RICHARD KELLY, ETC. VS. GENCO REMODELING, INC. (L-2824-08, MERCER 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NOT FOR PUBLICATION WITHOUT THE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-5275-15T4
RICHARD KELLY, as executor
of the ESTATE OF JACQUELINE
E. KELLY,
Plaintiff-Appellant,
v.
GENCO REMODELING, INC., GENE
LOMBARDI, and DONNA LOMBARDI,
Defendants,
and
PAUL VERNA,
Defendant-Respondent.
Argued August 30, 2017 – Decided September 25, 2017
Before Judges Alvarez and Gooden Brown.
On appeal from Superior Court of New Jersey,
Law Division, Mercer County, Docket No. L-
2824-08.
Grant S. Ellis argued the cause for appellant
(Archer Law Office, LLC, attorneys; Mr. Ellis,
on the briefs).
Christopher J. Amentas argued the cause for
respondent (Carosella & Associates, PC,
attorneys; Mr. Amentas, on the brief).
PER CURIAM
In this case, we affirm a trial judge's order vacating a
default judgment. Jacqueline E. Kelly sued defendant Genco
Remodeling, Inc. under the Consumer Fraud Act, N.J.S.A. 56:8-1 to
-20. In 2007, Kelly hired Genco to install windows in her home.
The complaint alleges "Defendants, Gene Lombardi, Donna Lombardi
and Paul Verna were the agents, successors, incorporators or owners
of the Defendant, Genco Remodeling, Inc." The complaint further
contends, "[Genco] was merely an alter ego of said individual
Defendants, that said Defendants are thus liable to the Plaintiff
for damages jointly, individually and in the alternative."
Unfortunately, Kelly died during the pendency of the litigation.
The caption was amended accordingly and Kelly's estate substituted
as plaintiff.
On March 3, 2009, a default judgment in the amount of $47,400
was entered against the defendants "individually, severally and
in the alternative." Only Verna is involved in this appeal. It
is undisputed that he was Genco's registered agent and an
accountant who prepared tax returns for Genco.
On July 11, 2014, the default judgment against Verna was
vacated. During the course of oral argument on a subsequent
motion, Verna's counsel said that he had mailed a copy of the
motion, with a proposed answer attached, to the estate's counsel.
2 A-5275-15T4
He acknowledged, however, that the order vacating the default was
not forwarded. When the court sent the estate notice regarding
pretrial discovery, the estate promptly filed an application to
set the order aside, which application was denied on August 18,
2015. The estate unsuccessfully sought leave to take an
interlocutory appeal of the order.
After an April 13, 2016 settlement conference, the parties
agreed that the litigation would be dismissed with prejudice, as
Kelly was not available to testify, but that the estate retained
the right to appeal the order vacating the default and the order
denying the motion to reinstate. We now affirm.
The estate's proofs of personal service on Verna all refer
to an address in Sewell. The Sewell property is apparently the
residence of the Lombardi defendants and presumably the
headquarters of Genco. One of the sheriff's returns of service
indicated that the daughter of the Lombardi defendants, Christina
Lombardi, accepted service. Other documents were acknowledged,
allegedly for Verna, by Donna Lombardi.
When deposed on June 24, 2015, Verna denied being related to
the Lombardis, having socialized with them, having ever been to
the Sewell address, or having been financially involved with the
corporation or with any of the individual defendants. His
relationship to Genco and the Lombardis was limited to the
3 A-5275-15T4
preparation of corporate tax returns and his agreement to act as
Genco's corporate agent. Verna's services for Genco appear to
have ended on July 14, 2009. He also denied any knowledge of the
underlying claim.
On June 14, 2011, Verna completed an information subpoena
after the entry of judgment. When deposed, he said that he was
served by the sheriff with the form at his Thorofare office, not
at the Sewell address. Verna is a resident of Media, Pennsylvania.
