DENNIS GRABER v. CYNTHIA ROMANO

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-3935-12T3

DENNIS GRABER,

Plaintiff-Respondent,

v.

CYNTHIA ROMANO and

JULIA ROMANO,

Defendants-Appellants.

___________________________

February 19, 2015

Submitted September 15, 2014 Decided

Before Judges Lihotz and Rothstadt.

On appeal from the Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-9322-12.

Malcolm J. McPherson, Jr., attorney for appellants.

Respondent has not filed a brief.

PER CURIAM

Defendants Cindy Romano1 and her daughter Julia Romano appeal from the Law Division's December 28, 2012 Judgment of Ejectment and two post-judgment orders: the court's January 29, 2013 order denying defendants' motion to vacate default and the judgment; and the court's March 12, 2013 order denying defendants' motion for reconsideration. On appeal, defendants argue the court erred in (1) entering the judgment of ejectment by default; (2) establishing a "fair market [rental] value" for defendants to pay retroactive to December 8, 2011, as consideration for their occupancy of the subject premises; and (3) awarding attorney's fees. The thrust of their arguments is the court improperly denied their motions as they established both excusable neglect and a meritorious defense to the complaint to set aside the default judgment, as required by Rule 4:50-1(a). They also argue for the first time on appeal Julia Romano is not a proper party.

We have considered these arguments, the record and the applicable law. We affirm the Law Division's judgment and orders except we reverse and remand, for further consideration consistent with this opinion, of the provisions of the order setting the fair market rental value and awarding counsel fees.

This action arises from a family dispute regarding Cindy's and Julia's2 occupancy of a single family home located in Lyndhurst. Approximately twenty-seven years ago, Cindy and her late spouse, Lawrence Romano, moved into the home with his mother, Pauline Romano. Pauline owned the house since September 1988, when her husband Angelo passed away. There was no oral or written lease agreement between Pauline, her son or daughter-in-law. Lawrence died in February 2005. Cindy and her three children continued to reside in Pauline's house.

Neither Cindy nor any of her children acquired any ownership or leasehold interest in the property despite their long term occupancy. Pauline died in January 2012. Cindy learned Pauline had executed her Last Will and Testament which appointed Pauline's daughter Maria as executrix. In the will, Pauline devised the property to Maria for her life and, upon Maria's death, to Pauline's grandchildren, including Julia, her (minor) sisters and Maria's two children. However, in August 2008, Pauline deeded the property to Maria. According to Cindy, she understood the transfer was made in case Pauline had to be moved to a nursing home and Maria "would make sure the real property would go back to [Pauline's] grandchildren."

Also, Pauline executed a power of attorney in favor of Maria in 2010. The document was prepared by Malcom J. McPherson, Jr., Esq., Cindy's and Julia's attorney in this action.

Maria died in 2011, but Pauline never had title to the real estate restored in her name or changed her will. As a result, after Maria's death, her husband, plaintiff Dennis Graber, inherited Maria's interest and, pursuant to a deed he signed on behalf of Maria's estate on December 8, 2011, he became the property's sole owner.

On that same day, Dennis' attorney sent a letter to Cindy advising her of her responsibility to maintain the property and pay its carrying charges. The letter described Cindy as an occupant, not a tenant, of the property. On April 24, 2012, Dennis' attorney sent another letter to Cindy claiming she violated the requests made in the December 8, 2011 letter. It also stated Cindy's occupancy would be treated, without prejudice, as a tenancy. Counsel also informed Cindy she would have to pay a monthly rental of $1,250 beginning June 2012. He also advised Cindy of Dennis' intention to sell the property. Cindy never paid any rent although she did make some payments towards the property's carrying charges.

Dennis filed a complaint for ejectment on October 1, 2012, in which he sought the removal of Cindy and Julia from the premises as part of his effort to sell the property. He alleged both of them obstructed his efforts to sell and they failed to pay costs associated with the premises. He also demanded they pay to him a "fair-market" monthly rent of $2,200 for each month since he took title.

Cindy and Julia were personally served at their home on October 7, 2012, but they did not file any response. Default was entered against them on December 6, 2012.3 On December 19, 2012, Cindy and Julia attempted to file an answer and counterclaim. The court received the answer, but would not file it because a default was already entered.

Although Cindy never raised any issue about Pauline's will, the deed, the power of attorney, Pauline's mental capacity or Maria's influence over Pauline at any time prior to this action, in her and Julia's unfiled answer and counterclaim, they alleged Dennis' deed was invalid because the initial deed from Pauline to Maria was void. They alleged Pauline was under duress and undue influence at the time of the transfer and, therefore, ownership of the property should be governed by the terms of Pauline's Last Will and Testament. They also asserted they fulfilled all responsibilities requested by Dennis.

