ROBERT DIVINCENT and DEAN DIVINCENT, Plaintiffs–Respondents, v. MICHAEL DIVINCENT, and WEB ON DEMAND SYSTEMS, INC., Defendants–Appellants.
Defendants Michael DiVincent and WebOnDemand, Systems Inc. appeal from the April 30, 2012 order of the Law Division awarding counsel fees and costs of $30,221.94 to plaintiffs, Robert and Dean DiVincent. Defendants contend that the motion court erred by failing to consider a previously-filed motion to stay, prior to hearing the counsel fee motion. They further argue, for the first time on appeal, that the initial default judgment that led to the award should be vacated due to improper service of process. We have considered these arguments and find them to be without merit and affirm.
In 2003, Michael 1 approached Dean, his cousin, with a proposal to invest in a new company, WebOnDemand, which would provide wireless internet access to marinas and camping grounds in California and along the west coast. Dean made an initial $60,000 investment in the venture. One year later, Michael approached Robert, another cousin, who invested $100,000 in the company.
Michael initially agreed to provide Dean and Robert with information regarding their ownership interests in the company. Despite numerous requests, they received nothing other than informal progress reports of WebOnDemand's development. When Dean and Robert demanded more accurate accounting information, Michael refused to furnish it.
Dean and Robert filed a securities fraud action against Michael in the Superior Court of New Jersey. On July 4, 2008, service of process was effectuated on Michael and WebOnDemand in California following eight unsuccessful attempts. Although some settlement discussions followed, Michael and WebOnDemand failed to respond to the litigation and default was entered against both defendants in September 2008.
After the entry of default, plaintiffs served defendants with notice of default along with notice of motion for a proof hearing. Michael responded by sending a letter challenging the accuracy of some of the claims, but filed no formal opposition with the court. Michael also represented that he was exploring another avenue for repaying plaintiffs from profits generated by his new company, DozeDefender.
On September 26, 2008, the Law Division entered an order scheduling a proof hearing for November 14, 2008. Defendants were served with a copy of the order on November 4, 2008, but plaintiffs requested an adjournment.
The proof hearing was postponed until February 27, 2009. While defendants claim they were not notified of the new date, plaintiffs produced a letter from their counsel dated February 16, 2009, advising them of the date and location of the hearing. After considering plaintiffs' proofs, the Law Division found:
Given what I see in this case, which is a company that apparently in its—if it is still operating, in its at least four years of operations, has never turned a profit, despite the representations made in the progress reports of having contracts with marinas, hotels, area rapid transit, City of San Francisco, [et cetera]. No one has ever seen, despite requests, any documents of incorporation, any accounts receivable, any accounts payable, any income tax returns, any financial statements. Nobody has seen any kind of a business document, except the progress reports that Michael periodically sent to his cousins, and the glowing reports in the progress report do not match up to the results of the company.
So, I am satisfied that the proofs have been made that Dean DiVincent contributed $60,000, $20,000 of which ․ was returned, leaving $40,000 owed. And Robert contributed $100,000—$100,001 and none of that has been returned.
It certainly does appear from the proofs in this case that there was a fraud that was perpetrated by Michael. And his failure to even answer the lawsuit doesn't disabuse me of that impression.
So, I am entering judgment for $140,001; $100,001 of that being in favor of ․ Robert DiVincent, Jr., and [$]40,000 being in favor of [Dean].
Pre-judgment interest was calculated at $35,864.97 with an additional $9,026.82 in attorney's fees bringing the total amount of the judgment to $184,892.79.2 On March 2, 2009, plaintiffs transmitted a copy of the February 27, 2009 order entering judgment by default to Michael and WebOnDemand.
Plaintiffs retained the services of a California attorney who filed an application for the entry of judgment based on the New Jersey “sister-state judgment.” On September 30, 2009, defendants' California counsel moved to vacate the judgment on the grounds that the judgment was void as New Jersey lacked jurisdiction of defendants.
On November 4, 2009, the Honorable Barbara Zuniga of the Superior Court of California held that the “New Jersey Superior Court had power to render an effective judgment against defendant, and the judgment is entitled to full faith and credit in this state.” After noting that WebOnDemand was a suspended corporation without capacity to bring a motion, Judge Zuniga made the following findings as to individual defendant, Michael DeVincent:
a. Evidence shows that defendant purposefully contacted New Jersey residents, both in person and via mail, telephone and email, to solicit funds for his venture,
b. Solicitations were purportedly fraudulent․
c. Under New Jersey law, such intentionally fraudulent communications with a New Jersey resident establish specific personal jurisdiction over a nonresident․
d. Plaintiffs' claims also arise out of defendant's fraudulent communications with New Jersey residents․
e. Furthermore, New Jersey was a reasonable forum to litigate plaintiffs' claims.
After Judge Zuniga's ruling, Gardner was successful in collecting all but $25,000 of the approximate $200,000 judgment.
Plaintiffs filed a motion in the Law Division seeking counsel fees associated with the cost of collection. The motion was initially denied without prejudice for failure to comply with Rule 4:42–9(b). The motion was re-filed and scheduled to be heard on February 17, 2012, but on February 16, 2012, defendants' counsel wrote to the court requesting a brief adjournment, claiming plaintiffs' motion “was not properly served within the time constraints articulated by Rule 1:6–3.” No other objection was proffered by defendants and their request was granted and the matter postponed until March 16, 2012.
