APPELLATE DIVISION DECIDES NASTY NEIGHBOR CASE IN HUNTERDON MICHAEL MACNEIR, ET AL. VS. DAVID GRAVATT, ET AL.

http://www.judiciary.state.nj.us/opinions/a5174-13.pdf

 

MICHAEL MACNEIR and LISA MACNEIR, Plaintiffs-Respondents, v. DAVID GRAVATT and PATRICIA A. GRAVATT, Defendants-Appellants. _____________________________________ Argued May 19, 2015 – Decided June 22, 2015 Before Judges Simonelli and Leone. On appeal from the Superior Court of New Jersey, Law Division, Hunterdon County, Docket No. L-0529-13. Robert A. Ungvary argued the cause for appellants. Haekyoung Suh argued the cause for respondents (The Rotolo Law Firm, attorneys; Ms. Suh, on the brief). PER CURIAM Defendants David Gravatt and Patricia A. Gravatt seek to vacate the default judgment entered against them for failing to file a timely answer to a complaint filed by plaintiffs Michael MacNeir and Lisa MacNeir. We reverse, vacate, and remand. 2 A-5174-13T3 I. The following facts are drawn from pleadings, the certifications of the parties’ attorneys, and the documentary exhibits they submitted. Plaintiffs and defendants are neighbors. Plaintiffs’ complaint, and defendants’ proposed counterclaim, allege various incidents from 2008 to 2013. They raise disputes over fences, a dog, a tree, water migration, and other nuisances. They accuse each other of trespassing, abusive conduct, harassment, false complaints, defamation, and invasion of privacy. Plaintiff’s attorney certified that in an October 15, 2013 letter to defendants’ attorney, he proposed a settlement, attached a draft complaint, and warned that a complaint would be filed if defendants did not respond within seven days. After receiving no response, on October 28, 2013, plaintiffs filed a complaint in the Law Division. On November 19, 2013, defendants were personally served with the summons and complaint. Under Rule 4:6-1, their answer was due on December 24, 2013. Because the time to file an answer and counterclaim fell during the Christmas holidays, defendants’ attorney prepared a stipulation extending the time to answer and forwarded it to plaintiffs’ attorney on December 4, 2013, expecting it to be signed as a matter of professional courtesy. On December 9, an 3 A-5174-13T3 associate attorney with plaintiffs’ attorney’s law firm responded that because defendants had a copy of the complaint since the middle of October, she was not authorized by her client to extend the usual professional courtesies. On December 17, defendants’ attorney replied to plaintiffs’ attorney that, “[a]s your clients will not permit you to grant the ordinary courtesy of an extension to answer, I will see that the answer is filed within time.” Plaintiffs’ attorney certified that on December 20, 2013, he and defendants’ attorney discussed a potential settlement and he consented to a ten-day extension of the time to answer until January 3, 2014. Defendants’ attorney certified that plaintiffs’ attorney said his associate should not have refused an extension and that he expected plaintiffs’ attorney to sign and return the draft stipulation with the number of days changed and signed. Plaintiffs’ attorney countered that defendants’ attorney neither sent him a stipulation extending the time to January 3 nor instructed him to modify and sign the draft stipulation. Defendants’ attorney certified that he prepared the answer and counterclaim, but the stipulation never arrived. He also alleged he made several phone calls and faxed several letters to plaintiffs’ attorney, but received no response. 4 A-5174-13T3 On January 10, 2014, plaintiffs filed a request to enter default. In the accompanying affidavit, plaintiffs’ attorney’s associate noted that no answer had been filed by the January 3, 2014 extended due date. The clerk’s office entered default on January 13. On January 16, the associate faxed to defendants’ attorney a copy of the filed request to enter default. In a January 16, 2014 letter to plaintiffs’ attorney, defendants’ attorney advised he received the filed request to enter default and twice called plaintiffs’ attorney without receiving a return call. Defendants’ attorney also inquired whether he had to file a motion to vacate the default. On January 20, defendants’ attorney forwarded to plaintiffs’ attorney a proposed consent order to vacate the default; however, he received no reply. On February 4, 2014, defendants filed a motion vacate the default, attaching a copy of their proposed answer and