CHARLENE KAZNOSKY v. MICHAEL KAZNOSKY (2013)

Defendant Michael Kaznosky appeals from the Family Part order that denied his motion to vacate a default judgment of divorce and file an answer and counterclaim.   We reverse and remand.

Defendant Michael Kaznosky and plaintiff Charlene Kaznosky, who have one child, were married on November 15, 2003.   Eight years later, on November 18, 2011, plaintiff filed a divorce complaint seeking dissolution of the marriage, primary physical custody of the parties' child, child support from defendant, equitable distribution, and an order directing defendant to maintain life insurance policies designating plaintiff as the beneficiary.

Plaintiff served defendant with a summons and the complaint on December 2, 2011.   Defendant did not file an answer and default was entered against defendant on February 22, 2012.   By April 4, 2012, defendant had made no attempt to vacate the default or file an answer, so plaintiff served him with a Notice of Proposed Final Judgment as required by Rule 5:5–10.

The parties appeared before the court for a proof hearing on May 9, 2012.   Defendant represented to the court that he was prepared to proceed.   During plaintiff's testimony she asked the court, among other things, to order defendant to pay the outstanding balances on their credit card bills in exchange for her abandoning any claim to the landscaping business he operated out of his home.   Following her testimony, defendant asked that plaintiff remain responsible for the debt on one of their credit cards.

Defendant also acknowledged plaintiff was seeking to have him pay weekly alimony of fifty dollars and weekly child support of $261.   He told the court her attorney had called him a couple of days earlier and left a message on his answering machine that he would “pass that to $173.”   The attorney denied making that statement.   In response, defendant said that he could not make the requested alimony and support payments “without becoming homeless and having to claim bankruptcy.”   He also represented that he had attempted to retain counsel but was unable to afford an attorney.

At the conclusion of the hearing, the court entered a final judgment of divorce (FJOD).   One week later, on May 17, 2012, defendant filed a motion seeking to vacate the default judgment and file an answer and counterclaim.

In support of his motion, plaintiff certified that he had earned $27,000 per year during the parties' marriage.   He explained that he tried to represent himself in the divorce action because he was “unable financially to retain an attorney[.]”  After being served with the divorce complaint, he had several telephone conversations with plaintiff's attorney about custody, parenting time, child care, and support.   According to defendant, he agreed to “have an income for purposes of calculating child support of $40,000 per year.”

Defendant further averred that the terms of the proposed final judgment of divorce he received in April 2012 differed significantly from the settlement terms he had discussed with plaintiff and her attorney.   He informed the court of his disagreement with the proposed final judgment of divorce when he came to the court on the first trial date.   He claims the court adjourned the hearing for two weeks so that the parties could discuss settlement.   During the ensuing discussions, defendant repeated his offer to have $40,000 income imputed to him.   The attorney requested his tax returns, and defendant provided them.   As the new trial date approached, defendant contacted plaintiff's attorney who said “it was too late to meet ․ to resolve the issues.”   Consequently, he appeared in court on May 9, 2012, when the FJOD was entered.

Defendant asserted that he was “completely unaware of the process” that resulted in the entry of the judgment.   After discussing the judgment with his father, “with whom [he] had been previously estranged,” his father agreed to hire an attorney to attempt to vacate the FJOD.

Defendant contended that the default judgment should be vacated because the complaint was less than six months old, plaintiff resided with her brother, and he, defendant, was making the payments that he and plaintiff had agreed upon when they first separated.   Defendant argued that for those reasons, plaintiff was not prejudiced, but he would be prejudiced because he was financially unable to make the payments required by the final judgment of divorce.

Plaintiff's attorney filed a certification in opposition to defendant's motion.   According to the attorney, after being served with the complaint, defendant never provided a case information statement and avoided the attorney's attempts to contact him.   The attorney also disputed defendant had made any attempt to settle the case before the May 9, 2012 proof hearing.

Plaintiff's attorney acknowledged that defendant had appeared in court on the first date scheduled for trial, but disputed the reason for the adjournment.¹  According to the attorney, defendant informed the court's staff that he wanted to contest the divorce.   Staff personnel informed them that the default hearing would have to be rescheduled before another judge.   The attorney also disputed defendant had provided state tax returns.

The court denied defendant's motion.   In a statement of reasons appended to the confirming order, after recounting the parties' contentions and reciting the standard for vacating a default judgment, the court concluded:

The defendant has not shown excusable neglect wherein the default judgment should be vacated.   The defendant was present for the divorce proceeding and voluntarily entered into the parties' FJOD. As such, the [c]ourt will not vacate the parties' judgment and is denying the defendant's [m]otion in its entirety.

Defendant appealed.   During the course of appellate motion practice, we entered an order that “[t]he appeal is limited to review the order of July 9, 2012 denying defendant's motion to vacate the default judgment.”

