APOLLINE HOLDINGS, LLC VS. ALLIANCE HAND AND PHYSICAL THERAPY, PC (L-3148-18, PASSAIC COUNTY AND STATEWIDE), A-1493-19

Defendants (tenants) executed three promissory notes to plaintiff; notes were consolidated in June 2017 and much of the principal remained unpaid.
Defendants retained attorney Keith McKenna in Dec. 2017 on a hybrid retainer to sue plaintiff (Bergen County action); they did not pay the required retainer balance and McKenna repeatedly requested payment.
The Bergen County action was dismissed for lack of prosecution in Aug. 2018; defendants did not move to vacate that dismissal.
Plaintiff sued on the promissory notes in Passaic County in Nov. 2018; McKenna informed defendants he would not represent them in that separate action unless additional funds were paid and sent emails disclaiming representation.
Defendants were served, did not answer, and the Passaic County court entered default judgment in March 2019 for note amounts, interest, and contractual late charges; defendants later moved to vacate under R. 4:50-1(a).
The trial judge denied the vacatur motion, finding no excusable neglect (defendants knew they were unrepresented) and no meritorious defense; this Court affirmed.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether default judgment should be vacated for excusable neglect under R. 4:50-1(a)	Muscara had notice and cannot claim excusable neglect; McKenna disclaimed representation and defendants knew or should have known	They relied on McKenna's ongoing representation and were excusably negligent in failing to answer	Denied—no excusable neglect; defendants knew McKenna would not represent them and informed others they were unrepresented
Whether defendants showed a meritorious defense to the note claims	Note terms establish liability; plaintiff submitted documentation of damages	Late fees/default interest are excessive and clause is unconscionable	Denied—no meritorious defense; defendants admitted indebtedness and note terms treated late fees as liquidated damages
Whether retainer language created continuing representation covering the Passaic action	Retainer limited representation to the Bergen County action against plaintiff	Defendants read retainer as covering all matters related to the consolidated promissory note	Denied—retainer explicitly limited to one action; McKenna expressly declined Passaic representation without payment
Whether the damages/calculation in the default judgment was incorrect	Plaintiff supported calculations with certifications and documents	Defendants disputed late charges and calculations	Denied—the court accepted plaintiff's supporting proofs and explanations

U.S. Bank Nat'l Ass'n v. Guillaume, 209 N.J. 449 (N.J. 2012) (standard of review and deference to trial court on motions to vacate defaults)
Mancini v. EDS on Behalf of N.J. Auto. Full Ins. Underwriting Ass'n, 132 N.J. 330 (N.J. 1993) (excusable neglect may be found for honest mistakes compatible with due diligence)
Housing Auth. of Town of Morristown v. Little, 135 N.J. 274 (N.J. 1994) (Rule 4:50-1 should be used sparingly)
Marder v. Realty Const. Co., 84 N.J. Super. 313 (App. Div. 1964) (movant must show a meritorious defense to vacate default)
MetLife Capital Fin. Corp. v. Wash. Ave. Assoc., L.P., 159 N.J. 484 (N.J. 1999) (burden on party challenging liquidated-damages clause to prove unreasonableness)
Secretary of State v. GPAK Corp., 95 N.J. Super. 82 (App. Div. 1967) (excusable-neglect doctrine affords equitable relief in rare circumstances)
Iliadis v. Wal-Mart Stores, Inc., 191 N.J. 88 (N.J. 2007) (abuse-of-discretion framework for appellate review)