counterclaim. Plaintiffs opposed the motion. In a February 28, 2014, order, the trial court denied the motion. On April 23, 2014, defendants filed a motion for reconsideration. Defendants’ attorney certified that defendants’ answer and counterclaim were completed and ready to be filed on January 3, and he began calling plaintiffs’ attorney early the next week asking for the return of the stipulation, 5 A-5174-13T3 but received no reply. In a May 13, 2014 order and oral opinion, the court denied defendants’ motion, noting finding they did not establish entitlement to reconsideration. Meanwhile, on May 2, plaintiffs filed a cross-motion for entry of final judgment by default, supported by an affidavit of proof by plaintiff Lisa MacNeir of damages for landscaping, fencing, security cameras, and legal representation. On May 23, 2014, the court entered final judgment by default, awarding plaintiffs $16,051.08 in damages and prejudgment interest. On July 8, 2014, defendants filed a notice of appeal from the February 28, May 13, and May 23 orders. II. Plaintiffs argue defendants’ appeal must be dismissed because “a direct appeal will not lie from a judgment by default.” Haber v. Haber, 253 N.J. Super. 413, 416 (App. Div. 1992). “The reason underlying this rule is that the very theory and constitution of a court of appellate jurisdiction is only the correction of errors which a court below may have committed, and a court below cannot be said to have committed an error when its judgment was never called into exercise, and the point of law was never taken into consideration, but was abandoned by acquiescence or default of the party who raised it.” [Ibid. (quoting McDermott v. Paterson, 122 N.J.L. 81, 84 (E. & A. 1939)).] 6 A-5174-13T3 Here, defendants did not acquiesce in the clerk’s entry of default or fail to take any action in the trial court. Cf. id. at 415 (the defendant failed to appear for trial and took no action to challenge the resulting default judgment in the trial court); N.J. Div. of Youth & Family Servs. v. T.R., 331 N.J. Super. 360, 363 (App. Div. 2000) (same). Rather, defendants challenged the default, and called into question the trial court’s subsequent exercise of judgment in their motion to vacate the default and in their motion for reconsideration. The trial court’s interlocutory orders denying those motions became appealable when the court entered the final judgment by default. See N.J. Mfrs. Ins. Co. v. Prestige Health Grp., LLC, 406 N.J. Super. 354, 357-59 (App. Div.), certif. denied, 199 N.J. 543 (2009). Thus, defendants could challenge those rulings in an appeal from the final judgment by default without filing a motion to vacate that judgment under Rule 4:50- 1, which otherwise “provides a defaulting party with a remedy.” Haber, supra, 253 N.J. Super. at 416-17. “[T]he stringent constraints imposed on final judgments and orders under Rule 4:50-1 (grounds for relief from judgment) are wholly inapplicable to interlocutory orders.” Lombardi v. Masso, 207 N.J. 517, 534 (2011) (citing Johnson v. Cyklop Strapping Corp., 7 A-5174-13T3 220 N.J. Super. 250, 257-64 (App. Div. 1987), certif. denied, 110 N.J. 196 (1988)). Plaintiffs argued defendants’ motion for reconsideration of the denial of the motion to vacate default was untimely. Plaintiffs cited Rule 4:49-2, which requires “a motion for rehearing or reconsideration seeking to alter or amend a judgment or order shall be served not later than 20 days after service of the judgment or order.” However, “the time prescriptions set forth in Rule 4:49-2 apply to final judgments and orders, not interlocutory orders, which are reviewable at any time” until final judgment. Sullivan v. Coverings & Installation, Inc., 403 N.J. Super. 86, 96 (App. Div. 2008) (citing Johnson, supra, 220 N.J. Super. at 263); see State v. Timmendequas, 161 N.J. 515, 554 (1999), cert. denied, 534 U.S. 858, 122 S. Ct. 136, 151 L. Ed. 2d 89 (2001); Pressler & Verniero, Current N.J. Court Rules, comment 1 on R. 4:49-2 (2015). We therefore turn to the merits of those motions. III. “Our Rules prescribe a two-step default process, and there is a significant difference between the burdens imposed at each stage. When nothing more than an entry of default pursuant to Rule 4:43-1 has occurred, relief from that default may be granted on a showing of good cause.” US Bank Nat’l. Ass’n v. 8 A-5174-13T3 Guillaume, 209 N.J. 449, 466-67 (2012); see R. 4:43-3. A motion to vacate a default need not meet “the more stringent requirements of R. 4:50-1 for setting aside a default judgment.” O’Connor v. Altus, 67 N.J. 106, 129 (1975). “[O]nly a ‘mere showing of good cause is required for setting aside an entry of default.'” N.J. Div. of Youth & Family Servs. v. M.G., 427 N.J. Super. 