NOT FOR PUBLICATION WITHOUT THE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-2577-15T4
F.A.L. REALTY, INC.,
Plaintiff-Respondent,
v.
TR & SONS REALTY, LLC,
Defendant-Appellant.
_________________________________
Submitted March 9, 2017 – Decided September 11, 2017
Before Judges O'Connor and Whipple.
On appeal from Superior Court of New Jersey
Chancery Division, Bergen County, Docket No.
F-30460-14.
Kates Nussman Rapone Ellis & Farhi, LLP,
attorneys for appellant (Michael Farhi, on
the brief).
Schumann Hanlon, LLC, attorneys for
respondent (Eugene R. Boffa, III, of
counsel; Joseph Elmo Cauda, Jr., on the
brief).
PER CURIAM
Defendant TR & Sons Realty, LLC, appeals from a January 14,
2016 General Equity Part order denying its application to vacate
a final default judgment in foreclosure entered in favor of
plaintiff, as well as the sheriff's sale held in this matter.
Defendant sought this relief on the ground it had not been
served with the complaint in foreclosure. Having reviewed
defendant's arguments in light of the record and applicable
principles of law, we reverse the order under review and remand
for further proceedings.
I
The following facts are derived from the motion record.
Defendant executed a note in favor of plaintiff F.A.L. Realty,
Inc., for $628,000. The note was secured by a non-residential
purchase money mortgage. Defendant defaulted on the note. In
December 2013, plaintiff served defendant with a Notice of
Default and Intent to Foreclose, which defendant's attorney
acknowledged receiving a few weeks later. The attorney advised
plaintiff that defendant would bring its payments current by
April 2014, and requested plaintiff refrain from filing a
complaint in foreclosure.
In February 2014, defendant informed plaintiff it could not
cure the default by April 2014. In response, plaintiff agreed
to modify the terms of the note and, in March 2014, the parties
executed a loan modification agreement. However, defendant
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failed to make any payments under that agreement and, in July
2014, plaintiff filed a complaint in foreclosure.
Plaintiff claims it served defendant in accordance with
Rule 4:4-4(6). The affidavit of service, executed by a private
process server, states on July 31, 2014, the summons, complaint,
and foreclosure case information statement were served on
defendant's managing agent. The affidavit further claims the
person who accepted service refused to provide her name, but the
process server described her as a sixty-five year old, white
female with "red/blonde" hair, who stood five feet, three inches
and weighed 125 pounds.
Defendant did not file a responsive pleading and on
December 5, 2014, a default judgment in foreclosure was entered.
In September 2015, a sheriff's sale was scheduled. Defendant
successfully obtained an adjournment of the sale to October 23,
2015; that date was subsequently adjourned to November 14, 2015,
December 4, 2015, and January 8, 2016. On November 10, 2015,
defendant filed an order to show cause seeking to vacate the
default judgment and sheriff's sale.
In support of its application, defendant's principal, Tarek
Ramadan, submitted a certification asserting defendant had never
been served with the summons and complaint. Ramadan further
claimed he had not been aware a judgment had been entered, let
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alone a complaint filed, until September 2015, when he learned
of the scheduled sheriff's sale. He stated he attempted to
negotiate a resolution but, when settlement efforts failed,
filed the order to show cause. In a supplemental certification,
Ramadan stated the person described in the affidavit of service
who accepted the summons and complaint on defendant's behalf did
not fit the description of defendant's managing agent or any of
its employees.
Plaintiff's principal, Alberto Silva, executed a
certification in opposition to defendant's application. Silva
claimed he spoke with Ramadan on February 5, 2015, at which time
Ramadan stated he was working on a "deal" that would enable
defendant to pay its arrears in full to plaintiff. Silva
further certified "[d]uring this conversation, I was very clear
to Mr. Ramadan that either we come to [an] agreement in which he
pays me in full and until such time I was not stopping the
foreclosure."
Before the court decided defendant's order to show cause
and despite the sale being adjourned to January 8, 2016, the
sheriff's sale went forward on December 4, 2015. In its
decision accompanying the January 16, 2016 order denying
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defendant's "motion,"1 the court denied the application, finding,
among other things, there was no authority to vacate the
judgment under Rule 4:50-1. The court did not address
defendant's assertion it was not in fact served with the
complaint.
