Portfolio Recovery Associates, LLC, Etc. v. Terry A. Chartonavich ( 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NOT FOR PUBLICATION WITHOUT THE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-1088-23
PORTFOLIO RECOVERY
ASSOCIATES, LLC, as assignee
of HSBC BANK NEVADA N.A./
CAPITAL ONE BANK (U.S.) N.A.,
Plaintiff-Respondent,
v.
TERRY A. CHARTONAVICH,
Defendant-Appellant.
_____________________________
Argued October 1, 2024 – Decided October 21, 2024
Before Judges Gooden Brown, Smith and Vanek.
On appeal from the Superior Court of New Jersey, Law
Division, Bergen County, Docket No. L-5641-23.
Mark Jensen argued the cause for appellant (Kim Law
Firm, LLC, attorneys; Mark Jensen, on the briefs).
Thomas M. Murtha argued the cause for respondent.
PER CURIAM
Defendant appeals the trial court's order denial of his motion to vacate
default judgment pursuant to Rule 4:50-1. Because defendant failed to show
that he filed his motion to vacate within a reasonable time after judgment was
entered against him, we affirm.
I.
Defendant Terry Chartonavich incurred delinquent credit-account debt
with HSBC Bank in the amount of $7,663.52. HSBC assigned the debt to
plaintiff Portfolio Recovery Associates, LLC, who in turn filed a complaint
against defendant to collect it. Defendant failed to file an answer, and on
plaintiff's motion, the court entered default judgment for $7,913.79 against
defendant on September 13, 2017.
Nearly six years later, on June 7, 2023, defendant moved to vacate the
default judgment. A Special Civil Part (SCP) judge denied the motion.
Defendant filed a second motion to vacate the judgment, and this time the SCP
judge granted the motion unopposed. Plaintiff then moved for reconsideration,
contending that it received no notice of the second motion. While
reconsideration was pending, defendant moved to transfer the matter to the Law
Division, which granted plaintiff's reconsideration motion and simultaneously
reinstated the default judgment in an order dated September 8.
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Defendant immediately filed a third motion to vacate the newly reinstated
default judgment under Rule 4:50-1(d), (e), and (f). Defendant's core argument
was that the judgment was void ab initio, because plaintiff did not possess a
consumer lender license under the New Jersey Consumer Finance Licensing Act
(CFLA) at the time judgment was entered. 1 The court denied the motion,
concluding as a matter of law that defendant could not assert plaintiff's failure
to obtain a CFLA license as a defense to the collection action. Distinguishing
this case from LVNV Funding, LLC v. Deangelo, 464 N.J. Super. 103 (App.
Div. 2020), where we affirmed a trial court's order vacating default judgment
because the plaintiff had violated federal law,2 the trial court stated:
The compelling factor in that case was the [LVNV]
court's conclusion the debt was void due to violations
of the FDCPA, and the finding that the policy interest
of curbing abusive collections practices outweighed the
policy interest of protecting finality of judgments.
Here, defendant does not have the benefit of that
countervailing policy interest. The court rejects
defendant's argument that the underlying debt is void.
The NJCFLA does not confer a private statutory cause
of action.
....
1
N.J.S.A. 17:11C-1, -89. The record shows Plaintiff did not obtain its consumer
lender license until February 8, 2018, well after its the entry of default judgment
against defendant.
2
The Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. §§1692-1692p.
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Defendant cannot secure a judicial determination that
the debt is void, because defendant cannot circumvent
the lack of a private cause of action under the NJCFLA
by seeking relief under . . . the New Jersey Uniform
Declaratory Judgments Law, N.J.S.A. 2A:16-50, -62.
....
Because defendant cannot establish the underlying debt
was void, defendant cannot satisfy [R. 4:50-1 (d), (e),
or (f),] and cannot establish that six years is a
"reasonable time" within which to have brought
[defendant's] motion.
[emphasis added.]
Defendant appeals, contending the trial court committed two errors of law.
First, the court erred by barring defendant from asserting plaintiff's lack of
CFLA compliance as an affirmative defense to the collection action, specifically
because it found no private right of action under the statute. Second, the court
erred when it rejected defendant's argument that our decision in LVNV v.
Deangelo should control, again because it found plaintiff had no private right of
action in the CFLA.
II.
