F.A.L. REALTY, INC. VS. TR & SONS REALTY, LLCÂ (F-30460-14, BERGEN COUNTY AND STATEWIDE)
A-2577-15T4
| N.J. Super. Ct. App. Div. | Sep 11, 2017Background
- TR & Sons executed a $628,000 note secured by a non-residential mortgage to F.A.L. Realty, defaulted, then signed a March 2014 loan modification but made no payments.
- F.A.L. filed a foreclosure complaint July 2014; a private process server executed an affidavit claiming service on a managing agent who refused to give her name and was described by physical characteristics.
- TR & Sons did not answer; a final default judgment in foreclosure entered December 5, 2014; a sheriff's sale was scheduled and repeatedly adjourned before occurring December 4, 2015.
- TR & Sons (through principal Ramadan) filed an order to show cause November 2015 asserting it had never been served and was unaware of the complaint or default judgment until learning of the sheriff's sale.
- The trial court denied the motion to vacate, finding no basis under R. 4:50-1, and did not resolve the factual dispute over service; the Appellate Division reversed and remanded for an evidentiary hearing.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether service of process was properly effected under R. 4:4-4(a)(6) | Affidavit of private process server shows personal service on managing agent; service valid | Ramadan swore under oath TR & Sons was not served; description in affidavit does not match any employee | Genuine factual dispute exists; cannot assume valid service; remand for evidentiary hearing |
| Whether a default judgment obtained after defective service is void under R. 4:50-1(d) | Defendant had actual notice of foreclosure and is estopped from denying service (relying on analogous cases) | Defective service renders judgment void; if void, relief under R. 4:50-1(d) does not require a meritorious defense | If service is defective, judgment is void and vacatur under R. 4:50-1(d) is appropriate; merits not required to vacate |
| Whether trial court abused discretion in denying vacation of judgment without resolving service issue | Court relied on its view that R. 4:50-1 did not apply and on plaintiff's factual assertions | Trial court failed to address competing sworn statements creating doubt about service | Trial court erred by not resolving the factual dispute; appellate court reversed for an evidentiary hearing |
| Effect on sheriff's sale if service found defective | If service was valid, sale stands | If service defective, default judgment must be vacated; court may decide how to handle the sale given elapsed time | If service invalid, default judgment must be vacated; trial court has discretion regarding the sale on remand |
Key Cases Cited
- U.S. Bank Nat'l Ass'n v. Guillaume, 209 N.J. 449 (discretionary review standard for vacating default judgments)
- Davis v. DND/Fidoreo, Inc., 317 N.J. Super. 92 (doubt about service warrants liberal disposition of vacatur motions)
- Rosa v. Araujo, 260 N.J. Super. 458 (actual notice to defendant through counsel can satisfy due process/service)
- Jameson v. Great Atl. & Pac. Tea Co., 363 N.J. Super. 419 (if judgment is void for defective service, meritorious defense not required under R. 4:50-1(d))
- Garley v. Waddington, 177 N.J. Super. 173 (sheriff's service carries presumption of validity; contrast with private process servers)
- Iliadis v. Wal-Mart Stores, Inc., 191 N.J. 88 (standards for appellate review when lower court departs from established policies)
- Goldfarb v. Roeger, 54 N.J. Super. 85 (historical support for liberality in vacating defaults when service is doubtful)