CESAR DEL CID v. DOUGLAS J. FLEISHER ESQ

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

CESAR DEL CID and

REINA DEL CID,

Plaintiffs-Respondents,

v.

DOUGLAS J. FLEISHER, ESQ.,

Defendant-Appellant.

__________________________________________

September 21, 2015

Submitted September 1, 2015 Decided

Before Judges St. John and Manahan.

On appeal from Superior Court of New Jersey, Law Division, Hudson County, Docket No. L-1024-12.

Cutolo Mandel, LLC, attorneys for appellant (Jeffrey S. Mandel, of counsel and on the briefs).

Steven V. Schuster, attorney for respondents.

PER CURIAM
 

Defendant Douglas J. Fleisher appeals from two orders of the Law Division: the court's July 11, 2014 order denying defendant's motion to vacate the default judgment and the September 5, 2014 order denying defendant's motion for reconsideration.

On appeal, defendant argues the court erred by improperly denying his motions, as he established both excusable neglect and a meritorious defense to the complaint sufficient to set aside the default judgment, as required by Rule 4:50-1(a).

In February 2012, plaintiffs Cesar Del Cid and his wife, Reina Del Cid, filed a malpractice claim against defendant contending he failed to timely file a personal injury lawsuit on their behalf. Plaintiffs served defendant with the complaint on March 16, 2012, and subsequently filed a proof of service. Defendant did not file an answer.

In June 2012, plaintiffs requested the clerk to enter default against defendant. Subsequently, on December 21, 2012, the case was administratively dismissed without prejudice for lack of prosecution pursuant to Rule 1:13-7(a). The dismissal order stated that, "formal notice of motion is now required to restore this case to active trial status."

Plaintiffs filed a notice of motion to restore on November 1, 2013, with certification that the notice of motion was filed with Hudson County Superior Court, but failed to provide a certification that defendant was served. Additionally, the cover letter enclosing the notice of motion did not show that a copy was sent to defendant. We note

The rule is clear that reinstatement can only be effected either by consent or by motion on good cause shown. . . . There is no suggestion in the rule that the normal motion pleading requirements of R. 1:6 should not apply when consent is not available. Thus the notice of motion requirements of R. 1:6-3(a) should apply, even when reinstatement is for an action dismissed pursuant to R. 1:13-7(b)(3) or (4) and R. 4:43-2(d).

[Pressler & Verniero, Current N.J. Court Rules, comment 1.2 on R. 1:13-7 (2015).]

The record does not disclose service on the defendant of the motion to restore as required by Rule 1:6-3.

On November 22, the court entered an order to restore the case to the trial list. The order provided that plaintiffs' attorney shall schedule a proof hearing within thirty days and shall comply with the requirements of Rule 4:43-2. The rule provides, in pertinent part, "the party entitled to a judgment by default shall apply to the court therefor by notice of motion pursuant to R. 1:6, served on all parties to the action, including the defaulting defendant[.]"

On December 2, plaintiffs' counsel wrote to the court requesting that the matter be scheduled for a proof hearing as soon as possible. Defendant was not copied on this letter. Plaintiffs later filed a notice of motion to enter final judgment dated December 20, 2013, and counsel certified that a copy was served on defendant.

On January 6, 2014, a proof hearing took place. At the proof hearing, a settlement letter demanding $100,000 authored by defendant to the opposing party's insurer in relation to the underlying accident claim was submitted to the court. Defendant was not present at the proof hearing. On the return date of the motion for entry of final judgment, January 17, 2014, the court denied the motion as moot because a proof hearing was held prior to the return date. On January 24, the court entered an order for judgment in the amount of $113,759.99.

On July 11, 2014, the court denied defendant's motion to vacate the default judgment. The court stated that defendant failed to set forth grounds under Rule 4:50-1 to warrant vacating the default. Moreover, the court determined that no meritorious defense was proffered "indeed, [defendant] admits liability in the proposed answer." On August 4, defendant filed a notice of motion seeking reconsideration, vacating default judgment and scheduling a new proof hearing. The court denied the motion on September 5.

In our review, we recognize that a decision to vacate a default final judgment lies within the sound discretion of the trial judge, guided by principles of equity. Hous. Auth. of Town of Morristown v. Little, 135 N.J. 274, 283 (1994); Prof'l Stone, Stucco & Siding Applicators, Inc. v. Carter, 409 N.J. Super. 64, 68 (App. Div. 2009) ("Rule 4:50 is instinct with equitable considerations."). For that reason, a trial court's decision in response to an application to open a judgment will be left undisturbed unless it represents a "clear abuse of discretion." U.S. Bank Nat'l Ass'n v. Guillaume, 209 N.J. 449, 467 (2012). An abuse of discretion "arises when a decision is made without a rational explanation, inexplicably departed from established policies, or rested on an impermissible basis." Flagg v. Essex Cnty. Prosecutor, 171 N.J. 561, 571 (2002) (citation and internal quotation marks omitted). Likewise, when the trial court gives insufficient deference to the principles governing the motion, we must reverse. Davis v. DND/Fidoreo, Inc., 317 N.J. Super. 92, 100-01 (App. Div. 1998), certif. denied, 158 N.J. 686 (1999).

