a calendaring error. He also certified that there was no evidence he wrongfully assisted Huang. Attached to his motion was a proposed answer that also denied plaintiffs' allegations of wrongdoing and asserted a number of affirmative defenses.

On December 7, 2012, the trial court entered an order denying the motion without prejudice on the ground Jeon failed, as required by Rule 4:43-3, to append to his motion a copy of the case information statement that is required to be filed with an answer.2

On December 24, 2012, defendant filed another motion to vacate the entry of default, attached to which was not only a copy of his answer, but also a case information statement. On January 11, 2013, the court entered an order denying the motion without prejudice on the ground that Jeon did not submit a filing fee for the answer, as required by Rule 4:43-3. The court further mentioned that it was precluded from addressing the "merits" of Jeon's motion until he complied with the procedural requirements of Rule 4:43-3. We interpret this statement to mean that the court assumed it was foreclosed from deciding whether defendant demonstrated good cause, see ibid., to warrant the vacation of the entry of default until he satisfied the procedural mandates of this Rule.

On January 17, 2013, Jeon filed a motion for reconsideration of the January 11, 2013 order. He certified that because he was in default, the "Finance Division"3 would not accept his answer without an order. Accordingly, he could not pay a filing fee until the default was vacated.

On February 8, 2013, the court denied the motion for reconsideration, finding Jeon failed to show he was entitled to relief under Rule 4:49-2. Specifically, the court found Jeon did not show that the court's reasons for entering the January 11, 2013 order were either palpably incorrect or founded upon an irrational basis, see ibid. Although the court acknowledged that bringing new information to a court's attention also may serve as a basis for reconsidering a prior order, see D'Atria v. D'Atria, 242 N.J. Super. 392, 401 (Ch. Div. 1990), it nevertheless did not address Jeon's explanation for failing to pay the filing fee.

Further, although it was implicit in his motion for reconsideration that Jeon was also seeking the vacation of the entry of default, the court regarded his motion as one for reconsideration only and concluded there was no application before it to vacate the entry of default. Then, notwithstanding this determination, the court chided Jeon for not addressing the issue of good cause in his motion for reconsideration and used such omission as an additional basis to deny the motion.

On March 15, 2013, a proof hearing was held, and on April 8, 2013, the court entered an order granting judgment in favor of plaintiffs and against Jeon for $150,000. Jeon was served with the order on April 12, 2013. On April 29, 2013, he filed a motion for reconsideration of the April 8, 2013 order. In addition to challenging the court's decision on the substantive issues, Jeon contended the court's failure to vacate the entry of default before the proof hearing was erroneous given he had met the requirements of Rule 4:43-3. Although inartfully stated, a close reading of Jeon's motion included not only a request to vacate the entry of default to allow him to file an answer, but also implicitly requested that the judgment be set aside.

On June 7, 2013, the court denied Jeon's motion. On the issue of whether the entry of default should have been previously vacated, the court stated

Defendant has been before the court on three separate motions in his attempt to vacate the entry of default. For the reasons explained in great detail and length in this court's prior orders dated December 7, 2012, January 11, 2013, and February 8, 2013, the court denied defendant's motions as defendant repeatedly failed to comply with the procedural and substantive requirements of R[ule] 4:43-2.[4]

The court also determined that it was too late under

Rule 4:49-2 to reconsider the February 8, 2013 order, which was the last order denying Jeon's request to vacate the entry of default before the default judgment was entered.

Jeon appeals from the June 7, 2013 order denying his motion for reconsideration. He contends the court should have set aside the judgment on the ground that it had erroneously denied his previous motions to vacate the entry of default. We agree.

II

Rule 4:43-3 states that

[a] party's motion for the vacation of an entry of default shall be accompanied by (1) either an answer to the complaint and Case Information Statement or a dispositive motion pursuant to R[ule] 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. 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 R[ule] 4:50.

In O'Connor v. Altus, 67 N.J. 106, 129 (1975), the Court determined that "good cause" as used in this Rule meant "the presence of a meritorious defense . . . and the absence of any contumacious conduct." See also Pressler & Verniero, Current N.J. Court Rules, comment on R. 4:43-3 (2015) ("[T]he showing of a meritorious defense is a traditional element necessary for setting aside both a default and a default judgment . . . ."). Further, when determining whether good cause exists, a court must exercise "sound discretion in light of the facts and circumstances of the particular case considered in the context of the purposes of the Court Rule being applied." Del. Valley Wholesale Florist, Inc. v. Addalia, 349 N.J. Super. 228, 232 (App. Div. 2002).

Importantly, "[i]t has been well-established that an application to vacate default 'should be viewed with great liberality and every reasonable ground for indulgence is tolerated to the end that a just result is reached.'" N.J. Div. of Youth & Family Servs. v. P.W.R., 410 N.J. Super. 501, 508 (App. Div. 2009) (quoting Marder v. Realty Constr. Co., 84 N.J. Super. 313, 319 (App. Div.), aff'd, 43 N.J. 508 (1964)), rev d on other grounds, 205 N.J. 17 (2011). Nonetheless, a trial court's decision to grant or deny a motion to vacate a default will not be disturbed unless we find an abuse of discretion. U.S. Bank Nat'l Ass'n v. Guillaume, 209 N.J. 449, 467 (2012).