He recalled completing the form while the sheriff waited and wrote
"N/A" across all the questions. Verna also added below his
signature, "ACTED AS REGISTERED AGENT AND ACCOUNTANT FOR CLIENT
ONLY." Verna assumed that his involvement in the case would end
once he responded. He did not contact his attorney to address the
matter until the judgment was discovered during a title search.
The estate disputes Verna's claim that the information
subpoena was served upon him at his Thorofare office. The
Gloucester County Sheriff's Office filed an affidavit of service
regarding the completed information subpoena that stated as
follows:
Date of Action 6/14/2011 Person/Corporation Served PAUL VERNA
Time of Action 100 COUNTY HOUSE ROAD
Sewell, NJ
ATTEMPTS DATE TIME Delivered to N/A
Relationship N/A
4 A-5275-15T4
Types of Action OTHER
COMPLETED INFORMATION SUBPOENA
From this affidavit, the estate contends Verna's testimony at
deposition was false.
When the judge initially heard the estate's motion to set
aside the order vacating the default, he reserved decision,
directing that Verna be deposed and that Verna supply his 2006,
2007, and 2008 tax returns for in camera inspection to confirm
that he reported no income from Genco. The estate argued at the
motion, as it did before us, that Verna was not being truthful
regarding his limited involvement with Genco or the Lombardis.
The estate deposed a representative from the Gloucester
County Sheriff's Office regarding protocols for service of
process. Although the officer who actually served the information
subpoena in this case had retired, the representative who was
called described office standards and the disciplinary
consequences for employees who fail to abide by them. The purpose
of deposing the sheriff's officer was to demonstrate that the
return of service on Verna for the information subpoena proved he
was served at Sewell, not Thorofare, and that he was lying when
he said he had never been to that address.
The court denied the estate's motion after receiving the
transcript of Verna's deposition, and before receiving a copy of
5 A-5275-15T4
the sheriff's representative's deposition. The judge held that
pursuant to R. 4:50-2, the order vacating the default was proper.
The issue of the timeliness of the application was not dispositive
because, he observed, citing Farrell v. TCI of Northern N.J., 378
N.J. Super. 341, 353-54 (App. Div. 2005), when the judgment was
not "transmitted to the party complaining of it, the timeliness
of the application is measured by when the party had actual
notice." Even if Verna had filled out an information subpoena,
that would not obviate the need for proper service of the
underlying complaint. Once Verna later learned of the actual
existence of the default judgment, he was diligent in seeking to
have it set aside. Therefore, the judge did not agree that Verna's
original application to vacate the default judgment was untimely.
He opined that the interest of justice required that the order
remain in place. Furthermore, "if Verna's allegations are true,
Verna would have a meritorious defense to liability." It would
be "legally incorrect to hold Verna liable in default if the facts
presented would not sustain any liability on the part of Verna for
the transaction. . . ."
On appeal, plaintiff raises the following points:
POINT 1: THE DEFAULT JUDGMENT SHOULD NOT HAVE
BEEN VACATED.
A. STANDARD OF REVIEW AND MOTION STANDARD.
6 A-5275-15T4
B. RESPONDENT FAILED TO DEMONSTRATE THE
CERTIFICATION OF SERVICE WAS INVALID BECAUSE
RESPONDENT'S TESTIMONY ALONE WAS LEGALLY
INSUFFICIENT TO CONTROVERT THE AFFIDAVITS OF
SERVICE.
C. RESPONDENT FAILED TO PROVE THE JUDGMENT
IS VOID BECAUSE HIS TESTIMONY IS NOT CLEAR AND
CONVINCING EVIDENCE IMPEACHING THE AFFIDAVIT
OF SERVICE.
D. WHEN RESPONDENT'S DELAY IN MOVING TO
VACATE THE DEFAULT JUDGMENT AND THE RELATIVE
PREJUDICE TO APPELLANT AND RESPONDENT ARE
WEIGHED, THE DEFAULT JUDGMENT SHOULD NOT BE
VACATED.
POINT 2: IN THE ALTERNATIVE, THE TRIAL COURT
SHOULD NOT HAVE REACHED A DECISION PRIOR TO
ALL THE EVIDENCE BEING SUBMITTED AND [SHOULD
HAVE] HELD A HEARING.
