Opinion
DOCKET NO. A-3804-13T2
03-02-2015
CHECK X. CHANGE, LLC, Plaintiff-Respondent, v. COLUMBIA EXPRESSO TRAVEL, INC., ROY'S CHECK CASHING, INC., and GEORGINA HOYOS, Defendants-Appellants.
Alan S. Pralgever argued the cause for appellants (Greenbaum Rowe Smith & Davis, LLP, attorneys; Mr. Pralgever and Gary L. Koenigsberg, on the brief). Henry F. Wolff, III, argued the cause for respondent.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION Before Judges Haas and Higbee. On appeal from the Superior Court of New Jersey, Law Division, Middlesex County, Docket No. L-10250-09. Alan S. Pralgever argued the cause for appellants (Greenbaum Rowe Smith & Davis, LLP, attorneys; Mr. Pralgever and Gary L. Koenigsberg, on the brief). Henry F. Wolff, III, argued the cause for respondent. PER CURIAM
Defendants appeal from the denial of their second motion to vacate default judgments entered against them. We affirm substantially for the reasons set forth in Judge Heidi Willis Currier's clear, concise, and well-reasoned oral opinion of March 14, 2014. However, in light of the complex history of this case, we add the following discussion.
Plaintiff, Check X. Change, is a licensed check cashing company in Perth Amboy, New Jersey. Plaintiff suspected illegal check cashing was taking place at Columbia Expresso Travel (Columbia), located a short distance from plaintiff's place of business. Accordingly, plaintiff hired a private detective who cashed checks at the unlicensed facility, and on December 15, 2009, plaintiff filed a complaint against both Columbia and Roy's Check Cashing (Roy's) for illegal check cashing, pursuant to N.J.S.A. 17:15A-30, which gives standing to file an action against an unlicensed check cashing operation within 2,500 feet of a licensed location.
Plaintiff alleged that Columbia used Roy's bank accounts to facilitate the illegal check cashing.
The complaint was personally served on both defendants, who failed to file answers. Defendants were also given notice of the entry of default, as well as notice of the scheduled proof hearing. Nevertheless, defendants again failed to make appearances or respond to the litigation. At that time, defendants claim they were represented by Thomas Frey, Esq., who was acting as both their lawyer and accountant. Frey filed an answer to the complaint for Georgina Hoyos (Hoyos), who was not named as a defendant at the time.
The proof hearing was held on January 6, 2011, and judgment was entered against Columbia and Roy's. Same was based on four social security disability checks illegally cashed by defendants at the unlicensed location; the transactions were charged double the permitted fee. Without discovery, plaintiff did not have records of other transactions; however, it was believed that numerous other transactions had occurred. Therefore, judgment was entered against Columbia and Roy's for $15,000 in fines and $10,000 in punitive damages, and the language of the judgment allowed for plaintiff to obtain discovery and return to reopen the judgment and present additional proofs. Copies of the judgment were served on Columbia and Roy's, who again took no action.
Meanwhile, plaintiff obtained information that Hoyos was directly involved in the illegal check cashing scheme, and amended the complaint to make her a named defendant. Plaintiff also subpoenaed Hoyos for a deposition. Plaintiff claims that Hoyos tried to avoid service of process. Of note, there were five unsuccessful attempts to serve Hoyos, before plaintiff was able to personally serve her with the complaint and deposition subpoena on February 25, 2011. Hoyos failed to answer the complaint and did not appear for the deposition. Plaintiff filed an application to hold Hoyos in contempt, which was unopposed. On May 13, 2013, Hoyos was held in contempt by Assignment Judge Travis Francis. Default was then entered against Hoyos.
Notice of default was served on Hoyos, Roy's, and Columbia. Notice of the second proof hearing was served on all defendants, who again did not appear or move to vacate the default, nor did they move to vacate the first judgment. At the second proof hearing, evidence was presented that Hoyos was responsible for the illegal check cashing. Judgment was entered against Hoyos for $15,000 in fines and $10,000 in punitive damages. This default judgment was served on Hoyos, Roy's, and Columbia, but yet again, no action was taken to vacate the judgments.
Plaintiff was initially unsuccessful in collecting the judgments. Finally, as a result of a subpoena, plaintiff was able to obtain Roy's detailed banking records. Armed with that documentary evidence, plaintiff applied for, and was granted a third proof hearing to amend the judgments. Notice of the hearing was served on all three defendants, who again did not move to vacate the prior judgments or appear at the hearing. The hearing was held on May 15, 2012, where plaintiff presented evidence that over twenty-eight million dollars in checks were deposited into Roy's Wachovia account from 2006 to 2011. The address of the account was the unlicensed address of defendant, Columbia Expresso Travel. The bank records also revealed that Hoyos received over two million dollars from the account. The evidence proved that as a result of the illegal, unlicensed check cashing, plaintiff lost $300,000 in profits. On May 15, 2012, the date of the hearing, judgment was entered against the defendants in the amount of $300,000 in compensatory damages and $200,000 in punitive damages. Again, plaintiff sent all defendants copies of the judgment. No application was made pursuant to Rule 4:50 to vacate the judgment within one year. See R. 4:50-2.