On December 24, 2012, Cindy's and Julia's counsel mailed the answer and counterclaim to Dennis' attorney who responded by advising he was not authorized to accept service or to consent to an extension. He also explained a default had been entered and reiterated the case had been transferred from the Chancery Division to the Law Division.

On December 28, 2012, the court entered a default judgment of ejectment, which also ordered Cindy and Julia to pay Dennis $2,200 per month, as of December 8, 2011. The court also ordered Cindy and Julia to pay $3279 towards Dennis' counsel fees. The court entered the default judgment without conducting a proof hearing. Further, there is no evidence Dennis filed a motion for entry of a default judgment or the court giving any statement of reasons for granting the relief demanded in the complaint.4

Cindy and Julia filed a motion to vacate the default and judgment of ejectment on January 15, 2013. Cindy filed a certification in support of their motion in which she never explained why she did not file a timely response to the complaint. She instead certified neither she and Julia nor their attorney received any application seeking the entry of a default judgment. Cindy further noted Dennis' attorney received their answer and counterclaim prior to the judgment's entry. Cindy's certification did not identify any defense to the complaint. Instead, her attorney certified "[Cindy and Julia] have alleged Pauline Romano was under duress and undue influence at the time the deed was signed transferring the property to Mari[a]. . . ."

Cindy contested the ordered $2,200 monthly rental because Dennis' attorney had written them saying they could remain on the premises as long as they paid certain costs associated with the property. She further stated Dennis' counsel's April 24, 2012 letter gave them legal possession of the property and it established the fair market rental value at $1,250 not $2,200. She also contested the court's award of counsel fees because the judgment did not specify who was responsible for the fees nor was the request supported by a certification of services.

Dennis responded claiming Cindy and Julia failed to establish good cause to vacate the judgment. However, in their certifications filed in opposition, neither Dennis nor his attorney ever confirmed they filed a motion for the entry of the default judgment.

The court considered these arguments and denied the motion. In its written statement of reasons, the court relied on its understanding that a motion for entry of default judgment was in fact filed and served on Cindy and Julia. The court found Cindy and Julia did not show excusable neglect nor a meritorious defense as required for vacating a default judgment. The judge did not find sufficient "good cause" for the two-month delay in responding to the complaint, noting that an answer, responsive pleadings, and motions opposing judgments were never filed. The court found that Cindy and Julia were adequately informed of the process and failed to respond within a reasonable time. The court did not find a meritorious defense noting that a single letter regarding a temporary living arrangement did not establish legal possession.

Cindy and Julia filed a motion for reconsideration of the order. They again emphasized they did not receive any notice of motion regarding the entry of the judgment of ejectment and argued their motion to vacate the default judgment should have been viewed with great liberality. Dennis did not file any opposition establishing a motion for entry of default had ever been filed.

The court denied Cindy's and Julia's motion for reconsideration. The court found, pursuant to Rule 4:49-2, it did not base its earlier decision on a palpably incorrect or irrational basis nor was it obvious that the court failed to consider the significance of probative, competent evidence.

Cindy and Julia filed a timely notice of appeal. As noted, they argue the motion judge should have vacated the default judgment because they demonstrated good cause by establishing excusable neglect and a meritorious defense.

Following our review, we conclude Cindy and Julia have not met the two-pronged burden required by Rule 4:50-1. Although we agree they proved sufficient excusable neglect, we cannot find they established a meritorious defense to vacate the entire judgment. Their proofs do not establish a challenge to Dennis' right to ownership and ejectment; however, their proofs properly establish a meritorious defense to the ordered monthly rental value and the award of counsel fees, which must be vacated and considered on remand.

In our review, we recognize 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) ("Rule4:50 is instinct with equitable considerations."). For that reason, a trial court'sdecision in response to an application to open a judgment will be left undisturbed unless it represents a "clear abuse of discretion." US Bank Nat'l Assoc. 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) (citations and internal quotation marks omitted). Also, where 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. SeeDavis, 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 Cindy's and Julia's claim of excusable neglect under Rule4:50-1(a).5

Before we examine the proofs advanced by Cindy and Julia in support of their argument to vacate the judgment, we must address procedural defects presented in this record. The judge entered default judgment without conducting a proof hearing or based on a motion for entry of a default judgment accompanied by a statement of reasons supporting the relief demanded in the complaint, as required by Rule4:43-2(b).

We are satisfied from our review of the record Dennis obtained the default judgment in this case without ever filing the notice of motion required by Rule4:43-2(b) ("[T]he 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 . . . .").

