VAN BRI REALTY, INC., ETC. VS. MICHAEL BLUMENTHALÂ (L-0880-14, MIDDLESEX COUNTY AND STATEWIDE)
A-0368-15T2
| N.J. Super. Ct. App. Div. | Aug 17, 2017Background
- Van Bri Realty (predecessor to JJP) leased commercial premises to Libra Laboratories beginning Dec. 1999; Libra later held over and Blumenthal formed Libra Technical. Libra's corporate charter later expired. Consent judgment of possession led to surrender of the premises in Aug. 2013.
- Plaintiff sued Blumenthal, Libra and Technical in Feb. 2014 for unpaid rent, fees and costs; Libra and Technical defaulted and a default judgment against them was entered in Oct. 2014.
- Blumenthal (pro se) answered but failed to respond to discovery; his answer was first struck without prejudice, then struck with prejudice under R. 4:23-5 and default entered against him.
- A May 2015 default judgment against Blumenthal was conditioned on a proof hearing. On June 30, 2015 the parties agreed in court that the default would be vacated if Blumenthal posted a non-rescindable bond of $87,950 and complied with discovery; the court gave him 5 days to post bond and 45 days to respond to discovery.
- Blumenthal failed to post the bond and to answer discovery. Plaintiff moved to reinstate default and enter judgment for $87,950; Blumenthal cross-moved to vacate the defaults and for other relief. The trial court re-entered the default judgment and denied Blumenthal’s cross-motion on Aug. 7, 2015. Blumenthal appealed only the orders against him.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the default judgment against Blumenthal should be vacated under R. 4:50-1 ("catch-all" subsection (f)) | Plaintiff argued the June 30 settlement required posting a bond and discovery compliance; plaintiff requested re-entry when Blumenthal failed to comply | Blumenthal argued relief should be granted for fairness, asserting neglect was not willful and cited health and financial difficulties plus alleged offsets for repairs | Court held R. 4:50-1(f) relief was not warranted: parties had agreed to conditions (bond and discovery), Blumenthal failed to comply, and no exceptional circumstances justified vacatur; affirmed denial of relief |
| Whether the appeal could challenge default judgments against Libra and Technical | Plaintiff emphasized the judgment re: Blumenthal only and that forced personal liability due to expired corporate charter | Blumenthal’s notice named corporate defendants but he advanced no appellate arguments attacking their defaults | Court held the defaults against Libra and Technical were not before the court (no timely appeal and not briefed), so the appeal concerns only the August 7, 2015 orders as to Blumenthal |
Key Cases Cited
- Guillaume v. U.S. Bank Nat'l Ass'n, 209 N.J. 449 (2012) (Rule 4:50-1 governs relief from default judgment and requires careful discretionary review)
- Marder v. Realty Constr. Co., 43 N.J. 508 (1964) (motions to vacate defaults should be viewed liberally to reach just results)
- Mancini v. EDS, 132 N.J. 330 (1993) (standard of appellate review for vacatur decisions is abuse of discretion)
- Flagg v. Essex Cty. Prosecutor, 171 N.J. 561 (2002) (defines abuse of discretion and when a trial court departs impermissibly from established policies)
- Leventhal v. Atl. Rainbow Painting Co., Ltd., 68 N.J. Super. 406 (1961) (persons continuing corporate business after charter expiration may be personally liable)
- Mortg. Graders, Inc. v. Ward & Olivio, LLP, 225 N.J. 423 (2016) (a dissolved corporation exists only to wind up affairs and not to continue business operations)