In reviewing a motion to vacate, "[a] court should view 'the opening of default judgments . . . with great liberality,' and should tolerate 'every reasonable ground for indulgence . . . to the end that a just result is reached.'" Mancini v. EDS ex rel. N.J. Auto. Full Ins. Underwriting Ass'n, 132 N.J. 330, 334 (1993)(alteration in original)(quoting Marder v. Realty Constr. Co., 84 N.J. Super. 313, 319 (App. Div.), aff'd, 43 N.J. 508 (1964)). "All doubts, . . . should be resolved in favor of the parties seeking relief." Ibid. (citing Arrow Mfg. Co. v. Levinson, 231 N.J. Super. 527, 534 (App. Div. 1989)). That is so because of the importance we attach to securing a decision on the merits. See Davis, supra, 317 N.J. Super. at 100-01 (stating doubts should be resolved in favor of the applicant in order to secure a trial upon the merits).

Rule 4:50-1 establishes six alternative grounds for relief from a final judgment, whether obtained by default or after a trial on the merits. We focus on defendant's claim of excusable neglect under Rule 4:50-1(a).1

Defendant urges, as grounds for his motion to vacate, certain procedural defects in the record; primarily the complaint being restored without notice to him. "'The minimum requirements of due process . . . are notice and the opportunity to be heard.'" Jamgochian v. N.J. State Parole Bd., 196 N.J. 222, 240 (2008) (alteration in original) (quoting Doe v. Poritz, 142 N.J. 1, 106 (1995)). We are satisfied from our review of the record that plaintiffs restored the complaint without ever serving the defendant with the requisite notice of motion.

To set aside a default judgment entered under Rule 4:43 2, a movant must provide proof of excusable neglect; however, "[f]or 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. 4:50." R. 4:43-3. Understanding that the required good-cause showing for setting aside an entry of default judgment is more stringent and guided by Rule 4:50-1, we conclude plaintiffs' failure to follow the court's rules regarding restoring the complaint, resulting in a default judgment, satisfies the requisites of Rule 4:50-1(a), thus allowing the judgment to be set aside due to "mistake, inadvertence, surprise, or excusable neglect."

Although the motion judge correctly found defendant did not provide any additional evidence of excusable neglect for his default, we believe good cause was shown by virtue of plaintiffs' failure to follow the court's rules regarding notice. A plaintiff's failure to comply with the applicable notice requirements for entry of a default judgment support a finding of excusable neglect. Linden v. Gleffi, 6 N.J. 246, 252 (1951) ("The failure to give such notice is grounds for setting the default judgment aside."). See also Rosenberg v. Bunce, 214 N.J. Super. 300, 306 (App. Div. 1986). Of course, that is not the end of our analysis.

Although not expressly included in Rule 4:50-1, it is well-settled that a defendant claiming excusable neglect must also demonstrate he or she has a meritorious defense. Marder, supra, 84 N.J. Super. at 318. A party's motion to open a judgment under Rule 4:50-1 must be supported by sufficient facts to establish a meritorious defense. "[The] failure to plead the details of what the meritorious defense is would be fatal to an application for reopening of a judgment." Id. at 318-19. Bald allegations do not give rise to proof necessary to meet the standard necessary to set aside a final judgment. See Del Vecchio v. Hemberger, 388 N.J. Super. 179, 187 (App. Div. 2006). "A just, sufficient and valid defense to the original cause of action stated in clear and unmistakable terms is a prerequisite to opening a judgment." Schulwitz v. Shuster, 27 N.J. Super. 554, 561 (App. Div. 1953).

The justification for requiring a showing of a meritorious defense is simple. There is little point in setting aside a default judgment, sacrificing interests in repose and burdening a plaintiff and the court with additional litigation, if the ultimate result will inevitably be the same. See ibid. "'[I]t would create a rather anomalous situation if a judgment were to be vacated on the ground of mistake, accident, surprise or excusable neglect, only to discover later that the defendant had no meritorious defense.'" Guillaume, supra, 209 N.J. at 469 (quoting Schulwitz, supra, 27 N.J. Super. at 561). "'The time of the courts, counsel and litigants should not be taken up by such a futile proceeding.'" Ibid.

The most common way to prove the harm inflicted by malpractice or other misconduct that adversely affected the outcome in the underlying action is a "suit within a suit." Garcia v. Kozlov, Seaton, Romanini, & Brooks, P.C., 179 N.J. 343, 358 (2004). Plaintiff's burden is to prove by a preponderance of the evidence that but for the malpractice or other misconduct, "'(1) he would have recovered a judgment in the action against the main defendant, (2) the amount of that judgment, and (3) the degree of collectibility of such judgment.'" Ibid. (quoting Hoppe v. Ranzini, 158 N.J. Super. 158, 165 (App. Div. 1978)).

Plaintiffs maintain the settlement proffered by the defendant to the insurer was properly admitted. We disagree. First, we take note of N.J.R.E. 408, which provides as follows

When a claim is disputed as to validity or amount, evidence of statements or conduct by parties or their attorneys in settlement negotiations . . . including offers of compromise . . . shall not be admissible to prove liability for, or invalidity of, or amount of the disputed claim. Such evidence shall not be excluded when offered for another purpose; and evidence otherwise admissible shall not be excluded merely because it was disclosed during settlement negotiations.

Accordingly, admission of defendant's letter to the opposing party's insurer regarding plaintiffs' willingness to accept $100,000 to settle their case was improper. It obviously had the potential of creating prejudice in the malpractice action in both the plaintiffs' claim that they were entitled to damages far greater than that amount and defendant's defense that the amount should be far smaller. See Kranz v. Tiger, 390 N.J. Super. 135, 151 (App. Div.), certif. denied, 192 N.J. 294 (2007). Therefore, defendant has demonstrated a meritorious defense.

We vacate the default judgment and remand for further proceedings consistent with our opinion. We do not retain jurisdiction.

1 "On motion, with briefs, 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, inadvertence, surprise, or excusable neglect . . . . " R. 4:50-1(a)(emphasis added).