BULENT TEMIZ v. LEVENT TEMIZ

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

BULENT (BILLY) TEMIZ and

MURAT (MIKE) TEMIZ,

Plaintiffs,

v.

LEVENT (LEON) TEMIZ,

Defendant.

____________________________________

January 13, 2016

Submitted January 4, 2016 Decided

Before Judges Sabatino and Accurso.

On appeal from the Superior Court of New Jersey, Law Division, Union County, Docket No. L-1010-10.

Bruce Regenstreich, attorney for appellant Alan J. Gutterman, Esq., as co-receiver in dissolution of 6th Avenue Electronics City, Inc.

Bressler-Duyk Law Firm, attorneys for respondent DEI Holdings, Inc. (Mark J. Bressler, on the brief).

PER CURIAM

Alan J. Gutterman, Esq., as co-receiver in dissolution of an insolvent company, 6th Avenue Electronics City, Inc. (6th Avenue), appeals the Law Division's order dated November 26, 2014. The order denied appellant's motion to void and vacate a default judgment entered on or about February 3, 2012 against 6th Avenue in favor of respondent DEI Holdings, Inc. (DEI) in the amount of $295,077.81. For the reasons that follow, we remand this matter for an evidentiary hearing.

The limited record presents the following circumstances and factual allegations, a number of which are disputed. DEI is a supplier of electronic retail equipment. In January 2006, DEI entered into a written dealership contract with an entity identified in a handwritten entry as "6th Ave Electronics" (6th Avenue) to furnish it with various goods. The goods were delivered to a retail store on Route 22 in Springfield in Union County.

After the bills for the goods were not paid, a collection action was brought on behalf of DEI against 6th Avenue. The sheriff made service on Lenny Carpio1, a manager at the Route 22 store location. No answer was filed. Consequently, the aforementioned default judgment was entered against 6th Avenue in February 2012.

Appellant contends that 6th Avenue is merely a real estate holding company. According to appellant, 6th Avenue has sold its only asset and the proceeds have been placed in escrow as part of the receivership. Counsel from appellant's law firm was appointed receiver for the dissolution of 6th Avenue by court order in October 2011, and appellant was added as a co-receiver in a subsequent order.

Appellant asserts that the company that actually purchased and received the goods from DEI was a related but distinct entity, "Sixth Avenue Electronics City, Inc." (Sixth Avenue). Hence, he claims that the default judgment was entered against the wrong entity, i.e., 6th Avenue instead of Sixth Avenue. In support of that contention, appellant relies factually upon a certification of Sixth Avenue's former Chief Financial Officer (CFO), who served in that capacity from 1996 to 2012.

The CFO attested that "it was widely known and understood that vendors and distributors were dealing with Sixth [Avenue], the retail operator, not 6th [Avenue], the real estate holding company." He further certified that DEI "would have been keenly aware that Sixth [Avenue] was the contracting party [for the goods in question] because Sixth [Avenue] operated as many as nineteen (19) retail locations in the metropolitan area, each of which did business with and entered into similar agreements with [DEI]." He added that, as a real estate holding company established solely for the premises on Route 22 in Springfield, 6th Avenue "would not have had any reason to enter into any agreements with any distributors of electronic audio equipment or other retail consumer products."

Meanwhile, Sixth Avenue, which is insolvent, has gone into liquidation. According to appellant, Sixth Avenue is now under the control of an assignee for the benefit of multiple creditors.

In October 2014, appellant filed a motion in the Law Division in Middlesex County to vacate the judgment. He asserted in an affidavit that he had only learned of the existence of DEI's default judgment "a few months" earlier, after obtaining the results of an updated title search. A Law Division judge in Middlesex County denied the motion without prejudice, noting the application should have been filed in Union County as the vicinage where the default judgment had been issued.

Appellant promptly re-filed his motion to vacate the judgment in Union County. Again, appellant argued that the judgment had been entered against the wrong debtor. In addition, appellant contended that service of process on the store manager in Springfield was invalid, and service should have been made upon 6th Avenue's registered agent listed with the State, Murat Temiz.2

DEI opposed the motion to vacate with a certification from its attorney. The certification attached the January 2006 contract containing the handwritten entry naming 6th Avenue as the dealer purchasing the goods from DEI. The attorney asserted that "[n]o person involved with 6th Avenue or Sixth Avenue advised [DEI that] 6th Avenue was not the proper dealer." However, the certification does not indicate how the attorney would have personal knowledge of that fact, as is required by Rule 1:6-6. DEI's opposition did not include any certifications from its principals or former principals.

After considering the parties' written submissions and the oral arguments of counsel, the trial court issued a bench ruling denying the motion. Among other things, the court concluded that there was sufficient overlap and similarity between the two business names of 6th Avenue and Sixth Avenue to have led a creditor such as DEI to be misled or confused about the actual identity of the company that was purchasing the goods. The court also noted the similarities in the logos of the two entities, and the fact that the signage displayed at the retail store used the designation "6th" rather than the spelled-out number "Sixth."

