INTERSTATE RESTORATION, LLC v. METRO BUILDERS, LLC

 

(NOTE: The status of this decision is Published.)

                        NOT FOR PUBLICATION WITHOUT THE
                      APPROVAL OF THE APPELLATE DIVISION
     This opinion shall not "constitute precedent or be binding upon any court."
      Although it is posted on the internet, this opinion is binding only on the
        parties in the case and its use in other cases is limited. R. 1:36-3.




                                       SUPERIOR COURT OF NEW JERSEY
                                       APPELLATE DIVISION
                                       DOCKET NO. A-2187-16T3

INTERSTATE RESTORATION, LLC,

        Plaintiff-Respondent,

v.

METRO BUILDERS, LLC,
and CLERK OF BERGEN COUNTY,

        Defendants,

and

METROPOLITAN BUILDERS OF
NY, INC.,

     Defendant-Appellant.
______________________________

              Submitted February 6, 2018 – Decided February 27, 2018

              Before Judges Reisner and Gilson.

              On appeal from Superior Court of New Jersey,
              Chancery Division, Bergen County, Docket No.
              C-000344-15.

              Barry M. Bordetsky, attorney for appellant.

              Scarinci & Hollenbeck, LLC, attorneys for
              respondent (Joel N. Kreizman, on the brief).

PER CURIAM
     Defendant Metropolitan Builders Of New York, Inc. appeals

from a December 20, 2016 order denying its motion to vacate a

default judgment for about $235,000 plus fees and costs, in favor

of plaintiff Interstate Restoration, LLC, and denying its motion

to compel arbitration.

     We conclude that the motion record raised material factual

disputes concerning service of process, and also potentially as

to the issue of excusable neglect.        Therefore, we remand this case

to the trial court to hold an evidentiary hearing on those issues.

In remanding, we note that the judgment is for a large sum,

defendant has asserted a potentially meritorious defense, and

there is some evidence that plaintiff failed to serve a courtesy

copy of the complaint, or any other pleadings, on defendant's

counsel despite knowing of the representation.

     Plaintiff    obtained    a    June      21,     2016   judgment   against

defendant, a construction company based in New York City, in

connection with a contract for renovations to a bank in Bergen

County, New Jersey.      Defendant filed a motion to vacate the

judgment on or about October 17, 2016.              The motion was supported

by   legally      competent       evidence         consisting   of     several

certifications.

     In his certification, Frank Porco, defendant's president and

sole shareholder, outlined the history of the contract dispute

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that led to the litigation.           He detailed the factual basis for

defendant's contention that it duly fulfilled its contractual

obligations     but   plaintiff     nonetheless    wrongfully      terminated

defendant's work on the project.           Porco also attested that before

plaintiff filed its complaint on November 19, 2015, defendant's

attorney and plaintiff's attorney had been trying to negotiate a

settlement of the dispute.

       According to Porco, contrary to plaintiff's affidavit of

service, he never received a copy of the complaint at defendant's

corporate office.      Nor did he receive a copy from defendant's New

York    registered    agent,    Corporation    Service   Company    (CSC),    a

company located in Albany, New York.           Porco also attested that in

March 2016, about two months after plaintiff claimed it served CSC

with process, CSC suddenly resigned without notice as defendant's

registered agent and designated agent for service of process.

Porco's certification included, as an exhibit, the certificate of

resignation CSC filed.      According to the certificate, CSC sent its

resignation notice to defendant at an address in Dobbs Ferry, New

York,    when   according      to   Porco's   certification,    defendant's

corporate offices were in New York City.

       Porco attested that he knew nothing about the lawsuit until

after the judgment was entered and plaintiff filed an application

to domesticate the New Jersey judgment in New York. At that point,

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in August 2016, Porco received a "random email" from a New York

law firm offering to defend his company against the lawsuit. Porco

immediately contacted his company's attorney, Jon D. Jekielek, who

looked up the New York case file and discovered that Interstate

had filed the New Jersey action and had obtained a judgment.

According to Porco, neither defendant nor Jekielek was ever served

with the complaint or any subsequent pleadings in the New Jersey

action.   Porco asserted that if defendant had been served with the

complaint it would have invoked the arbitration clause in the

parties' contract.    However, he also attached to his certification

defendant's   proposed    answer   to   the   complaint.   Defendant's

defenses, as well as defendant's proposed counterclaims, were also

set forth in great detail in the body of Porco's certification.

     Defendant also filed a certification from its office manager,

Lorraine Shepherd, attesting based on her personal knowledge as

the person responsible for receiving and opening the company's

mail, that defendant never received a copy of plaintiff's complaint

or other pleadings.      However, she attested that she directed and

oversaw a comprehensive search of the corporate offices and found

two unopened envelopes with a return address for Scarinci &

Hollenbeck, postmarked June 21, 2016 and July 1, 2016. Those dates

were on or after the date judgment was entered.       The Scarinci firm

represented plaintiff in the litigation.        Shepherd's assistant in

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the office also attested that she never signed for or accepted any

legal documents during the relevant time period.

