VAN BRI REALTY, INC., ETC. VS. MICHAEL BLUMENTHALÂ (L-0880-14, MIDDLESEX COUNTY AND STATEWIDE) ( 2017 )


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  •                         NOT FOR PUBLICATION WITHOUT THE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-0368-15T2
    VAN BRI REALTY, INC.,
    a New Jersey Corporation,
    Plaintiff-Respondent,
    v.
    MICHAEL BLUMENTHAL,
    individually,
    Defendant-Appellant,
    and
    LIBRA LABORATORIES, INC.,
    a New Jersey Corporation,
    LIBRA TECHNICAL CENTER
    LIMITED LIABILITY COMPANY,
    a New Jersey Limited Liability
    Company,
    Defendants.
    ___________________________________
    Submitted January 31, 2017 – Decided August 17, 2017
    Before Judges Suter and Guadagno.
    On appeal from Superior Court of New Jersey,
    Law Division, Middlesex County, Docket No.
    L-0880-14.
    Harmon H. Lookhoff, attorney for appellant.
    Norris, McLaughlin & Marcus, PA, attorneys for
    respondent (Timothy P. McKeown, of counsel and
    on the brief).
    PER CURIAM
    Defendant Michael Blumenthal (Blumenthal) appeals the August
    7, 2015 orders that entered an $87,950 default judgment against
    him arising from a commercial lease and denied his cross-motion
    to vacate the judgment.       We affirm.
    Plaintiff Van Bri Realty, Inc. is the predecessor in interest
    to JJP Realty Company (JJP).         Blumenthal is the president of Libra
    Laboratories, Inc. (Libra) and managing member of Libra Technical
    Center, L.L.C. (Technical).          Commencing in December 1999, JJP and
    Libra entered into a one-year commercial lease under which Libra
    rented    a   3500   square   foot   building    in   Metuchen   for   $29,400
    annually, paid $2450 per month.             After the lease expired, Libra
    continued to occupy the premises as a hold-over tenant, and shortly
    thereafter, Blumenthal formed Technical. Plaintiff contended that
    Technical occupied the same commercial premises, operating Libra's
    business.
    Plaintiff filed a complaint seeking to evict Libra for non-
    payment of rent.       A consent judgment of possession1 was entered
    against Libra, and the premises were vacated in August 2013.                  In
    1
    The consent judgment was not included in the record.
    2                              A-0368-15T2
    February 2014, plaintiff filed a complaint in the Law Division
    against Blumenthal, Libra and Technical, seeking judgment for
    unpaid rent, attorney's fees and costs arising from the commercial
    lease.    Although the complaint was served on all defendants, Libra
    and Technical never answered it and were defaulted.              On October
    10, 2014, plaintiff obtained a $141,850 default judgment in its
    favor against Libra and Technical for amounts due under the lease,
    and recorded the default judgment as a lien.
    Blumenthal, representing himself, filed an answer to the Law
    Division complaint in April 2014.          He denied personal liability
    for the unpaid rent or other charges, contending that Libra and
    Technical were separate legal entities, Technical did not operate
    from the commercial premises, records of the businesses were
    "locked    in    storage,"   plaintiff     breached    the    contract,    and
    defendants were due an offset for repairs and renovations made to
    the demised premises.
    Plaintiff      propounded      interrogatories     and   requests     for
    documents.      Blumenthal's time to answer discovery was extended to
    July 1, 2014, but he never answered it.                On August 22, 2014,
    plaintiff was granted an order under Rule 4:23-5(a)(1) that struck
    Blumenthal's     answer   without    prejudice   for   failure   to   provide
    discovery, conditioning reinstatement upon compliance and payment
    of $100.
    3                              A-0368-15T2
    Blumenthal obtained counsel, but discovery still was not
    answered. At plaintiff's request, an order was entered on February
    6, 2015 that struck Blumenthal's answer with prejudice under Rule
    4:23-5(a)(2), and a default was entered against him.              After that,
    plaintiff   requested   the    entry     of    a   default   judgment   against
    Blumenthal,   explaining      in   the       supporting   certification     that
    although Libra's corporate charter expired in 2005, Blumenthal
    continued to conduct business at the leased premises through Libra
    and two other corporations, of which he was president, from April
    2005 until August 2013 when Blumenthal and his entities moved out
    of the premises under the consent order.
    A default judgment was entered in favor of plaintiff and
    against Blumenthal on May 8, 2015, but the requested damages of
    $87,950 was crossed out on the order, and added was the notation
    the parties were to schedule a proof hearing with the court.
    On June 23, 2015, the day of the scheduled proof hearing, the
    parties reached an agreement, evidenced by the June 30, 2015 order
    which included the language "the parties having conferred prior
    to the taking of testimony on [p]laintiff's [p]roof [h]earing and
    the consent of the [p]arties having been placed on the record in
    open [c]ourt."2   The June 30, 2015 order provided that the May 18,
    2
    We have not been provided with a transcript of a proceeding
    relative to the order. However, Blumenthal's statement of the case
    4                              A-0368-15T2
    2015   default     judgment   entered     against   Blumenthal    was   "deemed
    vacated    upon"    defendant's     posting   in    five   days   of    a     "non-
    rescindable" bond in the amount of $87,950.            Blumenthal was given
    forty-five days to respond to outstanding discovery. If Blumenthal
    answered the discovery and served it on plaintiff, the order
    permitted him to move to reinstate his answer.               If he failed to
    obtain a bond or to provide discovery, plaintiff could "apply for
    the entry of [a] default and default judgment" against Blumenthal
    for $87,950.
    Blumenthal could not obtain the requisite bond.                 Plaintiff
    moved to reinstate the default and default judgment for liability
    that had been entered on May 8, 2015, and also to enter a default
    judgment for damages against Blumenthal in the amount of $87,950.
    Blumenthal filed a cross-motion to vacate "any default or default
    judgment previously entered," for his counsel to represent Libra
    and Technical in addition to himself, to file a responsive pleading
    for    "all"   defendants     and   for   reasonable   discovery.           In   his
    supporting certification, Blumenthal recounted his recent health
    history, including renal failure, prostate cancer, surgery and
    radiation; described his financial difficulties; explained he was
    provided in this appeal references the date of June 30, 2015,
    saying "at which time an apparent resolution of the matter was
    reached by settlement of the default matters."
    5                                 A-0368-15T2
    entitled to offsets exceeding $70,000 for repairs made to the
    leased commercial building; and advised that Technical was set up
    as a consulting company with no physical operations "per se."
    Plaintiff opposed the cross-motion, contending any repairs by
    Blumenthal were made without the permission of the landlord and
    clarifying the requested damages of $87,950 was for the period
    Blumenthal operated Libra at the premises without a corporate
    charter.
    On August 7, 2015, the previous default and default judgment
    were re-entered against Blumenthal.    The order entered a default
    judgment in favor of plaintiff and against Blumenthal for $87,950.
    In a separate order also dated August 7, 2015, the court denied
    Blumenthal's cross-motion.      Handwritten on the order was the
    notation that Blumenthal failed to post the required bond and was
    not entitled to relief under Rule 4:50-1 because he still had not
    complied with Rule 4:23-5(a)(1) and (2).3
    Blumenthal appeals the August 7, 2015 orders contending the
    "defaults and default judgments" should be vacated "to afford
    fairness and justice to the parties" where the neglect was not
    willful or calculated.    We are not persuaded by this argument.
    3
    Blumenthal indicates there is no transcript of this proceeding.
    6                         A-0368-15T2
    Although Blumenthal's notice of appeal states the appeal is
    by himself and the "corporate defendants," we clarify here that
    the default judgments against Libra and Technical are not part of
    this appeal.   The August 7, 2015 order entered a judgment against
    Blumenthal, not Libra or Technical, and only Blumenthal filed the
    cross-motion seeking relief.   Libra and Technical did not appeal
    the default judgment entered against them in October 2014.       They
    are out of time to appeal that order.   See R. 2:4-1(a).   The brief
    in this appeal does not mention why the default judgments entered
    against Libra and Technical should be vacated.      Because issues
    related to Libra and Technical were not raised in the merits brief,
    they are waived.   Gormley v. Wood-El, 
    218 N.J. 72
    , 95 n.8 (2014);
    Drinker Biddle v. N.J. Dep't of Law & Pub. Safety, Div. of Law,
    