Subsequent to the default, plaintiff continued to try to collect the judgment. In October and November, 2012, the Sheriff was able to seize some cash at Roy's licensed check cashing location. In response, defendants then formed a new entity, with a new name, which operated at the same location with the same employees. Defendants were able to thwart efforts to collect additional money to satisfy the judgment. Thus, plaintiffs filed a complaint in 2013 against the new entity, LGH & ASSOCIATES LLC, defendant Georgina Hoyos, her husband, Luis Hoyos, and three individuals who had been employees of defendant Roy's Check Cashing, alleging fraudulent transfer of assets. Thereafter, plaintiff levied on Hoyos' interest in the real estate where Columbia Expresso Travel had been located.
With a levy filed against their real property, defendants for the first time filed a motion to vacate the default judgment under Rule 4:50. The application was filed on August 7, 2013, over a year after the final judgment was entered. Defendants claimed a meritorious defense and excusable neglect were present because they had trusted Thomas Frey, their lawyer, to represent them. Notably, defendants argued that Frey had been convicted of fraud and related charges in federal court, and had been disbarred. Thus, they attempted to shift the blame for their inaction on him.
Judge Currier denied the motion on October 16, 2013. At that time, the judge noted that this matter had started years before and that the first proof hearing was in 2011. She then recounted the repeated notices defendants had received and had "chosen to ignore." She pointed out that it was not until levy was made on their property that they chose to try and defend the action. The judge stated the "attorney in this case may not have done anything but the parties did less." Judge Currier found there was no excusable neglect, and that it appeared defendants had not just ignored the proceedings but attempted to hide assets. As to their claimed meritorious defense, the judge found they had not presented sufficient information to demonstrate such a defense existed. Defendants did not file a motion for reconsideration or appeal her order.
Instead, defendants filed a second motion to vacate the default judgments on February 6, 2014, with assistance from their third lawyer. The second motion to vacate made essentially the same arguments as the first. In an oral opinion placed on the record on March 14, 2014, Judge Currier again denied the motion setting forth her reasoning and repeating much of what she stated previously. Defendants subsequently filed this appeal.
The standard that guides our review of this matter is well settled. "The trial court's determination under [Rule 4:50] warrants substantial deference, and should not be reversed unless it results in a clear abuse of discretion." US Bank Nat. Ass'n v. Guillaume, 209 N.J. 449, 467 (2012). A court will find "an abuse of discretion when a decision is made without a rational explanation, inexplicably departed from established policies, or rested on an impermissible basis." Ibid. (citing Iliadis v. Wal-Mart Stores, Inc., 191 N.J. 88, 123 (2007) (internal quotations omitted)).
Applying this standard, we find the judge did not abuse her discretion. We agree with her stated reasons for denying both motions to vacate the judgments under Rule 4:50. We add that the judge properly found defendants' reliance on Professional Stone, Stucco & Siding Applicators, Inc. v. Carter, 409 N.J. Super. 64 (App. Div. 2009) was misplaced. There, the trial court denied a motion to vacate a judgment that was filed without adequate certifications. When a second motion was filed, the court denied the motion based solely on the fact that the first order was not appealed. We reversed, holding that equitable principles would still allow a trial court the discretion to grant a second motion to vacate a default judgment to prevent injustice.
In Carter, the defendants acted reasonably at all times, which is distinguishable from the present case. See Id. at 67-68. Here, the judge found the motion lacked merit and the defendants were not innocent. Repeated notices were sent directly to defendants, which they ignored. Defendants had to have been aware of the judgments. Defendants were sophisticated businesses and could not demonstrate that they were victims of counsel. In fact, they took steps to avoid collection of the money they owed. They were not entitled to wait until their real property was levied upon to seek relief. Defendants' efforts to shift the blame to Frey, and then, to their second attorney was not supported by the facts.
Defendants make one last effort to shift the blame, with an attack on plaintiff for filing the complaint for fraudulent transfer without putting information in the certification about this action. The complaint, itself, refers to the judgment obtained in this action, so there was no attempt to deceive. The appeal of the denial of the motion to consolidate the two cases is affirmed, and does not warrant further discussion in this opinion. R. 2:11-3(e)(1)(E).
We affirm. I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION