Opinion
DOCKET NO. A-0600-14T4
09-10-2015
TOWNSHIP OF MAHWAH, Plaintiff-Respondent, v. JOHN A. MERRILL, Defendant-Appellant.
George J. Cotz, attorney for appellant. Gittleman, Muhlstock & Chewcaskie, LLP, attorneys for respondent (Brian M. Chewcaskie, on the brief).
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION Before Judges Ostrer and Tassini. On appeal from an interlocutory order of the Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-8952-13. George J. Cotz, attorney for appellant. Gittleman, Muhlstock & Chewcaskie, LLP, attorneys for respondent (Brian M. Chewcaskie, on the brief). PER CURIAM
On leave granted, defendant John A. Merrill appeals from the trial court's September 5, 2014, order denying his motion to vacate entry of default and permit him to file a responsive pleading out of time. Plaintiff Mahwah Township alleged in its complaint that Merrill both expanded and abandoned non-conforming uses on his property. As the court had previously denied plaintiff the same relief in an order entered June 6, 2014, the court deemed the motion as one for reconsideration. However, the court erred in applying Rule 4:49-2, which governs reconsideration of final orders, instead of Rule 4:42-2, which governs reconsideration of interlocutory orders such as the one entered June 6, 2014. Based on our review of the record and the applicable principles of law, we reverse and remand.
I.
It is undisputed that since the early 1940s, defendant or his family before him has owned a roughly five-acre property in Mahwah Township, now designated on the tax map as Block 21, Lots 21, 22 and 23. Defendant or his family have continuously resided in a house on the property ever since. Merrill family ownership preceded adoption of the township's first zoning ordinance in 1946, which placed the property in a residential zone.
In its November 2013 complaint — to which defendant seeks to file an answer — Mahwah alleges that a junkyard was operated on the property before 1946, but defendant has ceased that non-conforming use. Instead, Mahwah contends, defendant leases the property to contractors and landscapers, who store their equipment on the property and conduct business operations there. Mahwah also alleges that defendant maintains a law office on the property. The township asserts defendant's use of the property as a residence and law office while renting to non-residential tenants constitutes an unauthorized expansion of a non-conforming use.
The township's complaint apparently mirrored a similar complaint in 2012, which defendant answered and initially defended pro se. On the eve of trial in November 2013, both sides found it in their interests to consent to a voluntary dismissal of the complaint, without prejudice to the township's refiling the action. The dismissal served defendant's needs, because the trial court had denied his late request — made by his newly retained counsel — to amend his pleading to add a counterclaim and a third-party complaint. Defendant contends that plaintiff also agreed to the dismissal to enable it to conduct discovery regarding the allegations in the proposed counterclaim, which also related to defendant's defense.
The 2012 complaint is not included in the record. According to defendant, this was not the first time the township had engaged in litigation over his use of the property. He states that the township had alleged zoning violations in a complaint which was "abandoned by the Town ca 1980."
Defense counsel accepted service of the refiled complaint in December 2013. Counsel served, and attempted to file defendant's responsive pleading, but "carelessly" — in counsel's own words — forgot to include the required fee. Although notified by the court that the pleading had not been filed, counsel failed to attend to the matter while he appeared in an ongoing trial. He also failed to cure the oversight, despite letters from the township's attorney in January and February 2014, advising him that no answer had been filed, even though his predecessor had a copy of the pleading in his file. Later in February 2014, the township's attorney filed a request to enter default, a copy of which he served on defense counsel on March 4, 2014.
On May 12, 2014, over two months later, defense counsel filed a motion seeking an order for permission to file defendant's responsive pleading out of time. Defense counsel explained that his inattentiveness was the cause of the default. Plaintiff opposed the motion, arguing the court should deem the motion as one to vacate entry of default under Rule 4:43-3, and should deny it because defense counsel failed to act with due diligence.
Defendant did not include the motion papers associated with this motion. We rely on the trial judge's description of the papers she considered.
The court agreed. The court held that defense counsel's carelessness — his failure to include the fee, and his failure to respond to various notices of his oversight — did not constitute good cause for relief.
Soon thereafter defense counsel submitted a second motion to vacate the entry of default, along with a supporting certification. The motion was marked received by the court on June 25, 2014, but ultimately returned by the clerk's office in July 2014. Counsel received two, apparently inconsistent letters from court staff: one stated his motion fee would be refunded, explaining "needs answer and fee"; a second stated his $200 fee for the answer would be returned, explaining that his "answer [was] in default" — notwithstanding that the motion sought an order vacating the entry of default.
Defense counsel tried again in August 2014. His motion sought an order vacating the entry of default, and permitting defendant to file his answer, counterclaim and third-party complaint. In his supporting certification, counsel described the background of the suit that was dismissed in 2013; his failed efforts to file an answer to the new complaint; and his inattentiveness thereafter. He asserted that plaintiff was not prejudiced, as the responsive pleading was timely served on plaintiff's counsel, notwithstanding defense counsel's failure to successfully file it with the court.
Defense counsel included his proposed pleading. The counterclaim and third-party complaint included extensive factual allegations regarding the history of the property, and the uses to which Merrill, and his father before him, put the property. Defendant asserted that the property was continuously used for the storage and repair of vehicles and equipment, as well as for activities one might categorize as "junkyard" uses. The pleading refers to a 1972 resolution of the township's board of adjustment that recognized Merrill's non-conforming use of the property. He also alleged that aerial photographs from 1969-1970 showed that the property was used for vehicle storage. In sum, defendant alleged he had neither expanded, nor abandoned his non-conforming use of the property.
Merrill's proposed third-party complaint against neighboring property owners and a surveyor are not relevant to our disposition of the appeal.
The court denied the motion. The court noted that Rule 4:43-3 governed the motion to vacate the entry of default, which may be set aside "[f]or good cause shown." However, in view of the court's previous order in June 2014 denying similar relief, the court deemed defendant's motion to be one for reconsideration under Rule 4:49-2. Applying Cummings v. Bahr, 295 N.J. Super. 374, 384 (App. Div. 1996), the court held that defendant had failed to demonstrate that the court's previous order was based
on a palpably incorrect or irrational basis, and defendant failed to provide the court with any legal authority that contradictsThe court confirmed its previous determination that defendant failed to establish good cause for vacating the entry of default.
the court's reasoning or supports a contrary position. Moreover, there was no failure on the part of this court to appreciate the evidence set before it, nor did the court act in an arbitrary, capricious or unreasonable manner in denying defendant's motion to vacate the entry of default.
We granted defendant's motion for leave to appeal in October 2014.
II.
We review a trial court's order on a motion for reconsideration for an abuse of discretion. Fusco v. Bd. of Educ. of Newark, 349 N.J. Super. 455, 462 (App. Div.), certif. denied, 174 N.J. 544 (2002). Although the "abuse of discretion standard defies precise definition," we may find that a court has mistakenly exercised discretion when it has rested its decision on "an impermissible basis" or "upon a consideration of . . . inappropriate factors." Flagg v. Essex Cnty. Prosecutor, 171 N.J. 561, 571 (2002) (internal quotation marks and citations omitted). That is what occurred here.
The trial judge correctly deemed defendant's second motion as one for reconsideration — because the court had previously denied his motion to file a responsive pleading out of time, viewing that motion as one to vacate entry of default because default had already been entered. However, the court erred in deciding that the motion was governed by Rule 4:49-2, which addresses reconsideration of final orders, as opposed to Rule 4:42-2, which addresses reconsideration of interlocutory orders. See also R. 1:7-4(b) ("Motions for reconsideration of interlocutory orders shall be determined pursuant to R. 4:42-2.").
Reconsideration in either context requires the exercise of the trial court's discretion, in the interest of justice. Compare Cummings, supra, 295 N.J. Super. at 384 (stating that under Rule 4:49-2, "[r]econsideration is a matter within the sound discretion of the Court, to be exercised in the interest of justice") (quoting D'Atria v. D'Atria, 242 N.J. Super. 392, 401 (Ch. Div. 1990)), with Lombardi v. Masso, 207 N.J. 517, 534 (2011) ("It is well established that 'the trial court has the inherent power[,] to be exercised in its sound discretion, to review, revise, reconsider and modify its interlocutory orders at any time prior to the entry of final judgment.'") (quoting Johnson v. Cyklop Strapping Corp., 220 N.J. Super. 250, 257 (App. Div. 1987), certif. denied, 110 N.J. 196 (1988)), and R. 4:42-2 (stating that an interlocutory order "shall be subject to revision at any time before the entry of final judgment in the sound discretion of the court in the interest of justice").
However, reconsideration of an interlocutory order requires a less stringent showing than reconsideration of a final order. Referring to both Rule 4:50-1, regarding relief from judgments, and Rule 4:49-2, regarding reconsideration of final orders, the Court in Lombardi stated that "stringent constraints imposed on final judgments and orders under Rule 4:50-1 . . . are wholly inapplicable to interlocutory orders." Lombardi, supra, 207 N.J. at 534. The Court added, "Indeed, '[a] significant aspect of the interlocutory nature of an order is its amenability to the trial court's control until entry of final judgment without interposition of considerations appropriate to finality.'" Id. at 534-35 (quoting Pressler & Verniero, Current N.J. Court Rules, comment 3 on R. 4:42-2 (2011)). In other words, we impose more stringent standards on reconsideration of, or relief from, final judgments, in recognition of the value we place on finality, and the stability of judgments.