It appears to us Dennis obtained the default judgment by following the procedure for entry of a default judgment for a sum certain as described in Rule4:43-2(a). That procedure is reserved for default judgments when the complaint is based upon a "sum certain or for a sum which can by computation be made certain [.]" In this matter, however, the nature of Dennis' claims was not fixed or certain, necessitating a damage award calculated in compliance with the procedures set forth in subpart (b) of Rule4:43 2.

That subpart requires the plaintiff to file a motion for entry of default, on notice to the defaulting defendants. It requires a proof hearing, also on notice, where

If, to enable the court to enter judgment or to carry it into effect, it is necessary to take an account or to determine the amount of damages or to establish the truth of any allegation by evidence or to make an investigation of any other matter, the court, on its own motion or at the request of a party on notice to the defaulting defendant or defendant s representative, may conduct such proof hearings with or without a jury or take such proceedings as it deems appropriate.

[R. 4:43-2(b).]

As to the need for a proof hearing and a defaulting defendant's right to participate in the hearing, we have observed

It is axiomatic that where, following the entry of a default, a plaintiff seeks unliquidated damages, judgment should not ordinarily be entered without a proof hearing, see Beech Forest Hills, Inc. v. Morris Plains, 127 N.J. Super. 574, 580-82, (App. Div. 1974); see also Sema v. Automall 46 Inc., 384 N.J. Super. 145, 153 (App. Div. 2006) (defining unliquidated damages), although the question of what proofs are necessary is inherently within the judge's discretion. See Douglas v. Harris, 35 N.J. 270, 276-77 (1961); Metric Inv., Inc. v. Patterson, 98 N.J. Super. 130, 133 (Law. Div. 1967), aff'd, 101 N.J. Super. 301 (App. Div. 1968). Even though a defendant who has defaulted has relinquished the right to present affirmative proofs in the matter, the right to challenge a plaintiff's showings in a proof hearing by way of cross-examination and argument should not ordinarily be precluded. See Jugan v. Pollen, 253 N.J. Super. 123, 129-31 (App. Div. 1992), certif. denied, 138 N.J. 271, (1994); see also BJL Leasing Corp. v. Whittington, Singer, Davis and Co., 204 N.J. Super 314, 322-23 (App. Div. 1985); Beech Forest Hills, . . . 127 N.J. Super. [574,] 581-82 [1974)]; Johnson v. Johnson, 92 N.J. Super. 457, 464-65 (App. Div. 1966); Perry v. Crunden, 79 N.J. Super. 285 (Cty. Ct. 1963); Fox v. Fox, 76 N.J. Super. 600 (Ch. Div. 1962).

[Chakravarti v. Pegasus Consulting Grp., Inc., 393 N.J. Super. 203, 210-11 (App. Div. 2007).

There was no evidence Dennis followed the mandated procedure by giving notice of application for the entry of the default judgment. If he had, Cindy and Julia would then at least have had an opportunity to appear at a proof hearing where they could have challenged the amount of any award.

To set aside a default judgment entered under Rule4:43 2, a movant must provide proof of excusable neglect; however, "for good cause shown, the court may set aside and entry of default and if judgment by default has been entered, may likewise set it aside in accordance with R.4:50." R.4:43-3. Understanding the required good-cause showing for setting aside an entry of default judgment is more stringent and guided by Rule4:50-1, we conclude Dennis' failure to follow the court's rules regarding entry of a damage award included in a default judgment satisfies the requisites of Rule4:50-1(a), allowing the judgment to be set aside because of "mistake, inadvertence, surprise, or excusable neglect."

Although the motion judge correctly found Cindy and Julia did not provide any evidence of excusable neglect for their default, we believe good cause was shown by virtue of Dennis' 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 Rule4:50-1, 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 Rule4:50-1 must be supported by sufficient facts to establish a meritorious defense. "The failure to plead the details of the meritorious defense is 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. SeeDel 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. SeeSchulwitz, supra, 27 N.J. Super.at 561. "'It 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.

Cindy and Julia did not provide any evidence as to their meritorious defense regarding Pauline's capacity or Maria's undue influence, except merely alleging the deed's execution to Maria was the result of duress and undue influence. These are conclusions for which they provided no specific facts. Also, they never raised these issues at any time during the three years from the date of the deed to Pauline's death. Moreover, they did not act or assert these claims at Maria's death when they received correspondence from Dennis' attorney mandating they assume financial obligation to occupy the property, and later because they were considered Dennis' tenants.

Accordingly, we discern no abuse of discretion in the judge's denial of the motion to vacate the default judgment of ejectment.

We reach a different result in reviewing that portion of the judgment fixing damages. Cindy and Julia argue there was no basis for the $2,200 monthly rental value during their past occupancy. They argue there was no proof to support a fair market value of $2,200 per month, and they rely on the letter written to them by Dennis' attorney on April 24, 2012, which demanded a monthly rental of $1,250. They also argue prior to that letter, they fulfilled the obligations established in the December 8, 2011 letter from Dennis' attorney requiring them to pay the property's carrying charges and to maintain the premises.