On appeal, defendant contends the trial court erred in failing to vacate the default judgment, claiming his mistake in failing to answer the complaint was consistent with due diligence.

Defendant moved to vacate the default judgment under Rule 4:50–1, which provides:

On motion, with briefs, and upon such terms as are just, the court may relieve a party or the party's legal representative from a final judgment or order for the following reasons:  (a) mistake, inadvertence, surprise, or excusable neglect;  (b) newly discovered evidence which would probably alter the judgment or order and which by due diligence could not have been discovered in time to move for a new trial under R. 4:49;  (c) fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party;  (d) the judgment or order is void;  (e) the judgment or order has been satisfied, released or discharged, or a prior judgment or order upon which it is based has been reversed or otherwise vacated, or it is no longer equitable that the judgment or order should have prospective application;  or (f) any other reason justifying relief from the operation of the judgment or order.

When a trial court considers a motion to vacate a default judgment, the motion must be “viewed with great liberality, and every reasonable ground for indulgence is tolerated to the end that a just result is reached.”  Marder v. Realty Constr.   Co., 84 N.J.Super. 313, 319 (App.Div.), aff'd, 43 N.J. 508 (1964).   However, a motion to vacate a judgment under Rule 4:50–1(a) “should be granted sparingly, and is addressed to the sound discretion of the trial court, whose determination will be left undisturbed unless it results from a clear abuse of discretion.”  Fineberg v. Fineberg, 309 N.J.Super. 205, 215 (App.Div.1998) (citing Hous. Auth. of Morristown v. Little, 135 N.J. 274, 283–84 (1994)).   An abuse of discretion occurs “when a decision is made without a rational explanation, inexplicably departed from established policies, or rested on an impermissible basis.”  Iliadis v. Wal–Mart Stores, Inc., 191 N.J. 88, 123 (2007) (internal quotation marks and citation omitted).

Defendant argues that he “demonstrated the mistake and excusable neglect required by Rule 4:50–1(a), and he also set out a meritorious defense (even though the trial court ․ never reached this issue).”   He points out that his tax return shows he earns considerably less than the amount the judge imputed to him, and that even plaintiff testified that his landscaping business was his sole source of income.   Defendant also points out the trial court's finding that he “ ‘voluntarily’ entered into the final judgment of divorce ․ is simply incorrect.”   To the contrary, he argued at the proof hearing that the proposed final judgment of divorce was unfair for several reasons.   Finally, he contends plaintiff did not establish a prima facie case entitling her to the judgment the court entered.

Plaintiff contends the trial court acted entirely within its discretion when it denied defendant's motion to vacate the default judgment.   Plaintiff points out that defendant ignored the court process despite being fully informed of its existence, failed to fully disclose financial information, and failed to establish a meritorious defense.   Although plaintiff does not dispute defendant's argument that the court's reason for denying the motion was factually inaccurate, she claims there is more than adequate evidence in the record to support the court's discretionary ruling.

The trial court's decision is based on an inaccurate factual predicate.   The court stated in its decision that defendant voluntarily entered into the parties' FJOD. The record does not support that statement.   To the contrary, when he appeared at the proof hearing, defendant protested the amount of weekly child support, and stated explicitly, “I cannot afford to pay that without becoming homeless and having to claim bankruptcy.”   In response to that statement, the court informed defendant that by not filing an answer, and by not filing a motion to vacate the default, defendant gave up his right to dispute the FJOD. As stated previously, an abuse of discretion occurs when a decision is made on an impermissible basis.  Iliadis, supra, 191 N.J. at 123.

Plaintiff suggests the trial court's mistake is moot because there was sufficient evidence in the record to support the court's denial of defendant's motion.   That argument overlooks the basic tenet that the trial court, not an appellate court, must exercise its discretion to grant or deny a motion to vacate a default judgment.   When a trial court decides a motion under Rule 4:50–1, and thereby “reconcile[s] 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. Bank Nat. Ass'n v. Guillaume, 209 N.J. 449, 467 (2012) (internal quotation marks and citation omitted), the court's “determination ․ warrants substantial deference [.]”  Ibid.

Here, we cannot say with certainty that the trial court would have ruled the same way had it not mistakenly believed defendant had consented to the judgment.   Such a decision would have been entitled to the same deference as a decision denying defendant's motion.

We reject defendant's argument because the standard of review is not whether the trial court's decision can be affirmed under any view of the facts, but rather whether the trial court abused its discretion.   For the reasons previously explained, we conclude the trial court mistakenly exercised its discretion by deciding defendant's motion based on a factually incorrect basis.   Accordingly, we reverse and remand for further proceedings consistent with this opinion.

Reversed and remanded.   We do not retain jurisdiction.

FOOTNOTES

FN1. The parties have not provided a transcript of that proceeding..  FN1. The parties have not provided a transcript of that proceeding.

PER CURIAM