"We review a motion under Rule 4:50-1 to vacate final judgment under
the abuse of discretion standard." 257-261 20th Ave. Realty, LLC v. Roberto,
477 N.J. Super. 339, 366 (App. Div. 2023) (citing U.S. Bank Nat'l. Ass'n v.
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Guillaume, 209 N.J. 449, 467 (2012)). "Although the ordinary abuse of
discretion standard defies precise definition, it arises when a decision is made
without a rational explanation, inexplicably departed from established policies,
or rested on an impermissible basis." Flagg v. Essex Cnty. Prosecutor, 171 N.J.
561, 571 (2002) (internal quotation marks omitted). "[A] functional approach
to abuse of discretion examines whether there are good reasons for an appellate
court to defer to the particular decision at issue." Ibid.The rule states in pertinent part:
On motion, with briefs and upon such terms as are just,
the court may relieve a party or the party's legal
representative from a final judgment or order for the
following reasons: . . . (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.]
III.
In the written statement of reasons supporting its order, the trial court
emphasized its legal conclusion that defendant could not assert plaintiff's failure
to comply with the CFLA as an affirmative defense. However, the court also
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found defendant failed to seek relief under Rule 4:50-1 within a reasonable time.
We focus our attention on this threshold question.
Motions pursuant to Rule 4:50-1(d), (e), and (f) "shall be made within a
reasonable time, . . . after the judgment, order or proceeding was entered or
taken." R. 4:50-2. "The rule[s are] 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." Guillame,
209 N.J. at 467 (internal quotation marks omitted). "We have explained that a
reasonable time is determined based upon the totality of the circumstances . . .
." Romero v. Gold Star Distrib., LLC, 468 N.J. Super. 274, 296 (App. Div.
2021). The judge "has the discretion to consider the circumstances of each case.
. . ." Ibid.Our thorough review of the record reveals no evidence whatsoever from
which a finder of fact could determine that defendant filed his motion for Rule
4:50-1 relief within a reasonable time. Because we consider the reasonable time
issue before we reach the merits of a motion to vacate under Rule 4:50-1(d), (e),
and (f), we end our inquiry here. The trial court engaged in a proper exercise of
discretion when it found defendant failed to make this showing. We affirm the
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trial court solely on this basis, and we express no opinion concerning the legal
conclusions it reached in support of its order.
Defendant cites our opinion in Deangelo for the proposition that we
should balance defendant's absence of proof on reasonableness of his delay in
filing the motion to vacate against plaintiff's violation of the law. Deangelo,
464 N.J. Super. at 110. He contends that when we do so, we should arrive at the
same conclusion we did in Deangelo and vacate the default judgment. We are
not persuaded.
In that case, we affirmed a trial court's order vacating default judgment of
a debtor under Rule 4:50-1(f). The undisputed Deangelo record showed the
plaintiff collection agency had violated federal law, the Fair Debt Collection
Practices Act. Deangelo, 464 N.J. Super. at 106 (citing 15 U.S.C. §§1692-
1692p). The Deangelo record also showed defendant waited eight years to file
a motion to vacate default under Rule 4:50-1. Id. at 108. The trial court found
the defendant's filing delay "inexcusable." Id. at 106.
In Deangelo we deferred to the trial court, which considered the facts and
then balanced competing policy interests in an equitable analysis under Rule
4:50-1(f). Id. at 108. Here, we defer to the trial court's finding on defendant's
six-year delay in filing his motion to vacate default judgment.
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For completeness, we briefly discuss defendant's affirmative defense
argument, noting we do not defer to the trial court on issues of law and, instead
consider them de novo. See Buddy v. Knapp, 469 N.J. Super. 168, 188 (App.
Div. 2021) (citing Nicholas v. Mynster, 213 N.J. 463, 478 (2013)).
We recently held, in an unrelated matter, that the CFLA does not create a
private right of action for debtors pursuing affirmative claims against debt
collectors. Francavilla v. Absolute Res. VI., 478 N.J. Super. 171, 182 (App.
Div. 2024). Defendant contends that, despite Francavilla preventing the use of
the CFLA as a sword, he is entitled to raise plaintiff's lack of compliance as a
shield. He essentially argues that nothing express or implied in the CFLA strips
him of the right to assert plaintiff's judgment is void ab initio. Because we
decide this appeal on Rule 4:50-2 grounds, we do not reach the question of
whether our holding in Francavilla bars a debtor from asserting a debt collector's
violation of the CFLA as an affirmative defense.
The "reasonable time" threshold applies to all three grounds argued by
defendant in his motion—Rule 4:50-1(d), (e), and (f). See Rule 4:50-2. On this
record, we end our inquiry here.
Affirmed.
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