The judge established the monthly rental by presumably following the provisions of N.J.S.A. 2A:35-2, which permits an owner to recover in an action for ejectment "all incidental damages, including mesne profits, and the full value of the use and occupation of the premises . . . ." "[An] obligation created by law to pay for use and occupation" creates an obligation to pay fair rental value. Hous. Auth. of E. Orange v. Leff, 125 N.J. Super. 425, 436 (Law Div. 1973).

Fair market rental value is the price that a willing buyer would offer and a willing seller would accept. City of Trenton v. Lenzner, 16 N.J. 465, 476 (1954), cert. denied, 348 U.S. 972, 75 S. Ct. 534, 99 L. Ed. 757 (1955). Thus, all of the considerations that would influence a willing buyer and willing seller in making their decisions are relevant to a determination of fair market value. Vil. of S. Orange v. Alden Corp., 71 N.J. 362, 368 (1976).

Absent an agreement between the parties, the amount of fair market rental value is not a sum certain which a court can determine merely by accepting as legitimate, unsupported allegations. A proof hearing is required. See R. 4:43-2(b). Where a court enters a judgment without proof of damages, the judgment should be vacated. Marder, supra, 84 N.J. Super. at 319 ("[A] reopening of the judgment for purposes of assessing damages is proper where the defendant provides a reasonable assertion to the effect that it is not liable for the amount of damages claimed by the plaintiff.").

We, therefore, find the court abused its discretion by refusing to vacate its award of rental value. It should have conducted a hearing for the purpose of determining the value of Cindy's and Julia's occupancy to be awarded to Dennis and provided reasons for its determination. We are constrained to vacate that portion of the default judgment and remand for a hearing on that issue.

We reach a similar result regarding the court's award of attorney's fees. Cindy and Julia argue the imposition of counsel fees in the amount of $3,279 was "unfounded and unsubstantiated," noting that they never received any certification of attorney services. We agree.

We adhere to the rule that a determination or decision to award counsel fees made by trial courts "will be disturbed only on the rarest occasions, and then only because of a clear abuse of discretion." Rendine v. Pantzer, 141 N.J. 292, 317 (1995).

However, based on the record available to us, we cannot discern how the court calculated or determined the reasonableness of the attorney fees. Although the motion judge noted he relied upon a certification of services, no certification was ever served on Cindy and Julia nor is it included in the record. Also, we do not know the basis under Rule 4:42-9 upon which the court relied in making the award. The court's written decisions are silent as to the basis for the award or how it was calculated. As a result, we are again constrained to remand for an explanation if the award was supported by a properly filed and served certification of services. If the court finds no certification was filed and served, the award must be denied. See R. 4:42-9(b).

Finally, Cindy and Julia argue Julia is not a proper party to this action because all correspondences from Dennis' attorneys were made to Cindy only. They argue, even though Julia resided at the premises with her mother, there is no reason she should be responsible for any of the damages or fees awarded in the judgment. They did not, however, raise this argument in either of their post-judgment motions.

We will not consider allegations of error not brought to the trial judge's attention. State v. Robinson, 200 N.J. 1, 20 (2009); State v. Arthur, 184 N.J. 307, 327 (2005); Nieder v. Royal Indem. Ins. Co., 62 N.J. 229, 234 (1973). See also Pressler & Verniero, Current N.J. Court Rules, comt 2 on R. 2:6-2 (2015). Generally, unless an unraised issue (even a constitutional issue) goes to the jurisdiction of the trial court or concerns matters of substantial public interest, we will not consider it. Ibid. Because this issue was not previously raised and it is not a question of jurisdiction or of substantial public interest, we choose to withhold our review. Nieder, supra, 62 N.J.at 234.

Affirmed in part and reversed and remanded in part. We do not retain jurisdiction.

1 Cindy Romano was improperly pleaded as Cynthia Romano.

2 We resort to using individuals first names for clarity because several members of the family involved share the same last name. We intend no disrespect.

3 On December 14, 2012, the court transferred the matter from the Chancery Division to the Law Division. According to Dennis' counsel, he immediately forwarded the order to Cindy's and Julia's attorney.

4 In the judge's decisions denying relief to Cindy and Julia he refers twice to a filed motion for the entry of a default judgment. We however find no evidence the motion was ever filed. In a certification filed in opposition to Cindy's motion to vacate, Dennis' attorney never stated a motion to enter default was ever filed or served. There is no copy of a motion attached to the certification and a motion is not included in the appendix on appeal. We glean from this the motion was never filed.

5 "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).