Rule 4:49-2, governing reconsideration of final orders, requires a prompt motion — within twenty days of entry of the final order — and a showing that the trial court erred in some way, or new evidence has come to light that the movant could not have reasonably discovered previously. See Del Vecchio v. Hemberger, 388 N.J. Super. 179, 189 (App. Div. 2006). The Rule expressly requires the movant to include "a statement of the matters or controlling decisions which counsel believes the court has overlooked or as to which it has erred." R. 4:49-2. This has been construed to mean a showing that the court has based its decision on a "'palpably incorrect or irrational basis'" or when it is clear that the court failed to consider or appreciate significant evidence. Cummings, supra, 295 N.J. Super. at 384 (quoting D'Atria, supra, 242 N.J. Super. at 401). Alternatively, the movant must show that new evidence "could not have [been] provided on the first application." Ibid.
The court's power to reconsider an interlocutory order is not so constrained. The court's inherent power to reconsider or modify interlocutory orders is "committed to the sound discretion of the court." Johnson, supra, 220 N.J. Super. at 263. It shall be exercised only "for good cause shown and in the service of the ultimate goal of substantial justice . . . ." Id. at 264-65.
Applying this standard, we are convinced the trial court erred in declining to reconsider defendant's motion to vacate entry of default. In its June order, the court relied solely on its conclusion that defense counsel's admitted carelessness and lack of diligence did not constitute good cause under Rule 4:43- 3. The court confirmed its finding regarding good cause in its subsequent decision.
The court's analysis was unduly restrictive. Rule 4:43-3 authorizes a court to vacate entry of default "[f]or good cause shown." However, the standard of establishing "good cause" under the rule is less stringent than the standard applicable to a motion for setting aside a default judgment. See US Bank Nat'l Ass'n v. Guillaume, 209 N.J. 449, 466-67 (2012); see also O'Connor v. Altus, 67 N.J. 106, 129 (1975); N.J. Mfrs. Ins. Co. v. Prestige Health Grp., LLC, 406 N.J. Super. 354, 360 (App. Div.) (noting that the standard for vacating default, which requires "[a] mere showing of good cause," is less stringent than the test for vacating default judgment), certif. denied, 199 N.J. 543 (2009). As with the different standards of reconsideration, the reason lies in our strong interest in finality. US Bank Nat'l Ass'n, supra, 209 N.J. at 467.
A party seeking to vacate a default judgment based on counsel's neglect must show the neglect was "excusable." Rule 4:50-1(a). "'Excusable neglect' may be found when the default was 'attributable to an honest mistake that is compatible with due diligence or reasonable prudence.'" Id. at 468 (quoting Mancini v. EDS ex rel. N.J. Auto. Full Ins. Underwriting Ass'n, 132 N.J. 330, 335 (1993)). Rule 4:43-3 is not so demanding, and permits a court to shield a party from the consequences of his or her attorney's lack of diligence.
Whether a movant has a meritorious defense is an appropriate consideration in determining whether good cause for relief has been shown to vacate entry of default. See O'Connor, supra, 67 N.J. at 129. The court may ascertain that there is a meritorious defense based on the face of the pleadings. See Rosenberg v. Bunce, 214 N.J. Super. 300, 304 (App. Div. 1986) ("[W]e perceive from the face of the complaint, answer and other pleadings genuine issues as to liability and damages."). A movant need not prove a likelihood of prevailing on the merits. 10 James W. Moore et al., Moore's Federal Practice - Civil ¶ 55.70[2] (3d ed. 2015) (discussing analogous federal standard of meritorious defense).
Under the circumstances, we are persuaded that defendant demonstrated that he possessed a meritorious defense. His extensive allegations in the counterclaim go far beyond mere denials. They present detailed assertions that counter plaintiff's claim of expanded and abandoned non-conforming use.
Although we do not condone defense counsel's lack of diligence, he attempted to remedy the situation with relative promptness. Cf. Reg'l Constr. Corp. v. Ray, 364 N.J. Super. 534, 541 (App. Div. 2003) (affirming finding of excusable neglect "when examined against the very short time period between the entry of default judgment and the motion to vacate").
The ultimate goal of our system is to secure adjudications on the merits. See, e.g., State v. Farrell, 320 N.J. Super. 425, 447 (App. Div. 1999) (stating "the demands of justice require adjudications on the merits to the greatest extent possible"); Connors v. Sexton Studios, Inc., 270 N.J. Super. 390, 395 (stating "[c]ases should be won or lost on their merits"). A party may, through lack of diligence that prejudices an adversary, forfeit the opportunity to secure such an adjudication. We conclude in this case, however, that the court mistakenly exercised its discretion in denying reconsideration, and denying defendant's motion to vacate entry of default.
Reversed and remanded. We do not retain jurisdiction. I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION