VAN BRI REALTY, INC., ETC. VS. MICHAEL BLUMENTHALÂ (L-0880-14, MIDDLESEX COUNTY AND STATEWIDE) ( 2017 )

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court."
Although it is posted on the internet, this opinion is binding only on the
parties in the case and its use in other cases is limited. R.1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-0368-15T2
VAN BRI REALTY, INC.,
a New Jersey Corporation,
Plaintiff-Respondent,
v.
MICHAEL BLUMENTHAL,
individually,
Defendant-Appellant,
and
LIBRA LABORATORIES, INC.,
a New Jersey Corporation,
LIBRA TECHNICAL CENTER
LIMITED LIABILITY COMPANY,
a New Jersey Limited Liability
Company,
Defendants.
___________________________________
Submitted January 31, 2017 – Decided August 17, 2017
Before Judges Suter and Guadagno.
On appeal from Superior Court of New Jersey,
Law Division, Middlesex County, Docket No.
L-0880-14.
Harmon H. Lookhoff, attorney for appellant.
Norris, McLaughlin & Marcus, PA, attorneys for
respondent (Timothy P. McKeown, of counsel and
on the brief).
PER CURIAM
Defendant Michael Blumenthal (Blumenthal) appeals the August
7, 2015 orders that entered an $87,950 default judgment against
him arising from a commercial lease and denied his cross-motion
to vacate the judgment. We affirm.
Plaintiff Van Bri Realty, Inc. is the predecessor in interest
to JJP Realty Company (JJP). Blumenthal is the president of Libra
Laboratories, Inc. (Libra) and managing member of Libra Technical
Center, L.L.C. (Technical). Commencing in December 1999, JJP and
Libra entered into a one-year commercial lease under which Libra
rented a 3500 square foot building in Metuchen for $29,400
annually, paid $2450 per month. After the lease expired, Libra
continued to occupy the premises as a hold-over tenant, and shortly
thereafter, Blumenthal formed Technical. Plaintiff contended that
Technical occupied the same commercial premises, operating Libra's
business.
Plaintiff filed a complaint seeking to evict Libra for non-
payment of rent. A consent judgment of possession1 was entered
against Libra, and the premises were vacated in August 2013. In
1
The consent judgment was not included in the record.
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February 2014, plaintiff filed a complaint in the Law Division
against Blumenthal, Libra and Technical, seeking judgment for
unpaid rent, attorney's fees and costs arising from the commercial
lease. Although the complaint was served on all defendants, Libra
and Technical never answered it and were defaulted. On October
10, 2014, plaintiff obtained a $141,850 default judgment in its
favor against Libra and Technical for amounts due under the lease,
and recorded the default judgment as a lien.
Blumenthal, representing himself, filed an answer to the Law
Division complaint in April 2014. He denied personal liability
for the unpaid rent or other charges, contending that Libra and
Technical were separate legal entities, Technical did not operate
from the commercial premises, records of the businesses were
"locked in storage," plaintiff breached the contract, and
defendants were due an offset for repairs and renovations made to
the demised premises.
Plaintiff propounded interrogatories and requests for
documents. Blumenthal's time to answer discovery was extended to
July 1, 2014, but he never answered it. On August 22, 2014,
plaintiff was granted an order under Rule 4:23-5(a)(1) that struck
Blumenthal's answer without prejudice for failure to provide
discovery, conditioning reinstatement upon compliance and payment
of $100.
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Blumenthal obtained counsel, but discovery still was not
answered. At plaintiff's request, an order was entered on February
6, 2015 that struck Blumenthal's answer with prejudice under Rule
4:23-5(a)(2), and a default was entered against him. After that,
plaintiff requested the entry of a default judgment against
Blumenthal, explaining in the supporting certification that
although Libra's corporate charter expired in 2005, Blumenthal
continued to conduct business at the leased premises through Libra
and two other corporations, of which he was president, from April
2005 until August 2013 when Blumenthal and his entities moved out
of the premises under the consent order.
