ADSIMILIS B v. VS. NUWAY LIVING, INC. (L-6449-17, MIDDLESEX COUNTY AND STATEWIDE) ( 2019 )

NOT FOR PUBLICATION WITHOUT THE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-1166-18T3
ADSIMILIS B.V.,
Plaintiff-Respondent,
v.
NUWAY LIVING, INC.,
Defendant-Appellant.
__________________________
Submitted October 2, 2019 – Decided October 10, 2019
Before Judges Fasciale and Mitterhoff.
On appeal from the Superior Court of New Jersey, Law
Division, Middlesex County, Docket No. L-6449-17.
Ronald De Simone, attorney for appellant.
Saldana Law Firm, LLC, attorneys for respondent
(Lanhi H. Saldana and John O'Brien, on the brief).
PER CURIAM
Defendant Nuway Living, Inc. appeals from the trial court's August 31,
2018 order denying defendant's motion to vacate a default judgment, as well as
the court's October 9, 2018 order denying defendant's motion for
reconsideration. The matter arises from a breach of contract action in which
plaintiff filed a complaint against defendant for non-payment of services. After
accepting service of the complaint, defendant failed to answer. Consequently,
plaintiff requested and obtained a default judgment. On appeal, defendant
contends that the default judgment should be vacated under Rule 4:50-1 because
defendant demonstrated excusable neglect and a meritorious defense. Having
reviewed the record in light of the applicable legal principles, we affirm.
The parties contracted for plaintiff to provide internet marketing and
advertising services to defendant. Plaintiff allegedly performed the services
agreed to, but defendant claimed the rendered services did not conform to the
contract. A dispute arose, and defendant refused to pay plaintiff. Thereafter,
plaintiff filed a complaint against defendant for non-payment under the contract.
On November 7, 2017, plaintiff personally served defendant at its registered
business address, and service was accepted by Rama Singh, defendant's
managing agent and Chief Operating Officer (COO). After defendant failed to
answer, plaintiff requested and obtained an entry of default against defendant on
January 22, 2018. Plaintiff then moved for a final judgment by default, which
the court entered on February 6, 2018. Plaintiff obtained a writ of execution on
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May 17, 2018, served it on July 16, 2018, and successfully executed it on July
26, 2018.
Meanwhile, on July 18, 2018, defendant filed a motion to vacate the
default judgment and stay the sheriff's levy and sale, asserting "excusable
neglect together with meritorious defenses" under Rule 4:50-1(a). An attached
certification also indicated defendant's reliance on Rule 4:50-1(f), providing for
"any other reason justifying relief from the operation of the judgment or Order."
Defendant attached to its motion papers a proposed answer and
counterclaim, in which it alleged that plaintiff engaged in fraud. In support of
its fraud claim, defendant asserted that plaintiff sent defendant more than 100
orders per day, largely including "incentivized, coupon paid, survey paid
traffic." Defendant certified that about ninety-one percent of these orders were
voided, charged back, or declined after it had already fulfilled them.
Notwithstanding the cancellation of these orders, plaintiff allegedly charged
defendant $162,694 for its services. Defendant alleged that plaintiff's request
for payment was unjustified because it was "artificially inflated . . . since these
buyers were incentivized or coupon buyers which are typically paid money to
register to buy a product and then immediately cancel or void their orders . . . ."
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On August 31, 2018, the trial judge denied defendant's motion to vacate
the default judgment. The judge found that plaintiff had personally served
defendant at its registered business on November 7, 2017. The judge concluded
that while defendant had outlined what it alleged to be a meritorious defense, it
failed to show excusable neglect or any valid reason for its failure to appear until
five months after entry of the default judgment and eight months after service
of the complaint.
On September 11, 2018, defendant filed a motion for reconsideration. The
COO submitted an affidavit explaining that defendant had not appeared in the
action sooner because at the time the complaint was served, he was staying in
New York City to assist his wife, who is also defendant's president, while she
recovered from a September 2017 knee replacement surgery. According to the
COO, his wife was a high risk patient, requiring her to stay near the New York
City hospital during recovery. Additionally, she required assistance due to her
lack of mobility. The COO asserted that once he and his wife were able to
review plaintiff's complaint, he began looking for an attorney, and that he only
obtained legal representation in June 2018.
On October 5, 2018, the trial judge denied defendant's motion for
reconsideration because defendant failed to demonstrate that denial of the
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motion to vacate the default judgment relied on an irrational basis or that the
judge failed to consider or appreciate probative, competent evidence. After
denying the motion, the judge commented on the "new" facts that defendant
asserted, concluding that they did not constitute excusable neglect. The judge
reasoned that defendant's delay was solely the result of its own conduct, and
defendant neither went "through great strides to timely resolve the dispute[,]"
nor "dealt with an element that it arguably could not control." In making this
determination, the judge relied on Mancini v. EDS ex rel New Jersey
Automobile Full Insurance Underwriting Association, 132 N.J. 330, 334 (1993),
Olympic Industrial Park v. P.L., Inc., 208 N.J. Super. 577, 581 (App. Div. 1986),
and Marder v. Realty Construction Co., 84 N.J. Super. 313, 318 (App. Div.)
aff'd, 43 N.J. 508 (1964). This appeal ensued.
Defendant argues on appeal that it showed excusable neglect by
explaining the COO's need to care for his wife after her surgery. Defendant
further contends that it is not the type of business to get sued, so it could not be
expected to have procedures in place to forward any complaints it receives while
its executive officers were away. Defendant also contests the judge's failure to
consider its fraud claim, arguing that it was intended to be the grounds for
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moving to vacate the default judgment under Rule 4:50-1 because fraud
constitutes a "special circumstance" warranting relief from judgment.