154, 171 (App. Div. 2012) (quoting N.J. Mfrs., supra, 406 N.J. Super. at 360).1 As under the more stringent Rule 4:50-1, “an application to vacate default ‘should be viewed with great liberality and every reasonable ground for indulgence is tolerated to the end that a just result is reached.'” N.J. Div. of Youth & Family Servs. v. P.W.R., 410 N.J. Super. 501, 508 (App. Div. 2009) (quoting Marder v. Realty Constr. Co., 84 N.J. Super. 313, 319 (App. 1 By contrast, “[a] motion to set aside a default judgment will not be granted unless the movant shows . . . that there is a meritorious defense.” M.G., supra, 427 N.J. Super. at 171. Plaintiffs do not contend this requirement applies to a motion to vacate entry of default. Cf. Intek Auto Leasing, Inc. v. Zetes Microtech Corp., 268 N.J. Super. 426, 430-32 (App. Div. 1993); Trs. of Local 478 Trucking & Allied Indus. Pension Fund v. Baron Holding Corp., 224 N.J. Super. 485, 489 (App. Div. 1988). In any event, in their proposed answer and counterclaim, defendants denied plaintiffs’ factual allegations and made contrary factual allegations, indicating there are two sides to this dispute between neighbors, and suggesting “the presence of a meritorious defense worthy of judicial determination.” O’Connor, supra, 67 N.J. at 129 (finding meritorious defenses which, “while perhaps tenuous on the record before us, are at least arguable”). 9 A-5174-13T3 Div.), aff’d, 43 N.J. 508 (1964)), rev’d on other grounds, 205 N.J. 17 (2011); Pressler & Verniero, supra, comment on R. 4:43. “The decision whether to grant such a motion is left to the sound discretion of the trial court, and will not be disturbed absent an abuse of discretion. All doubts, however, should be resolved in favor of the parties seeking relief.” Mancini v. EDS ex rel. N.J. Auto. Full Ins. Underwriting Ass’n, 132 N.J. 330, 334 (1993) (citation omitted). We must hew to that standard of review. Here, defendants moved to vacate the entry of default, certifying they were prepared to file their answer and counterclaim within the ten-day extension granted by plaintiffs’ attorney, but could not file it without proof of that extension in the form of a signed stipulation. Defendants’ attorney believed that plaintiffs’ attorney was altering, signing, and returning the stipulation previously sent. Plaintiffs’ attorney believed that defendants’ attorney was sending a new stipulation to sign and return. We have found that such mistaken assumptions can contribute to good cause. N.J. Mfrs., supra, 406 N.J. Super. at 357, 360 (finding that “[b]ecause defendants assumed that plaintiffs had also served [their counsel], they never advised him of their receipt of the amended complaint.”). 10 A-5174-13T3 Even under the more stringent Rule 4:50-1(a), relief can be granted upon a showing of “mistake, inadvertence, surprise, or excusable neglect.” “‘Excusable neglect’ may be found when the default was ‘attributable to an honest mistake that is compatible with due diligence or reasonable prudence.'” US Bank, supra, 209 N.J. at 468 (quoting Mancini, supra, 132 N.J. at 335). Under that standard, we have found that a defendant’s mistaken “assumption that his counsel in the other actions was addressing this action seems reasonably sufficient to constitute excusable neglect.” Reg’l Constr. Corp. v. Ray, 364 N.J. Super. 534, 541 (App. Div. 2003). Here, defendants’ attorney made the mistaken assumption that plaintiffs’ attorney would alter, sign, and return the stipulation. It is undisputed the mistake was an honest one. Further, defendants’ attorney certified that, when the stipulation was not returned by the extended due date, he made further inquiry of plaintiffs’ attorney. Such inquiry was compatible with due diligence and reasonable prudence. Although defendants’ attorney should probably have made such inquiries earlier, the lack of response from plaintiffs’ attorney, and plaintiffs’ speedy filing for entry of default, convince us his 11 A-5174-13T3 delay was not the sole reason his efforts failed.2 His actions constituted excusable neglect, and thus “would constitute good cause under R. 4:43-3 to set aside the entry of default.” See Bernhardt v. Alden Cafe, 374 N.J. Super. 