A default judgment was entered in favor of plaintiff and
against Blumenthal on May 8, 2015, but the requested damages of
$87,950 was crossed out on the order, and added was the notation
the parties were to schedule a proof hearing with the court.
On June 23, 2015, the day of the scheduled proof hearing, the
parties reached an agreement, evidenced by the June 30, 2015 order
which included the language "the parties having conferred prior
to the taking of testimony on [p]laintiff's [p]roof [h]earing and
the consent of the [p]arties having been placed on the record in
open [c]ourt."2 The June 30, 2015 order provided that the May 18,
2
We have not been provided with a transcript of a proceeding
relative to the order. However, Blumenthal's statement of the case
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2015 default judgment entered against Blumenthal was "deemed
vacated upon" defendant's posting in five days of a "non-
rescindable" bond in the amount of $87,950. Blumenthal was given
forty-five days to respond to outstanding discovery. If Blumenthal
answered the discovery and served it on plaintiff, the order
permitted him to move to reinstate his answer. If he failed to
obtain a bond or to provide discovery, plaintiff could "apply for
the entry of [a] default and default judgment" against Blumenthal
for $87,950.
Blumenthal could not obtain the requisite bond. Plaintiff
moved to reinstate the default and default judgment for liability
that had been entered on May 8, 2015, and also to enter a default
judgment for damages against Blumenthal in the amount of $87,950.
Blumenthal filed a cross-motion to vacate "any default or default
judgment previously entered," for his counsel to represent Libra
and Technical in addition to himself, to file a responsive pleading
for "all" defendants and for reasonable discovery. In his
supporting certification, Blumenthal recounted his recent health
history, including renal failure, prostate cancer, surgery and
radiation; described his financial difficulties; explained he was
provided in this appeal references the date of June 30, 2015,
saying "at which time an apparent resolution of the matter was
reached by settlement of the default matters."
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entitled to offsets exceeding $70,000 for repairs made to the
leased commercial building; and advised that Technical was set up
as a consulting company with no physical operations "per se."
Plaintiff opposed the cross-motion, contending any repairs by
Blumenthal were made without the permission of the landlord and
clarifying the requested damages of $87,950 was for the period
Blumenthal operated Libra at the premises without a corporate
charter.
On August 7, 2015, the previous default and default judgment
were re-entered against Blumenthal. The order entered a default
judgment in favor of plaintiff and against Blumenthal for $87,950.
In a separate order also dated August 7, 2015, the court denied
Blumenthal's cross-motion. Handwritten on the order was the
notation that Blumenthal failed to post the required bond and was
not entitled to relief under Rule 4:50-1 because he still had not
complied with Rule 4:23-5(a)(1) and (2).3
Blumenthal appeals the August 7, 2015 orders contending the
"defaults and default judgments" should be vacated "to afford
fairness and justice to the parties" where the neglect was not
willful or calculated. We are not persuaded by this argument.
3
Blumenthal indicates there is no transcript of this proceeding.
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Although Blumenthal's notice of appeal states the appeal is
by himself and the "corporate defendants," we clarify here that
the default judgments against Libra and Technical are not part of
this appeal. The August 7, 2015 order entered a judgment against
Blumenthal, not Libra or Technical, and only Blumenthal filed the
cross-motion seeking relief. Libra and Technical did not appeal
the default judgment entered against them in October 2014. They
are out of time to appeal that order. See R. 2:4-1(a). The brief
in this appeal does not mention why the default judgments entered
against Libra and Technical should be vacated. Because issues
related to Libra and Technical were not raised in the merits brief,
they are waived. Gormley v. Wood-El, 218 N.J. 72, 95 n.8 (2014);
Drinker Biddle v. N.J. Dep't of Law & Pub. Safety, Div. of Law,
421 N.J. Super. 489, 496 n.5 (App. Div. 2011) (noting that claims
not addressed in merits brief are deemed abandoned). See Pressler
& Verniero, Current N.J. Court Rules, cmt. 5 on R. 2:6-2 (2017).
Thus, Libra and Technical are not parties to this appeal.