Decisions regarding the vacation of default judgments should
be "left to the sound discretion of the trial court, and will not
be disturbed absent an abuse of discretion." Mancini v. EDS, 132
N.J. 330, 334 (1993) (citing Court Inv. Co. v. Perillo, 48 N.J.
334, 341 (1966)); see also U.S. Bank Nat. Ass'n v. Guillaume, 209
N.J. 449, 467 (2012) (requiring "clear abuse of discretion")
(citations omitted). The movant bears the burden of demonstrating
the grounds to vacate a default judgment. Jameson v. Great Atl.
& Pac. Tea Co., 363 N.J. Super. 419, 425-26 (App. Div. 2003)
(citation omitted), certif. denied, 179 N.J. 309 (2004). Doubts
should be resolved in favor of the applicant in order to secure a
trial upon the merits. Davis v. DND/Fidoreo, Inc., 317 N.J. Super.
7 A-5275-15T4
92, 100-01 (App. Div. 1998) (citation omitted), certif. denied,
158 N.J. 686 (1999).
R. 4:50-1(d) governs a motion to vacate a default judgment
for lack of service. Notwithstanding actual notice of the suit,
a default judgment must nonetheless be set aside if there was a
substantial deviation from the service of process rules. See
Sobel v. Long Island Entm't Prods. Inc., 329 N.J. Super. 285, 293
(App. Div. 2000). Even absent such a substantial deviation, where
"'there is at least some doubt as to whether the defendant was in
fact served with process, . . . the circumstances require a more
liberal disposition of' the motion [to vacate a default judgment.]"
Davis, supra, 317 N.J. Super. at 100 (quoting Goldfarb v. Roeger,
54 N.J. Super. 85, 92 (App. Div. 1959)).
In fact, where defective service has rendered a judgment
void, a meritorious defense is not required. Motions made under
R. 4:50-1(d) must be made within a "reasonable time" and are not
subject to the absolute one year time bar. R. 4:50-2. Thus, the
judge's decision, when viewed through the prism of applicable
precedent, was correct.
Despite the sheriff's return of service of the information
subpoena, again seemingly placing Verna at the Sewell address,
Verna was never personally served with the complaint. This was a
substantial deviation from the service of process rules. Nor is
8 A-5275-15T4
it dispositive that Verna knew about the lawsuit after service of
the information subpoena. See Sobel, supra, 329 N.J. Super. at
293. Verna mistakenly believed that his notation at the end of
the information subpoena explaining his relationship to Genco
would suffice to end the matter. In any event, his prior
knowledge, whatever it may have been, is not a barrier to the
court setting aside the default judgment.
During his deposition, Verna testified that he had no
connection to the Lombardis, other than having acted as their
accountant and registered agent. He had never been to their home.
The estate position that Verna's deposition testimony was
insufficient to refute the sheriff's return of service of the
information subpoena simply lacks merit. No service of process
of the complaint was established. Nothing in the sheriff's
deposition regarding general office procedures in any way refuted
Verna's sworn testimony.
Equally lacking in merit is the argument that Verna's delay
in seeking to vacate the judgment caused prejudice. The estate
contends that the alleged change of circumstances, namely Kelly's
death, is prejudicial. However, the change of circumstances does
not alter Verna's defense to liability. If Verna would not have
been liable, the delay would not be prejudicial and Kelly's death
has no effect on the estate's likelihood of success. The work was
9 A-5275-15T4
performed by a corporation, and the estate would have had to have
pierced the corporate veil to establish liability on even the
Lombardis, which is no easy task. See e.g., Sean Wood v. Hegarty
Grp., Inc. 422 N.J. Super. 500, 517-519 (App. Div. 2011).
Therefore, the judge's decision to render a decision before
receiving the sheriff's representative's deposition was not
unreasonable. He did not err by doing so. The judge's decision
to vacate the default was not an abuse of discretion and will not
be disturbed.
Affirmed.
10 A-5275-15T4