A party aggrieved by an order or judgment may file a motion for reconsideration under Rule 4:49-2. See, e.g., Wells Fargo Bank, N.A. v. Garner, 416 N.J. Super. 520, 522-23 (App. Div. 2010). Rule 4:49-2 states in pertinent part

[A] motion for . . . reconsideration seeking to alter or amend a judgment or order shall be served not later than 20 days after service of the judgment or order upon all parties by the party obtaining it. The motion shall state with specificity the basis on which it is made, including a statement of the matters or controlling decisions which counsel believes the court has overlooked or as to which it has erred

. . . .

A motion to alter and amend a judgment under Rule 4:49-2 also includes a motion to vacate the judgment. Baumann v. Marinaro, 95 N.J. 380, 390-91 (1984).

"'Reconsideration should be utilized only for those cases which fall into that narrow corridor in which either 1) the Court has expressed its decision based upon a palpably incorrect or irrational basis, or 2) it is obvious that the Court either did not consider, or failed to appreciate the significance of probative, competent evidence.'" Cummings v. Bahr, 295 N.J. Super. 374, 384 (App. Div. 1996) (quoting D'Atria, supra, 242 N.J. Super. at 401; see also Fusco v. Bd. of Educ. of Newark, 349 N.J. Super. 455, 462 (App. Div.), certif. denied, 174 N.J. 544 (2002). A motion for reconsideration is addressed to the sound discretion of the motion court, and we review the denial of reconsideration under the abuse of discretion standard. See Capital Fin. Co. of Del. Valley, Inc. v. Asterbadi, 398 N.J. Super. 299, 310 (App. Div.) (citing Johnson v. Cyklop Strapping Corp., 220 N.J. Super. 250, 257 (App. Div. 1987), certif. denied, 110 N.J. 196 (1988)), certif. denied, 195 N.J. 521 (2008); Hinton v. Meyers, 416 N.J. Super. 141, 148 (App. Div. 2010); D'Atria, supra, 242 N.J. Super. at 401. However, the trial court's interpretation of the law is afforded no special deference, and this court's review of the legal issues is de novo. Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995).

Here, it is not disputed that Jeon's motion for reconsideration of the April 8, 2013 order granting judgment was timely. Jeon served this motion within twenty days of being served with the April 8, 2013 order. In this motion, he complained the prejudgment motions to vacate default should have been granted. Had those motions been granted, the April 8, 2013 order granting judgment would not have been entered.

The court stated that, given the passage of time, it was too late under Rule 4:49-2 to reconsider any prejudgment order denying defendant's request to vacate the entry of default. However, before judgment is entered, a court is not limited by the time constraints in Rule 4:49-2 to reconsider and modify an interlocutory order. Sullivan v. Coverings & Installation, Inc., 403 N.J. Super. 86, 96 (App. Div. 2008) (citing Johnson, supra, 220 N.J. Super. at 263, certif. denied, 110 N.J. 196 (1988)). Only when a judgment is entered is the twenty-day time proscription in the rule triggered. Here, Jeon met that deadline. He filed the motion for reconsideration of the April 8, 2013 order within twenty days of the entry of the judgment.

In our view, the April 8, 2013 order that granted judgment should have been reconsidered and the judgment set aside, because the motion that resulted in the February 8, 2013 order should have been granted and the entry of default vacated. By then, Jeon had complied with the requirements of

Rule 4:43-3. While he had not paid the filing fee, he certified the Finance Division would not accept the fee until the court vacated the default.

Further, Jeon met the good cause standard. He showed the existence of a meritorious defense and there was no indication his failure to file a timely answer was contumacious. In his initial motion papers, he certified he did not wrongfully assist Huang. While he did not repeat this defense in the certifications filed with the two subsequent motions, his answer, which was attached to every prejudgment motion, revealed he had a meritorious defense.

We also note Jeon filed his first motion to vacate default within a relatively short period of time after default was entered. After each motion seeking to vacate the default was denied, he promptly filed a new motion to address the deficiency identified by the court. None of the reasons he asserted in support of these motions violated Rule 4:49-2.

Based upon our review of the record and the governing legal principles, we are convinced the court mistakenly exercised its discretion when it denied Jeon's motion for reconsideration of the April 8, 2013 order.

Reversed and remanded for the continuation of the litigation. We do not retain jurisdiction.

1 The record does not indicate whether defendant Huang was ever served with the complaint.

2 Rule 4:5-1(b)(1) requires that a case information statement be annexed to each party's first pleading in all civil actions, but for the few exceptions specified in the Rule.

3 We assume Jeon was referring to the Finance Division of the Bergen County Superior Court, which is responsible for, among other things, the collection of filing fees. Bergen Vicinage-Finance Division, New Jersey Courts, http://www.judiciary.state.nj.us/bergen/finance.htm (last visited February 24, 2015).

4 We assume the court intended to cite Rule 4:43-3.