TDJP PROPERTIES, LLC v. ADAR ALEPH, LLC

NOT FOR PUBLICATION WITHOUT THE
                               APPROVAL OF THE APPELLATE DIVISION
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                                                        SUPERIOR COURT OF NEW JERSEY
                                                        APPELLATE DIVISION
                                                        DOCKET NO. A-1198-20

TDJP PROPERTIES, LLC,

          Plaintiff-Appellant,

v.

ADAR ALEPH, LLC, and DITMAS
PARK CAPITAL, LP,

     Defendants-Respondents.
______________________________

                   Argued November 3, 2021 – Decided April 13, 2022

                   Before Judges Fisher and Smith.

                   On appeal from the Superior Court of New Jersey,
                   Chancery Division, Ocean County, Docket No.
                   F-011016-19.

                   Adam D. Greenberg argued the cause for appellant
                   (Honig & Greenberg, LLC, attorneys; Adam D.
                   Greenberg, on the briefs).

                   Patrick O. Lacsina argued the cause for respondent
                   Adar Aleph, LLC.

PER CURIAM
      Plaintiff TDJP Properties, LLC (TDJP) appeals the denial of its motion

for reconsideration. The Chancery Division granted co-defendant Adar Aleph,

LLC's (Adar Aleph) motion to vacate default judgment in favor of TDJP

pursuant to Rule 4:50-1, and subsequently denied TJDP's reconsideration

motion. On appeal, plaintiff argues the motion court abused its discretion by

denying the motion for reconsideration. TDJP's main argument on appeal is that

defendant failed to meet its burden of proof to obtain relief from judgment under

Rule 4:50-1. We agree and reverse the Chancery Division's order vacating the

judgment of foreclosure. We reinstate the judgment of foreclosure in favor of

plaintiff and find moot the order denying reconsideration.

                                        I.

      Adar Aleph owned property located in Barnegat. Adar Aleph took out a

$123,00 purchase money mortgage from co-defendant Ditmas Park Capital L.P.

(Ditmas)1, which was secured by the property. Adar Aleph defaulted on its loan

payments and failed to pay several property tax installments. The Barnegat tax

collector sold Adar Aleph's tax sale certificate to a corporate buyer, who later


1
  Ditmas has not filed a brief on appeal, and it did not enter an appearance before
the motion court during Adar Aleph's motion to vacate or TDJP's motion for
reconsideration. Our review of the record shows no dismissal of TDJP's claims
against Ditmas as of the writing of this opinion.


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assigned it to TDJP. TDJP initiated a foreclosure action on the property, and

then served Adar Aleph with the summons and complaint. Adar Aleph failed to

file an answer and default was entered.       Adar Aleph failed to redeem the

property, and judgment of foreclosure was entered.

      Adar Aleph moved for vacation of the judgment pursuant to Rule 4:50-1,

submitting a one-page certification from Marcus Elias, a managing member of

Adar Aleph, alleging that the firm never received service of the foreclosure

summons and complaint. Elias further alleged that Adar Aleph had no notice of

the foreclosure action until August 2020, when it learned of its existence from

co-defendant Ditmas. TDJP vigorously opposed the motion, arguing that Adar

Aleph in fact had received service of the summons and complaint. TDJP argued

that, if the trial court found Adar Aleph was not served, such an outcome was

caused by Adar Aleph's deliberate attempt to avoid service of process by

swapping registered agents after receiving the notice of intent to foreclose and

quickly appointing an agent with an out-of-state address in violation of  N.J.S.A.

42:2C-14.2 TDJP argued that Adar Aleph's actions in switching registered

agents represented an effort to thwart its attempt at service.


2
  Pursuant to  N.J.S.A. 42:2C-14(a) and (c), a limited liability company "shall
designate and continuously maintain" in New Jersey "an office, which need not


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      The trial court heard argument on the motion to vacate on October 16,

2022. The record shows that the hearing was brief. The court granted Adar

Aleph's motion to vacate the foreclosure judgment, finding service was

improper, but made no findings on the record to support its order. The court

imposed certain conditions on Adar Aleph, requiring them to pay plaintiff's

maintenance costs at the property from the date of final judgment until the date

of Adar Aleph's motion to vacate. TDJP moved for reconsideration.