On March 7, 2012, defendants' counsel sought a further postponement of the motion, claiming he was “working with [his] clients with regard to reaching an agreement in this matter.” His request was granted and the motion was again postponed.
On April 12, 2012, defendants' counsel sought a fourth postponement of the motion, claiming “the parties are attempting to resolve this matter; we have been in settlement discussions.” In his letter to the court, counsel noted that plaintiffs opposed further adjournment. Plaintiffs' counsel wrote separately to the court opposing any further adjournments. Notwithstanding plaintiffs' objection, the court granted defendants' request and postponed the motion until April 27, 2012.
On April 24, 2012, defendants' counsel sent a letter to the court seeking yet another postponement of the motion, claiming they had filed a motion to stay plaintiffs' motion for counsel fees. The motion is dated April 19, 2012,3 eight days before plaintiffs' motion was scheduled to be heard.
In a certification in support of defendants' motion, counsel for defendants alleges only that, “It has come to the attention of this law firm that the Defendants were never properly served with the lawsuit leading to [the] judgment by default.”
On April 30, 2012, the Law Division entered an order compelling Michael and WebOnDemand to pay $30,221.94 in attorneys' fees associated with collecting on the default judgment. The court noted that there was no opposition to plaintiffs' application and determined that fees were reasonable and appropriate.
On May 8, 2012, defendants withdrew their motion to stay and acknowledged that the motion was moot in light of the award of counsel fees.
On appeal, defendants claim that the matter should be remanded to the motion court so that their motion to stay can properly be heard. They also argue that the default judgment is void due to improper service.
The rationale underpinning defendants' first argument is that it was improper for the motion court to hear the motion for counsel fees while the motion to stay was still pending. Since defendants failed to raise that issue with the motion court, the plain error standard guides our review. R. 2:10–2.
There is no evidence in the record indicating that the Law Division ever decided defendants' motion for a stay. The order granting attorney fees and costs mentions that defendants did not file any opposition to the motion for fees.
We are satisfied that any error by the motion judge in not deciding the motion for a stay is harmless, as defendants were seeking a stay to provide more time for them to address the issue of improper service. Since defendants' argument challenging the service of process is without merit, any error in not deciding the motion for a stay was not capable of producing an unjust result under the plain error standard. See R. 2:10–2.
We also note that plaintiffs' motion for fees was originally filed on November 8, 2011, and was adjourned several times at defendants' request. In the five-month period from the filing to the entry of the order, the motion court was extremely accommodating in granting defendants' numerous adjournment requests and they were afforded adequate time to prepare and brief their arguments challenging service.
“The minimal requirements of ‘due process of law’ include reasonable notice of the nature of the proceedings and a fair opportunity to be heard therein.” Fantony v. Fantony, 36 N.J.Super. 375, 378 (Ch. Div.1955), modified, 21 N.J. 525 (1956). Defendants clearly had notice of plaintiffs' motion and a fair opportunity to be heard. We are at a loss to understand why defendants, who filed for a stay eight days before the motion was to be heard, did not request oral argument or even appear on April 27, 2012.4 Nor, was there a motion for reconsideration or any attempt to notify the court of its failure to address the motion for a stay.
In essence, defendants are appealing the court's implicit denial of their request for an adjournment. “The granting of trial adjournments rests within the sound discretion of the trial court.” State v. D'Orsi, 113 N.J.Super. 527, 532 (App.Div.), certif. denied, 58 N.J. 335 (1971). Absent an abuse of discretion, denial of a request for an adjournment does not constitute reversible error. Had the motion court simply denied defendants' motion for a stay, there would have been no abuse of discretion.
Defendants next contend that the default judgment is void due to improper service. We decline to address this matter as it was not presented to the trial court when the opportunity for such a presentation was available. Nieder v. Royal Indem. Ins. Co., 62 N.J. 229, 234 (1973). Defendants' argument should have been raised before the motion court. It was not, and was, therefore, waived. Our jurisprudence counsels that “[r]elief is not given to those who sleep on their rights.” Upton v. Tribilcock, 91 U.S. 45, 55, 23 L. Ed. 203, 207 (1875). Moreover, Judge Zuniga rejected defendants' procedural and substantive challenges in her November 4, 2009 order and defendants are precluded from raising this issue. See First Union Nat'l Bank v. Penn Salem Marina, Inc., 190 N.J. 342, 352 (2007).
Even if we were inclined to consider defendants' claim of insufficient service, the record clearly demonstrates that Michael accepted service for himself and for WebOnDemand via certified mail, return receipt requested, on April 7, 2008, and via personal service at his primary residence in California on July 4, 2008.
1. FN1. To avoid confusion, we will refer to the three DiVincents by their forenames, intending no disrespect.
2. FN2. The order also states that the record did not contain enough support for a punitive damages award. If that evidence subsequently became available, the court granted plaintiffs leave to re-open for a hearing on such damages.
3. FN3. A filed copy of the motion is not included in the appendix. We have only an unfiled copy with a cover letter to the court dated April 19, 2012.
4. FN4. While defendants reside in California, their counsel has a local address.