We review a trial judge's denial of a motion to vacate a default judgment
for an abuse of discretion. Mancini, 132 N.J. at 334 (citation omitted). Rule
4:50-1, governing relief from a judgment or order, "is designed to reconcile 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." Ibid. (internal quotation marks omitted) (quoting Baumann v. Marinaro,
95 N.J. 380, 392 (1984)). The court should view such motions with great
liberality. Ibid. (quoting Marder, 84 N.J. Super. at 319).
A trial judge may grant a party's motion to vacate a default judgment for
several reasons, including "(a) mistake, inadvertence, surprise, or excusable
neglect . . . or (f) any other reason justifying relief from the operation of the
judgment or order." R. 4:50-1(a), (f). The defendant must also show that it has
a meritorious defense. Marder, 84 N.J. Super. at 318 (citations omitted).
Under Rule 4:50-1(a), the judge must find that the defendant's failure to
appear resulted from neglect excusable under the circumstances. Mancini, 132
N.J. at 334 (citation omitted) (alterations in original). The judge may find
excusable neglect when the defendant's conduct was "attributable to an honest
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mistake that is compatible with due diligence or reasonable prudence." Id. at
335 (citations omitted).
Under Rule 4:50-1(f), the judge has broad discretion to grant relief in
exceptional circumstances but only if presented with "a reason not included
among any of the reasons subject to the one year limitation." 1 Baumann, 95 N.J.
at 395 (citing Manning Engr'g, Inc. v. Hudson Cty. Park Comm'n., 74 N.J. 113,
120 (1977)). "[This] rule is limited to 'situations in which, were it not applied,
a grave injustice would occur.'" U.S. Bank Nat'l Ass'n v. Guillaume, 209 N.J.
449, 484 (2012) (quoting Hous. Auth. of Morristown v. Little, 135 N.J. 274, 289
(1994)); see Manning Engr'g, 74 N.J. at 125 (granting relief under Rule 4:50-
1(f) "because of the public policy to prevent recovery of damages for breach of
an illegal public contract"); Court Inv'r Co. v. Perillo, 48 N.J. 334, 347 (1966)
(granting relief under Rule 4:50-1(f) where defendant's attorney falsely assured
that suit was taken care of but default judgment was later entered).
Factors militating against a finding of extraordinary circumstances
include the defendant's choice not to respond, freedom to act, retention of
counsel, benefit of a trial, and inexcusable negligence. Baumann, 95 N.J. at
1
The reasons subject to the one year limitation include excusable neglect, newly
discovered evidence, and fraud. R. 4:50-2.
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395-96 (citing Ackermann v. United States, 340 U.S. 193 (1950) and Klapprott
v. United States, 335 U.S. 601 (1949)).
We also review a trial judge's denial of a motion for reconsideration for
an abuse of discretion. Fusco v. Bd. of Educ. of City of Newark, 349 N.J. Super.
455, 462 (App. Div. 2002). A motion for reconsideration "shall state with
specificity the basis on which it is made, including a statement of the matters or
controlling decisions which counsel believes the court has overlooked or as to
which it has erred . . . ." R. 4:49-2. The judge should only grant this motion if
"1) the Court has expressed its decision based upon a palpably incorrect or
irrational basis, or 2) it is obvious that the Court either did not consider, or failed
to appreciate the significance of probative, competent evidence." Cummings v.
Bahr, 295 N.J. Super. 374, 384 (App. Div. 1996) (quoting D'Atria v. D'Atria,
242 N.J. Super. 392, 401 (Ch. Div. 1990)).
We reject defendant's contention that the trial judge abused her discretion
in denying defendant's motion to vacate the default judgment. In that regard,
defendant failed to provide any evidence to show that it made an honest mistake
compatible with due diligence or reasonable prudence. See Mancini, 132 N.J.
at 334. Defendant was personally served in November 2017, in accordance with
Rule 4:4-4(a)(6), which permits personal service on a corporation's officer.
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Defendant waited until July 2018 to respond, after plaintiff had served the writ
of execution. Defendant was solely responsible for its delayed response, and its
allegation that the COO was caring for his wife after surgery cannot excuse
defendant's failure to respond to a complaint of which it was aware for eight
months. See Mancini, 132 N.J. at 334; Marder, 84 N.J. Super. at 318. We are
satisfied that the judge did not abuse her discretion in denying defendant's
motion.
Similarly, we reject defendant's contention that the judge abused her
discretion in declining to find that exceptional circumstances warranted relief
from the default judgment. In that regard, defendant failed to explain why a
grave injustice would occur absent the relief requested. Further, defendant
failed to provide any evidence that would permit a finding of exceptional
circumstances, such as lacking the freedom or knowledge of its requirement to
respond or act. See Baumann, 95 N.J. at 396 (citation omitted); Perillo, 48 N.J.
at 347. Defendant only asserted what it alleged to be a fraud claim. Fraud
claims are subject to the one year limitation under Rule 4:50-2 and thus cannot
serve as the basis for a claim for relief under Rule 4:50-1(f). See Baumann, 95
N.J. at 395 (citation omitted).
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We also reject defendant's contention that the trial judge abused her
discretion in denying defendant's motion for reconsideration. The only new
information that defendant asserted in its motion concerned its COO's trip to
New York City to assist his wife after surgery. As we have explained, these
facts do not constitute excusable neglect. Further, defendant provided no
reasonable explanation as to why the judge's denial of the motion to vacate the
default judgment was irrationally based. See Cummings, 295 N.J. Super. at 384.
Thus, we are satisfied that the judge did not abuse her discretion in denying
defendant's motion.
To the extent we have not specifically addressed any remaining arguments
raised by defendant, we conclude they lack sufficient merit to warrant discussion
in a written opinion. R. 2:11-3(e)(1)(E).
Affirmed.
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