     Defendant's   current      attorney,         Barry    M.    Bordetsky,      also

submitted a certification authenticating a series of court-filed

documents.     Among   them    was     evidence       of   the   history    of   the

underlying contract dispute prior to the filing of litigation,

including    defendant's      filing        of    a   construction     lien      and

plaintiff's filing of a bond to release the lien.                     Notably, a

letter from plaintiff's attorney to the Clerk's Office about the

lien was copied to defendant's then-counsel, Jekielek.                           That

corroborates Porco's assertion that plaintiff's attorney was aware

of Jekielek's representation.

     When plaintiff applied for entry of default, it filed an

affidavit of service attesting that it served CSC.                         However,

Jekielek was not copied on the letter from plaintiff's counsel

applying for the default.       Moreover, the record contains a March

18, 2016 order approving plaintiff's application for permission

to serve defendant with the summons and complaint by mail, based

on an alleged diligent inquiry during which plaintiff was unable

to serve defendant in New Jersey.                There was no indication that

plaintiff's attorney had contacted Jekielek about the service

issue.



                                        5                                   A-2187-16T3
     In opposition to defendant's motion to vacate the default

judgment,    plaintiff      filed   a   certification     from      its    attorney,

attesting to his efforts to effectuate service on defendant and

his unsuccessful efforts to have Porco served at his home.                            He

attached as an exhibit a certification from a process server,

attesting    that     the   process     server    delivered     the   summons       and

complaint to defendant's corporate office and left the papers with

a woman who refused to identify herself.                      The attorney also

attached a certified mail card, addressed to defendant's New York

office    and   bearing     an   illegible    signature,      as    evidence       that

defendant received the notice of default and the application for

the final judgment by default.                The attorney did not address

Porco's contention that the attorney never served Jekielek with a

courtesy copy of any of the pleadings.

     In response, defendant filed reply certifications from its

office manager and her assistant, both refuting the allegations

in plaintiff's counsel's certification.             They both denied that any

process server tried to serve them or that they refused to identify

themselves.        They also attested that neither of their signatures

were on the certified mail receipt and noted that there was no

printed     name    on   the     receipt.        Porco   also      filed   a     reply

certification, denying that he signed the receipt and denying that



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a copy of the summons and complaint was delivered to his New York

office.

     In denying the motion to vacate, the trial court reasoned

that there was proof of service and plaintiff had not produced

clear and convincing evidence to rebut that proof of service. He

also found no evidence of excusable neglect.

     "A   motion    under   Rule    4:50-1   is   addressed   to     the     sound

discretion of the trial court . . . ."            Hous. Auth. of Morristown

v. Little, 
135 N.J. 274, 283 (1994).              We will not disturb the

trial court's decision "unless it represents a clear abuse of

discretion."    DEG, LLC v. Twp. of Fairfield, 
198 N.J. 242, 261

(2009)    (citing   Little,   
135 N.J.    at   283)   (internal    citation

omitted).    However, where the parties' submissions raise a "sharp

factual dispute" about service of process, the trial court should

hold an evidentiary hearing to resolve the dispute.                First Nat'l

Bank of Freehold v. Viviani, 
60 N.J. Super. 221, 224-25 (App. Div.

1960).

     As we find clear from the motion record, the legally competent

evidence filed by the parties created material disputes of fact

as to whether defendant was served with the summons and complaint,

or with any of the other pleadings.               The papers also raise a

question as to whether plaintiff actually made a diligent inquiry,

if it knew defendant was represented by counsel, but made no effort

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to alert him that it was about to file a complaint and no effort

to determine from him if defendant could be served in New Jersey.

     The papers present a further issue as to whether, if CSC was

the only entity served, and if CSC wrongfully failed to forward

any of the papers to defendant, that might constitute excusable

neglect on defendant's part.    It is also abundantly clear from

Porco's very detailed certification that defendant asserted a

meritorious defense to the complaint.

     Because the motion papers created material factual disputes,

we conclude that the trial court mistakenly exercised discretion

by denying the motion based on the papers, instead of holding a

testimonial hearing to resolve the disputed issues.   See Viviani,


60 N.J. Super. at 224-25.    Accordingly, we vacate the order on

appeal and remand this matter to the trial court to hold an

evidentiary hearing.1

     Remanded.   We do not retain jurisdiction.




1
   In light of our disposition of this appeal, we do not address
defendant's remaining appellate contentions.   In particular, it
is premature to determine whether defendant is entitled to invoke
the arbitration clause.

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