Gail Stamler v. Shastri Persad ( 2024 )

NOT FOR PUBLICATION WITHOUT THE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-0291-22
GAIL STAMLER,
Plaintiff-Respondent,
v.
SHASTRI PERSAD,
Defendant-Appellant.
Submitted December 18, 2023 – Decided January 3, 2024
Before Judges Marczyk and Chase.
On appeal from the Superior Court of New Jersey, Law
Division, Essex County, Docket No. L-0309-19.
Shastri Persad, appellant pro se.
Vastola & Sullivan, attorneys for respondent (Jordan
Scott Friedman, on the brief).
PER CURIAM
Defendant Shastri Persad appeals from a September 23, 2022 order
denying his motion to vacate default judgment. Because the trial court did not
provide adequate reasons for its decision as required under Rule 1:7-4(a), we are
constrained to vacate the order and remand for further proceedings.
We discern the following material facts from the record. This dispute
arises from Persad's breach of a commercial guaranty of a loan by Stamler to
New Jersey Wholesale Properties, LLC ("Wholesale"). Persad was the sole
member of Wholesale and guarantor on Stamler's loan, which provided funding
for Wholesale's rehabilitation of commercial real estate located in Newark.
Stamler and Wholesale entered into agreements, including a loan, a promissory
note in the amount of $85,000, and a construction mortgage. Persad defaulted
on the loan.
In January 2018, a final judgment of foreclosure was entered against
Wholesale and in Stamler's favor. The property was sold at a sheriff's sale in
August 2018.
In January 2019, Stamler filed a complaint against Persad to pursue the
deficiency on the promissory note, as guaranteed under the commercial
guaranty. The trial court permitted substituted service of the complaint by
publication and mail. Mailed and published service were completed in May and
June 2021. Proof of service was filed in July 2021.
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In August 2021, default was entered against Persad. In July 2022, the trial
court entered default judgment against Persad in the amount of $154,661.68. On
the same date, Persad moved to vacate default judgment.
In the certification in support of motion to vacate default judgment, Persad
asserted: (1) plaintiff did not personally serve defendant; (2) service was not
valid; (3) there is no proof plaintiff's complaint was delivered; (4) defendant has
a meritorious defense; and (5) the matter to collect a debt on a mortgage secured
by a note was not brought within three months of the foreclosure sale as required
by N.J.S.A. 2A:50-2.
By order dated September 23, 2022, the trial court denied the motion to
vacate default judgment with its only finding being, "Motion to vacate default
judgment is DENIED. Movant fails to set forth excusable neglect and
reasonable likelihood to prevail on the merits. R. 4:50-1."1
On appeal, defendant contends the trial court failed to set forth an oral or
written statement of facts and legal reasons that led to the entry of the September
23, 2022 final order as required by Rules 1:7-4 and 4:43-3. Defendant also
posits he raised a meritorious defense and plaintiff's service was inconsistent
1
Although neither party's brief mentions oral argument, the order also states,
"the [c]ourt having heard oral argument . . . ."
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with due process of law. Persad argues because he made a showing of a
meritorious defense, Rule 4:43-3 required the court to set aside an entry of
default "[f]or good cause shown . . . ."
"[T]he requirements for setting aside a default under Rule 4:43-3 are less
stringent than . . . those for setting aside an entry of default judgment under Rule
4:50-1." N.J. Mfrs. Ins. Co. v. Prestige Health Grp., LLC, 406 N.J. Super. 354,
360 (App. Div. 2009) (citing Bernhardt v. Alden Cafe, 374 N.J. Super. 271, 277
(App. Div. 2005)). Our Supreme Court has explained:
Our Rules prescribe a two-step default process, and
there is a significant difference between the burdens
imposed at each stage. When nothing more than an
entry of default pursuant to Rule 4:43-1 has occurred,
relief from that default may be granted on a showing of
good cause. R[.] 4:43-3; Pressler & Verniero, Current
N.J. Court Rules, [cmt.] on R. 4:43-3 (2012) (stating
that "[t]he required good-cause showing for setting
aside an entry of default pursuant to this rule is clearly
a less stringent standard than that imposed by R[ule]
4:50-1 for setting aside a default judgment").
