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Court Tosses $114K Default Judgment in Legal Mal Case

posted Sep 23, 2015, 12:44 PM by Resty Manapat   [ updated Sep 23, 2015, 12:58 PM ]

The failure of plaintiffs to notify the defendant in a legal malpractice case of a motion to reopen the case after it had been dismissed for failure to prosecute is adequate reason to vacate a default judgment against the attorney, a New Jersey appeals court ruled Sept. 21.

A two-judge Appellate Division panel said defendant Douglas Fleisher, a Hackensack solo, had established both excusable neglect and a meritorious defense to set aside the $113,760 judgment.

"A plaintiff's failure to comply with the applicable notice requirements for entry of a default judgment support a finding of excusable neglect," said Appellate Division Judges Jerome St. John and Thomas Manahan in Del Cid v. Fleisher.

The ruling overturned Hudson County Superior Court Judge Lawrence Maron's decision on July 11, 2014, to deny Fleisher's motion to vacate the default motion and his Sept. 5, 2014, denial of a motion for reconsideration.

"We are clearly pleased with the result," said Fleisher's attorney, Jeffrey S. Mandel of the Manalapan office of Cutolo Mandel. "The Appellate Division recognized the procedural basis of our appeal, which was the lack of notice.

"Now we have an opportunity to address the case on its merits," Mandel said.

The lawyer for plaintiffs Cesar and Reina Del Cid, Hackensack solo Steven Schuster, did not return a call about the ruling.

The Del Cids filed the malpractice suit against Fleisher in February 2012, alleging that he failed to timely file a personal injury lawsuit on their behalf, according to the Appellate Division's opinion.

The plaintiffs served Fleisher with the complaint on March 16, 2012, and later filed proof of service. Fleisher, the ruling said, did not file an answer.

The suit was administratively dismissed Dec. 21, 2012, for lack of prosecution.

The Del Cids filed a motion to restore Nov. 1, 2013, but failed to provide a certification that Fleisher had been served. In addition, the cover letter enclosing the motion did not indicate that a copy was sent to Fleisher. The complaint was returned to the active list Nov. 22, 2013, according to the opinion.

On Dec. 2, 2013, the plaintiffs asked in a letter for a proof hearing as soon as possible. Fleisher was not copied on that letter, but a proof hearing was held Jan. 6, 2014, the opinion said. Fleisher was not present. At that hearing, the Del Cids submitted a letter from Fleisher to the opposing party's insurance carrier in the underlying personal injury case demanding $100,000.

On Jan. 24, 2014, the judgment against Fleisher was entered.

Maron denied Fleisher's motions to vacate the judgment, saying he had proffered no meritorious defense.

St. John and Manahan said they recognized that a decision to vacate a default judgment or not "lies within the sound discretion of the trial judge."

"For that reason, a trial court's decision in response to an application to open a judgment will be left undisturbed unless it represents a 'clear abuse of discretion,'" the judges said. "An abuse of discretion 'arises when a decision is made without a rational explanation, inexplicably departed from established policies, or rested on an impermissible basis,'" the judges said, quoting the state Supreme Court's 2002 ruling in Flagg v. Essex County Prosecutor.

"Likewise, when the trial court gives insufficient deference to the principles governing the motion, we must reverse," St. John and Manahan said.

Citing the Supreme Court's 1993 ruling in Mancini v. EDS ex rel. N.J. Automobile Full Insurance Underwriting Association, the judges said courts should view motions to open default judgments "with great liberality and should tolerate every reasonable ground for indulgence … to the end that a just result is reached."

Fleisher's primary argument was that the Del Cids failed to follow proper procedure by failing to notify him that they had filed a motion to restore the complaint, and the appeals court agreed.

"The minimum requirement of due process … are notice and the opportunity to be heard," the judges said, quoting the Supreme Court's 2008 ruling in Jamgochian v. New Jersey State Parole Board.

"We are satisfied from our review of the record that plaintiffs restored the complaint without ever serving defendant with the requisite notice of motion," the judges said. "Although [Maron] correctly found defendant did not provide any additional evidence of excusable neglect for his default, we believe good cause was shown by virtue of plaintiffs' failure to follow the court's rules regarding notice.

"A plaintiff's failure to comply with the applicable notice requirements for entry of a default judgment support a finding of excusable neglect," they said.

St. John and Manahan also said it was error to admit Fleisher's letter to the insurance carrier demanding $100,000 to settle the personal injury case.

"It obviously had the potential of creating prejudice in the malpractice action in both the plaintiffs' claim that they are entitled to damages far greater than that amount and defendant's defense that the amount should be far smaller," the judges said.


Source: New Jersey Law Journal