INTERPRINT DIVISION OF GOODSON HOLDING CO INC v. EXCLUSIVE SHOPAHOLIC PUBLICATIONS INC (2014)

In this special civil part case, defendant appeals from a March 25, 2013 order denying its motion to vacate default judgment.   We reverse and remand for further proceedings.

On May 16, 2012, plaintiff filed its complaint alleging breach of contract and seeking approximately $12,800 in damages.   The special civil part clerk served defendant by mail on or about July 5, 2012.   Defendant failed to answer the complaint, defendant was placed in default, and plaintiff moved for default judgment.   On September 17, 2012, the clerk entered judgment for plaintiff in the amount of $14,173.16, pursuant to Rule 6:6–3(a).

In November 2012, defendant moved to vacate the default judgment and transfer the case to the Law Division.¹  Gregg Linder, defendant's president, certified that “I thought I had given my attorney the [c]omplaint to file an [a]nswer.”   He admitted that “[t]here was some confusion on my part” because he learned after the judgment was entered that his counsel did not have the complaint.   In his certification, Linder asserted that defendant had a meritorious defense related to plaintiff's alleged failure to fulfill its contractual obligations to defendant.   He also certified that defendant had a valid counterclaim for damages that defendant allegedly incurred as a result of plaintiff's defective work.   The judge denied defendant's motion without providing a statement of reasons.

On appeal, defendant argues primarily that the judge erred by denying its motion to vacate because defendant demonstrated both excusable neglect and a meritorious defense, and because defendant had a meritorious counterclaim.   We only disturb a court's decision on a Rule 4:50–1 motion if there was a “clear abuse of discretion.”  Hous. Auth. of Morristown v. Little, 135 N.J. 274, 283 (1994).

The law governing motions to vacate default judgment is well-settled.   Rule 4:50–1 provides, in pertinent part, that “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[.]” ²  A party asserting excusable neglect must demonstrate that its “failure to answer was excusable under the circumstances and that a meritorious defense is available.”  Hous. Auth. of Morristown, supra, 135 N.J. at 284.   Careless neglect may be considered excusable if “attributable to an honest mistake that is compatible with due diligence and reasonable prudence.”  Ibid.

Courts should view motions to vacate default judgments with “ ‘great liberality’ ” and tolerate “ ‘every reasonable ground for indulgence ․ to the end that a just result is reached.’ ”   Prof'l Stone, Stucco & Siding Applicators, Inc. v. Carter, 409 N.J.Super. 64, 68 (App.Div.2009) (quoting Marder v. Realty Constr.   Co., 84 N.J.Super. 313, 319 (App.Div.), aff'd, 43 N.J. 508 (1964)).

Here, we are hampered in our task because the judge did not provide any reasons for denying defendant's motion.   Rule 1:7–4(a) requires that the court “by an opinion or memorandum decision, either written or oral, find the facts and state its conclusions of law thereon ․ on every motion decided by a written order that is appealable as of right[.]”  The Supreme Court has expounded on this essential obligation:

Failure to perform that duty constitutes a disservice to the litigants, the attorneys and the appellate court.   Naked conclusions do not satisfy the purpose of [Rule ] 1:7–4.   Rather, the trial court must state clearly its factual findings and correlate them with the relevant legal conclusions.

[Curtis v. Finneran, 83 N.J. 563, 569–70 (1980) (citation and internal quotation marks omitted).]

After a careful review of the record, however, we conclude that the judge abused his discretion by denying the motion to vacate because defendant established both excusable neglect and a meritorious defense.   We therefore reverse and remand for further proceedings.³

FOOTNOTES

FN1. The judge did not adjudicate this request, presumably because the court denied defendant's motion to vacate..  FN1. The judge did not adjudicate this request, presumably because the court denied defendant's motion to vacate.

FN2. This rule is applicable to matters in the special civil part pursuant to Rule 6:6–1..  FN2. This rule is applicable to matters in the special civil part pursuant to Rule 6:6–1.

FN3. Defendant may renew its motion to transfer the matter to the Law Division now that we have vacated the default judgment..  FN3. Defendant may renew its motion to transfer the matter to the Law Division now that we have vacated the default judgment.

PER CURIAM