271, 277 (App. Div. 2005).3 The trial court offered reasons for denying the motion to vacate default. In its March 5, 2014 letter opinion explaining its February 28 order, the trial court ruled: Here, good cause has not been shown to vacate the entry of default. Defendant was in possession of Plaintiffs[‘] complaint since October 15, 2013 yet did not request an extension of that time to answer until December 4, 2013. After having been granted an extension Defendants still failed to timely file an Answer after having assured Plaintiffs that they would do so. In its May 13, 2014 oral decision, the trial court added: [T]he motion [to vacate] was denied due to the defendant’s own unreasonable delay in 2 Defendants’ counsel also could have filed a motion seeking an extension for “good cause,” which likely would have been granted. R. 4:6-1(c); see Audubon Volunteer Fire Co. No. 1 v. Church Constr. Co., 206 N.J. Super. 405, 405-07 (App. Div. 1986). However, such a motion should have been unnecessary given plaintiffs’ agreement to the extension, and was quickly precluded by plaintiffs’ hurried entry of default. 3 Plaintiffs have not claimed they suffered any prejudice by the one-week delay between the agreed-on due date and their entry of default. Cf. Jugan v. Pollen, 253 N.J. Super. 123, 135 (App. Div. 1992). Nor have plaintiffs alleged “any contumacious conduct” by defendants’ counsel. See O’Connor, supra, 67 N.J. at 129. 12 A-5174-13T3 filing the responsive papers. Defendant was informed that plaintiff would not sign a stipulated — stipulation to allow him any more time to respond, yet defendant waited for it anyway. Defendant assured plaintiff that he would serve his own papers by date certain, did not comply with his deadline, and the defendant’s motion was denied for these reasons. Unfortunately, these reasons misconstrue the facts and law. On October 15, 2013, plaintiffs’ attorney sent defendants’ attorney only a draft, unfiled complaint. Even assuming that draft complaint was identical to the complaint plaintiffs filed on October 28, the filed complaint was not served until November 19. Only “after service of the summons and complaint” on defendants did the thirty-five days to answer begin to run. R. 4:6-1(a). Defendants’ December 4 request for an extension was well before the December 24 due date. Although plaintiffs’ attorney initially informed defendants’ attorney that plaintiffs would not agree to an extension, and defendants’ attorney replied that he would file defendants’ answer by December 24, plaintiffs’ attorney did agree before that due date to a ten-day extension until January 3, 2014. Defendants’ attorney waited for a stipulation that both sides agreed would be signed by plaintiffs’ attorney. Defendants’ attorney could not file the answer without that stipulation, because “the written consent of 13 A-5174-13T3 the parties” for an extension “shall be filed with the responsive pleading.” R. 4:6-1(c). Thus, the trial court’s decision rested on a misapprehension of the facts and law. The “good cause” standard “requires the exercise of sound discretion in light of the facts and circumstances of the particular case considered in the context of the purposes of the Court Rule being applied.” Del. Valley Wholesale Florist, Inc. v. Addalia, 349 N.J. Super. 228, 232 (App. Div. 2002). It is “an abuse of discretion when a decision is made without a rational explanation, inexplicably departed from established policies, or rested on an impermissible basis.” US Bank, supra, 209 N.J. at 467-68 (internal quotation marks omitted). Therefore, we find the court mistakenly exercised its discretion by denying defendants’ motion to vacate the entry of default. As a result, we need not address the trial court’s denial of the motion to reconsider that ruling. Because a valid “[e]ntry of default is a necessary predicate to a default judgment,” the default judgment is “void.” Clark v. Pomponio, 397 N.J. Super. 630, 641-42 (App. Div.), certif. denied, 195 N.J. 420 (2008). Accordingly, we reverse the trial court’s denial of the motion to vacate entry of default, and vacate both the entry of 14 A-5174-13T3 default and the judgment of default. R. 4:43-3. We remand for the prompt filing of defendants’ responsive pleading and further proceedings. See O’Connor, supra, 67 N.J. at 129; Midland Funding LLC v. Albern, 433 N.J. Super. 494, 499 (App. Div. 2013). We do not retain jurisdiction.