    421 N.J. Super. 489
    , 496 n.5 (App. Div. 2011) (noting that claims
    not addressed in merits brief are deemed abandoned).   See Pressler
    & Verniero, Current N.J. Court Rules, cmt. 5 on R. 2:6-2 (2017).
    Thus, Libra and Technical are not parties to this appeal.
    Blumenthal appeals the August 7, 2015 orders.     Because his
    notice of appeal did not reference other orders entered in this
    case, no other orders are before us on appeal.    See W.H. Indus.,
    Inc. v. Fundicao Balancins, Ltda, 
    397 N.J. Super. 455
    , 458 (App.
    Div. 2008) ("It is clear that it is only the orders designated in
    the notice of appeal that are subject to the appeal process and
    7                           A-0368-15T2
    review.").   Thus, the June 30, 2015 order was not appealed, which
    allowed for the entry against Blumenthal of an $87,950 default
    judgment if he did not post a bond or answer discovery.
    It is Rule 4:50-1 that "governs an applicant's motion for
    relief from default when the case has proceeded to judgment." U.S.
    Bank Nat'l Ass'n v. Guillaume, 
    209 N.J. 449
    , 466 (2012).   Once the
    court has entered a default judgment, relief from the judgment
    must satisfy one of the following reasons:
    (a) mistake, inadvertence, surprise, or
    excusable neglect; (b) newly discovered
    evidence which would probably alter the
    judgment or order and which by due diligence
    could not have been discovered in time to move
    for a new trial under R. 4:49; (c) fraud
    (whether heretofore denominated intrinsic or
    extrinsic),   misrepresentation,    or   other
    misconduct of an adverse party; (d) the
    judgment or order is void; (e) the judgment
    or order has been satisfied, released or
    discharged, or a prior judgment or order upon
    which it is based has been reversed or
    otherwise vacated, or it is no longer
    equitable that the judgment or order should
    have prospective application; or (f) any other
    reason justifying relief from the operation
    of the judgment or order.
    [R. 4:50-1.]
    An application to vacate a default judgment pursuant to Rule
    4:50-1 is to be "viewed with great liberality, and every reasonable
    ground for indulgence is tolerated to the end that a just result
    8                          A-0368-15T2
    is reached."        Marder v. Realty Constr. Co., 
    84 N.J. Super. 313
    ,
    319 (App. Div.) (citation omitted), aff'd, 
    43 N.J. 508
     (1964).
    We review the decision whether to grant a motion to vacate a
    default judgment under an abuse of discretion standard.                     See
    Mancini v. EDS, 
    132 N.J. 330
    , 334 (1993); see also Guillaume,
    