      The reconsideration motion was heard November 13, 2020. The trial court

considered the papers, heard argument, and made findings. The court found

that: Adar Aleph changed its registered agent after receiving TDJP's notice of

intent to foreclose; TDJP's service of the summons and complaint was

"appropriate"; failure to serve Adar Aleph was not a basis to vacate summary

judgment; Adar Aleph's certification that it never received notice of the

complaint was sufficient to show excusable neglect; and Adar Aleph had a

meritorious defense in that it had expressed a "willing[ness] to satisfy the entire

tax sale certificate amount," as well as reimburse TDJP's "reasonable" ongoing




be a place of its activity in [the] State" and "an agent for service of process" who
"shall be an individual who is a resident of [the] State" or a "person with
authority to transact business in [the] State."


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maintenance and related costs at the subject property. The trial court, finding

that Adar Aleph had met its burden of showing excusable neglect and a

meritorious defense under Rule 4:50-1(f), denied the motion for reconsideration.

      TDJP appeals, arguing the trial court erred in denying reconsideration. It

contends that Adar Aleph was served properly, despite its attempts to avoid

service, and that Adar Aleph has failed to meet the standard for relief under Rule

4:50-1.

                                          II.

      We review a court's determination under Rule 4:50-1 for an abuse of

discretion. Hous. Auth. of Morristown v. Little,  135 N.J. 274, 283 (1994). Rule

4:50-1 states: "the court may relieve a party . . . from a final judgment . . . for

the following reasons: (a) mistake, inadvertence, surprise, or excusable neglect;

. . . (d) the judgment or order is void; . . . or (f) any other reason justifying relief

from the operation of the judgment or order." "The rule is 'designed to reconcile

the strong interests in finality of judgments and judicial efficiency with the

equitable notion that courts should have authority to avoid an unjust result in

any given case.'" U.S. Nat'l Bank Ass'n v. Guillaume,  209 N.J. 449, 467 (2012)

(citation and internal quotation marks omitted).




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      Rule 4:50-1(a) requires a showing of excusable neglect and a meritorious

defense. Id. at 468. "'Excusable neglect' may be found when the default was

'attributable to an honest mistake that is compatible with due diligence or

reasonable prudence.'" Ibid. (quoting Mancini v. EDS ex. rel. N.J. Auto. Fill

Ins. Underwriting Ass'n,  132 N.J. 330, 335 (1993)).

      With respect to Rule 4:50-1(f), the Supreme Court stated: "No

categorization can be made of the situations which would warrant redress under

[that subsection]. [T]he very essence of [subsection] (f) is its capacity for relief

in exceptional situations. And in such exceptional cases its boundaries are as

expansive as the need to achieve equity and justice." DEG, LLC v. Twp. of

Fairfield,  198 N.J. 242, 269-70 (2009) (quoting Ct. Inv. Co. v. Perillo,  48 N.J.
 334, 341 (1966)) (second alteration in original).

                                        III.

      We do not address TDJP's argument on appeal that Adar Aleph

manufactured its case for excusable neglect by defeating service with a "shell

game" of registered agents in violation of  N.J.S.A. 42:2C-14. The trial court

found, on reconsideration, that service of the summons and complaint on Adar

Aleph was effective. We turn to the sole question remaining: did the trial court




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have a sufficient basis in the record to find Adar Aleph met its burden under

Rule 4:50-1 for relief?

      The record is unclear as to which of the subsections of the rule were being

argued, however, a close reading suggests that subsections (a), (d), and (f) were

placed at issue by defendant. 3 Subsection (a) requires the movant to show

excusable neglect and a meritorious defense to obtain relief. See R. 4:50-1 (a).

Here, the trial court's finding of service negates Adar Aleph's managing

member's certification that the company never received notice of the foreclosure

before August 2020. The record discloses no other fact alleged by Adar Aleph

from which trial court could infer excusable neglect or support the finding that

Adar Aleph made "an honest mistake that is compatible with due diligence or

reasonable prudence." Guillaume,  209 N.J. at 468.

      We turn to subsection (f). Given the trial court finding of service, we find

nothing in the record which could be characterized as "exceptional

circumstances" warranting relief under the rule. The record shows Adar Aleph

failed to maintain the property, including allowing the utilities to be shut off and



3
  To the extent Adar Aleph argued that the final judgment of foreclosure was void
under Rule 4:50-1(d) because it was never served with the summons and complaint,
we find that argument moot, given the motion court's finding of effective service.


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failing to repair holes in the ceiling and roof. The record reveals no proofs from

Adar Aleph which would overcome "the strong interest[] in finality of

judgments and judicial efficiency." Guillaume,  209 N.J. at 467.

      We conclude that the motion court mistakenly exercised its discretion in

vacating the judgment against Adar Aleph, and we reverse. The motion court's

order denying reconsideration is rendered moot, and the final judgment of

foreclosure is reinstated.

      Reversed.




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