When the matter has proceeded to the second stage and
the court has entered a default judgment pursuant to
Rule 4:43-2, the party seeking to vacate the judgment
must meet the standard of Rule 4:50-1 . . . .
[U.S. Bank Nat'l Ass'n v. Guillaume, 209 N.J. 449, 466-
467 (2012) (third alteration in original)].
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Persad conflates Rules 4:43-3 and 4:50-1. Rule 4:43-3 is reserved for
setting aside a default, not a default judgment. Even though he referenced Rule
4:43-3, he moved to vacate the default judgment under Rule 4:50-1.
Under subsection (a) of Rule 4:50-1, a "defendant seeking to set aside a
default judgment must establish that his failure to answer was due to excusable
neglect and that he has a meritorious defense." Deutsche Bank Nat'l Tr. Co. v.
Russo, 429 N.J. Super. 91, 98 (App. Div. 2012) (quoting Goldhaber v.
Kohlenberg, 395 N.J. Super. 380, 391 (App. Div. 2007)). Excusable neglect
refers to a default that is "attributable to an honest mistake that is compatible
with due diligence or reasonable prudence." Ibid. (quoting Guillaume, 209 N.J.
at 468). The type of mistake warranting relief under the Rule is one against
which the party could not have protected themselves. DEG LLC v. Twp. of
Fairfield, 198 N.J. 242, 263 (2009).
We review an order granting or denying vacatur of a final judgment for
an abuse of discretion. United States v. Scurry, 193 N.J. 492, 502-03 (2008).
An abuse of discretion arises "when a decision is 'made without a rational
explanation, inexplicably departed from established policies, or rested on an
impermissible basis.'" Guillaume, 209 N.J. at 467-68 (quoting Iliadis v. Wal-
Mart Stores, Inc., 191 N.J. 88, 123 (2007)).
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Rule 1:7-4(a) requires that "[t]he court shall, by an opinion or
memorandum decision, either written or oral, find the facts and state its
conclusions of law thereon in all actions tried without a jury, on every motion
decided by a written order that is appealable as of right . . . ." Findings of fact
and conclusions of law are also required on "every motion decided by [a] written
order[] . . . appealable as of right." Schwarz v. Schwarz, 328 N.J. Super. 275,
282 (App. Div. 2000) (quoting R. 1:7-4(a)).
Without a statement of reasons, "we are left to conjecture as to what the
judge may have had in mind." Salch v. Salch, 240 N.J. Super. 441, 443 (App.
Div. 1990). "Meaningful appellate review is inhibited unless the judge sets forth
the reasons for his or her opinion." Ibid.The court's two-line order does not adequately set forth the basis for its
ruling. We therefore vacate the September 23, 2022 order and remand to the
trial court to provide its findings of fact and conclusions of law with an
accompanying order. See Kas Oriental Rugs, Inc. v. Ellman, 407 N.J. Super.
538, 561 (App. Div. 2009) (finding we were "compelled to vacate the award
under review and remand for further proceedings because the judge's findings
do not comport with Rule 1:7-4(a) in a number of respects"); see also United
Consumer Fin. Servs. Co. v. Carbo, 410 N.J. Super. 280, 313 (App. Div. 2009)
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(finding that the trial court's decision was not sufficiently explained to permit
appellate review and remanding the matter for further proceedings). In vacating
the September 23, 2022 order, we proffer no opinion as to the merits of the
parties' claims and whether defendant failed to demonstrate excusable neglect
and a potential meritorious defense.
Vacated and remanded for proceedings in accordance with this opinion.
We do not retain jurisdiction.
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