    supra,
     
    209 N.J. at 467
     (requiring "a clear abuse of discretion"
    to vacate).     An abuse of discretion occurs when the trial court's
    decision, "without a rational explanation, inexplicably departed
    from established policies, or rested on an impermissible basis."
    Flagg v. Essex Cty. Prosecutor, 
    171 N.J. 561
    , 571 (2002) (quoting
    Achacoso-Sanchez v. Immigration and Naturalization Serv., 
    779 F.2d 1260
    , 1265 (7th Cir. 1985)).
    The court did not err in denying Blumenthal's request to
    vacate the default judgment against him.               He seeks relief only
    under      subsection     (f),   "the    elusive     'catch-all'   category."
    Pressler & Verniero, supra, cmt. 5.6.1 on R. 4:50-1.               "[I]n order
    to obtain relief under this subsection, the movant must ordinarily
    show that the circumstances are exceptional and that enforcement
    of   the    order    or   judgment      would   be   unjust,   oppressive     or
    inequitable."       Ibid. (citing Guillaume, 
    supra,
     
    209 N.J. at 484
    )
    (other citations omitted).           Those circumstances are not present
    here.
    9                             A-0368-15T2
    The June 30, 2015 order resulted from an agreement between
    the parties to resolve the issues prior to a proof hearing.        Under
    the order, Blumenthal agreed to condition the vacation of the
    default judgment against him on his posting an $87,950 bond.
    Blumenthal did not provide the agreed upon bond nor did he answer
    the discovery.      Plaintiff then moved to re-enter the default
    judgment for $87,950, which was the amount provided for in the
    order.
    We agree that in light of the June 30, 2015 order, the court
    did   not   abuse   its   discretion   when   it   denied   Blumenthal's
    application to vacate the default judgment.         Blumenthal did not
    provide discovery.    Counsel represented him when the June 30 order
    was entered. The order was based on a settlement. Because Libra's
    charter had expired, Blumenthal faced liability.            Leventhal v.
    Atl. Rainbow Painting Co., Ltd., 
    68 N.J. Super. 406
    , 413 (App.
    Div. 1961) ("[P]ersons who carry on the business of a corporation
    . . . after the charter has expired, or after dissolution, become
    personally liable as general partners."). See also Mortg. Graders,
    Inc. v. Ward & Olivio, LLP, 
    225 N.J. 423
    , 437 (2016) ("A dissolved
    corporation exists solely to prosecute and defend suits, and not
    for the purpose of continuing the business for which it was
    established." (quoting Lancellotti v. Maryland Cas. Co., 
    260 N.J. Super. 579
    , 583 (App. Div. 1992))); N.J.S.A. 14A:12-9(1) (stating
    10                             A-0368-15T2
    that a dissolved corporation "shall carry on no business except
    for the purpose of winding up its affairs").         The dollar amount
    set forth in the June 30 order apparently represented rental
    charges for the period after Libra's corporate charter expired and
    while   Blumenthal   operated   from   the   premises.   No   abuse    of
    discretion was demonstrated on this record.
    Affirmed.
    11                            A-0368-15T2