In light of what the trial court described as "the very unusual circumstances presented," the court found that DEI "had every reason to believe that it was dealing with an entity entitled 6th, with a six, number six[.]" The court did not address in its opinion appellant's claims of invalid service of process.

Appellant argues to us that the trial court erred in reaching these conclusions on the basis of conflicting written submissions and that, at the very least, the court should have conducted an evidentiary hearing to resolve the factual disputes. Appellant further argues that a proof hearing should have been conducted to establish the proper amount of the debt.

The applicable legal standards are well established. As a matter of general policy, our court system prefers adjudicating contested matters on their merits. Crescent Park Tenants Ass'n v. Realty Equities Corp., 58 N.J. 98, 107-08 (1971). In furtherance of that policy, Rule 4:50-1 provides several avenues for a defendant that is the subject of a default judgment to set aside that judgment in appropriate circumstances. Some of those grounds only pertain where the judgment has been issued within the preceding year. See R. 4:50-2 (stating that motions made under R. 4:50-1(a), (b), and (c) must be made within one year of judgment). Because appellant did not move for relief until October 2014, which is more than two years after the February 2012 default judgment was entered, subsections (a) through (c) of Rule 4:50-1 are inapplicable. Of the remaining grounds for relief listed in the Rule, subsections (d) ("the judgment or order is void") and (f) ("any other reason justifying relief from the operation of the judgment or order") potentially apply.

Appellant contends that the judgment is void under subsection (d) because service was invalid under Rule 4:4-4(a)(6), there being no proof that the store manager on duty was "in charge of the corporation" to an extent that it is fair to expect that he would take appropriate action concerning the summons and complaint handed to him. See Trustees of Local 478 Trucking and Allied Indus. Pension Fund v. Baron Holding Corp., 224 N.J. Super. 485, 490 (App. Div. 1988).

Appellant further argues that the judgment was void because it was purportedly entered against the wrong entity, 6th Avenue, rather than the supposed actual purchaser, Sixth Avenue. He further argues, under the "catchall" language of subsection (f), that it would be unjust for the default judgment to stand under these circumstances. See Mancini v. EDS, 132 N.J. 330, 334 (1993).

A trial court undoubtedly has considerable discretion in ruling on motions to set aside defaults and default judgments. However, in applying that discretion, the court is to exercise "great liberality" and "tolerate 'every reasonable ground for indulgence'" with a view to opening default. Ibid. (quoting Marder v. Realty Const. Co., 84 N.J. Super. 313, 319 (App. Div.), aff'd, 43 N.J. 508 (1964)).

Here, the trial court was understandably skeptical of the apparently interchangeable manner in which the owners of 6th Avenue and Sixth Avenue held out those two similar-sounding entities to the public, and the resultant potential for confusion by creditors such as DEI. However, the court should not have reached definitive conclusions about the contested issues without conducting an evidentiary hearing to resolve the multiple factual issues presented by the parties' competing written submissions. See State v. Gaitan, 209 N.J. 339, 381 (2012) (noting the potential necessity of a plenary hearing to resolve factual issues disputed in the parties' written submissions); Bruno v. Gale, Wentworth & Dillon Realty, 371 N.J. Super. 69, 76-77 (App. Div. 2004) (same).

Such a hearing is especially warranted here, given that DEI relies substantially on the certification of its counsel, who most likely lacks the personal knowledge required under N.J.R.E. 601 to testify about DEI's dealings with its Springfield customer during the relevant time frame. Even if DEI's counsel's certification is disregarded for that reason, the court is not obligated to accept as true the sworn statements tendered by appellant. Instead, appellant's fact witnesses should be exposed to cross-examination by opposing counsel and possible questioning by the court itself.

We thus conclude that the trial court should conduct an evidentiary hearing to make appropriate credibility assessments, including the former CFO who is appellant's key fact witness. In addition, the trial court shall make findings of fact disposing of appellant's unadjudicated claim of a flaw in service of process. Lastly, the need (or lack of need) for a proof hearing to confirm the amount owed shall abide the outcome of the other issues.

By calling for an evidentiary hearing and associated findings of fact, we by no means intimate that the conclusions originally reached by the trial court are necessarily incorrect or unjust. We simply remand for the appropriate procedural steps to be completed and factual disputes to be resolved in an expeditious manner. The court shall have discretion to permit depositions or other discovery that may be requested by counsel in advance of the hearing.

Remanded for an evidentiary hearing. Pending that hearing, the judgment shall remain in place. We do not retain jurisdiction.

1 The spelling of the manager's name is unclear on the sheriff's return of service.

2 The genesis of the case caption used by the parties and the trial court, Bulent Temiz and Murat Temiz v. Levent Temiz, is not readily apparent from the briefs, but that is not important to our disposition of this appeal.