Blumenthal appeals the August 7, 2015 orders. Because his
notice of appeal did not reference other orders entered in this
case, no other orders are before us on appeal. See W.H. Indus.,
Inc. v. Fundicao Balancins, Ltda, 397 N.J. Super. 455, 458 (App.
Div. 2008) ("It is clear that it is only the orders designated in
the notice of appeal that are subject to the appeal process and
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review."). Thus, the June 30, 2015 order was not appealed, which
allowed for the entry against Blumenthal of an $87,950 default
judgment if he did not post a bond or answer discovery.
It is Rule 4:50-1 that "governs an applicant's motion for
relief from default when the case has proceeded to judgment." U.S.
Bank Nat'l Ass'n v. Guillaume, 209 N.J. 449, 466 (2012). Once the
court has entered a default judgment, relief from the judgment
must satisfy one of 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.
[R. 4:50-1.]
An application to vacate a default judgment pursuant to Rule
4:50-1 is to be "viewed with great liberality, and every reasonable
ground for indulgence is tolerated to the end that a just result
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is reached." Marder v. Realty Constr. Co., 84 N.J. Super. 313,
319 (App. Div.) (citation omitted), aff'd, 43 N.J. 508 (1964).
We review the decision whether to grant a motion to vacate a
default judgment under an abuse of discretion standard. See
Mancini v. EDS, 132 N.J. 330, 334 (1993); see also Guillaume,
supra, 209 N.J. at 467 (requiring "a clear abuse of discretion"
to vacate). An abuse of discretion occurs when the trial court's
decision, "without a rational explanation, inexplicably departed
from established policies, or rested on an impermissible basis."
Flagg v. Essex Cty. Prosecutor, 171 N.J. 561, 571 (2002) (quoting
Achacoso-Sanchez v. Immigration and Naturalization Serv., 779 F.2d
1260, 1265 (7th Cir. 1985)).
The court did not err in denying Blumenthal's request to
vacate the default judgment against him. He seeks relief only
under subsection (f), "the elusive 'catch-all' category."
Pressler & Verniero, supra, cmt. 5.6.1 on R. 4:50-1. "[I]n order
to obtain relief under this subsection, the movant must ordinarily
show that the circumstances are exceptional and that enforcement
of the order or judgment would be unjust, oppressive or
inequitable." Ibid. (citing Guillaume, supra, 209 N.J. at 484)
(other citations omitted). Those circumstances are not present
here.
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The June 30, 2015 order resulted from an agreement between
the parties to resolve the issues prior to a proof hearing. Under
the order, Blumenthal agreed to condition the vacation of the
default judgment against him on his posting an $87,950 bond.
Blumenthal did not provide the agreed upon bond nor did he answer
the discovery. Plaintiff then moved to re-enter the default
judgment for $87,950, which was the amount provided for in the
order.
We agree that in light of the June 30, 2015 order, the court
did not abuse its discretion when it denied Blumenthal's
application to vacate the default judgment. Blumenthal did not
provide discovery. Counsel represented him when the June 30 order
was entered. The order was based on a settlement. Because Libra's
charter had expired, Blumenthal faced liability. Leventhal v.
Atl. Rainbow Painting Co., Ltd., 68 N.J. Super. 406, 413 (App.
Div. 1961) ("[P]ersons who carry on the business of a corporation
. . . after the charter has expired, or after dissolution, become
personally liable as general partners."). See also Mortg. Graders,
Inc. v. Ward & Olivio, LLP, 225 N.J. 423, 437 (2016) ("A dissolved
corporation exists solely to prosecute and defend suits, and not
for the purpose of continuing the business for which it was
established." (quoting Lancellotti v. Maryland Cas. Co., 260 N.J.
Super. 579, 583 (App. Div. 1992))); N.J.S.A. 14A:12-9(1) (stating
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that a dissolved corporation "shall carry on no business except
for the purpose of winding up its affairs"). The dollar amount
set forth in the June 30 order apparently represented rental
charges for the period after Libra's corporate charter expired and
while Blumenthal operated from the premises. No abuse of
discretion was demonstrated on this record.
Affirmed.
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