II
On appeal, defendant contends plaintiff failed to serve it
with the foreclosure complaint and, thus, the court erred when
it did not vacate both the default judgment in foreclosure and
the sheriff's sale.
The decision whether to grant a motion to vacate a default
judgment shall not be disturbed absent a "clear abuse of
discretion." U.S. Bank Nat'l Ass'n v. Guillaume, 209 N.J. 449,
467 (2012). However, an appellate court may reverse when the
trial court gives insufficient deference to the principles
governing the motion, see Davis v. DND/Fidoreo, Inc., 317 N.J.
Super. 92, 100-01 (App. Div. 1998), certif. denied, 158 N.J. 686
(1999), or "when a decision is 'made without a rational
explanation, inexplicably departed from established policies, or
rested on an impermissible basis.'" U.S. Bank Nat'l Ass'n,
1
Although defendant filed an order to show cause for relief,
the court determined the application was a motion, a finding
neither party challenges on appeal.
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supra, 209 N.J. at 467-68 (quoting Iliadis v. Wal-Mart Stores,
Inc., 191 N.J. 88, 123 (2007)).
"Generally, where a default judgment is taken in the face
of defective personal service, the judgment is void." Rosa v.
Araujo, 260 N.J. Super. 458, 462 (App. Div. 1992), certif.
denied, 133 N.J. 434 (1993). A motion to vacate a default
judgment for lack of service is governed by Rule 4:50-1(d),
which authorizes a court to relieve a party from a final
judgment if "the judgment or order is void." "If defective
service renders the judgment void, a meritorious defense is not
required to vacate the judgment under R. 4:50-1(d)." Jameson v.
Great Atl. & Pac. Tea Co., 363 N.J. Super. 419, 425 (App. Div.
2003), certif. denied, 179 N.J. 309 (2004).
Although the movant bears the burden of demonstrating
grounds to vacate a default judgment, Jameson, supra, 363 N.J.
Super. at 425-26, where "'there is at least some doubt as to
whether the defendant was in fact served with process, . . . the
circumstances require a more liberal disposition of' the motion"
to vacate a default judgment. Davis, supra, 317 N.J. Super. at
100 (quoting Goldfarb v. Roeger, 54 N.J. Super. 85, 92 (App.
Div. 1959)).
Rule 4:4-4(a)(6) provides service upon a corporation is
made by personally serving a copy of the summons and complaint:
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[O]n any officer, director, trustee or
managing or general agent, . . . or on a
person at the registered office of the
corporation in charge thereof, or, if
service cannot be made on any of those
persons, then on a person at the principal
place of business of the corporation in this
State in charge thereof . . . .
Although service by a sheriff, who is both a public officer and
disinterested third party, has a rebuttable presumption of
validity, see Garley v. Waddington, 177 N.J. Super. 173 (App.
Div. 1981), that presumption has not been extended to private
process servers. Here, the process server was a private one.
In our view, Ramadan's assertion under oath defendant had
not been served with the summons and complaint was sufficient on
this record to create a genuine issue of fact whether service
was accomplished. While Silva certified he was "clear" when
speaking to Ramadan in February 2015 plaintiff would not "stop
the foreclosure" unless plaintiff were paid in full, we cannot
conclude from such statement defendant was aware a complaint had
been filed, let alone served upon it. After all, plaintiff
pursued foreclosure before filing the complaint.
Plaintiff relies on Rosa, supra, 260 N.J. Super. 458, in
support of its position defendant was in fact aware the
complaint had been filed and thus defendant should be estopped
from asserting it had not been properly served. The facts in
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Rosa are different from those here. In that matter, the
defendant had received the summons and complaint and turned it
over to his attorney before default judgment was entered. We
determined actual notice of the lawsuit comported with due
process and sufficed as service of the summons and complaint.
Facts analogous to those in Rosa are not present in the record
supplied to us.
Because there is a question of fact whether plaintiff
properly served defendant, a question the court was unable to
resolve in the face of competing certifications, we reverse the
January 14, 2016 order. We remand this matter for an
evidentiary hearing to resolve the question whether defendant
had been properly served. If so, neither the default judgment
nor sheriff's sale shall be vacated. If not, the default
judgment shall be vacated, but we leave to the trial court's
discretion how it should proceed with the request to vacate the
sheriff's sale, in light of the time that has elapsed since the
property was sold.
Reversed and remanded for further proceedings consistent
with this opinion. We do not retain jurisdiction.
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