Midland Funding, L.L.C. v. Albern, A-0562-12T4; Appellate Division; opinion by Fisher, P.J.A.D.; decided and approved for publication December 23, 2013. Before Judges Fisher, Espinosa and Koblitz. On appeal from the Law Division, Monmouth County, L-2833-11. [Sat below: Judge Linda Grasso Jones.] DDS No. 07-2-2327 [9 pp.]

This appeal presents a procedural question: is a defendant, who, in responding to a complaint, moved for dismissal but did not file an answer after the motion was denied, entitled to notice of a plaintiff’s request for default?

On June 15, 2011, plaintiff Midland Funding, L.L.C., commenced this action against defendant Carl Albern Jr. on an alleged outstanding credit-card account. The summons contained the customary admonition that defendant was required to answer or otherwise move within the time allotted or default would be entered against him. Defendant timely responded by filing a pro se motion to dismiss, which was denied on Oct. 6, 2011. The judge’s order did not specify a time within which defendant was required to file an answer nor did it refer to defendant’s need to file an answer. Rule 4:6-1(b) allots 10 days to file an answer after denial of a motion to dismiss. Defendant did not file an answer within that time period.

On Dec. 1, 2011, plaintiff submitted to the clerk an ex parte application for entry of default, claiming “no defendant named herein has answered or otherwise moved.” This representation was incorrect because defendant had “otherwise moved,” albeit unsuccessfully. Plaintiff did correctly assert that defendant had not filed an answer and the time to do so had expired. Default was entered against defendant in early December 2011.

Plaintiff applied for the clerk’s entry of default judgment on March 15, 2012. Defendant submitted written opposition on March 19, 2012, claiming: he had not been served with an application to enter default; he had “filed an answer in the form of a motion to dismiss”; and plaintiff did not have standing to sue. The clerk entered a default judgment against defendant on March 21, 2012. The clerk apparently did not consider, and perhaps she did not receive, defendant’s written response because defendant’s opposition was not mentioned in the judgment and because the normal course, on receipt of opposition, would have required the clerk to refer the matter to the court for disposition.

On May 14, 2012, shortly after plaintiff sought discovery of defendant’s assets, defendant moved for relief pursuant to Rule 4:50-1. The trial judge denied this motion, concluding that defendant had not shown his failure to file an answer was excusable because he should have understood his earlier unsuccessful motion would not be viewed as an answer. The judge also determined that defendant failed to present a meritorious defense, finding the allegation of plaintiff’s lack of standing insufficient.

Defendant appeals.

Held: A defendant, who, in response to a complaint, moved for dismissal but did not file an answer after the motion was denied, is entitled to notice of a plaintiff’s request for default. Because Rule 4:43-1 does not expressly authorize an ex parte request for default in this unusual circumstance, and because the rules are based on a policy favoring the disposition of cases on their merits, the court reverses the denial of defendant’s Rule 4:50 motion to vacate both the default and the default judgment later entered.

Default was sought on the basis of Rule 4:43-1, which allows a plaintiff to make an ex parte request of the clerk for default if the defendant “has failed to plead or otherwise defend as provided by these rules or court order, or if the answer has been stricken with prejudice.” Defendant fit neither of these two descriptions. He had “otherwise defend[ed]” because he had moved for dismissal, and he was not “ a party…[whose] answer ha[d] been stricken with prejudice” because he had not filed an answer. Defendant’s peculiar status as a party who had once defended but did not answer is not expressly encompassed by Rule 4:43-1. Because that rule delineates all the circumstances on which an ex parte default may be requested, it stands to reason that plaintiff was required to request default by motion on notice to defendant.

The procedural rules were designed to be a means to the end of obtaining just and expeditious determinations between the parties on the ultimate merits, a policy that requires rejection of plaintiff’s invitation to interpret Rule 4:43-1 broadly. The absence of express authority in Rule 4:43-1, in light of the strong preference for adjudication on the merits rather than final disposition for procedural reasons, demands that the unauthorized ex parte default—and the subsequent judgment based on that default—be vacated and that defendant be given an opportunity to file an answer and defend against plaintiff’s claim.

The panel further observes that defendant took the position that his motion constituted an answer to the complaint. The trial judge held that defendant’s assumption was not reasonable or excusable. The panel finds the judge too strictly interpreted defendant’s actions and his reasonable expectations in the aftermath of the denial of the motion to dismiss.

The motion to dismiss asserted plaintiff lacked standing to sue, and the judge never ruled on the merits of the standing question. Further, the rejected text of defendant’s proposed order sought specified documents from plaintiff and in the judge’s written disposition of the motion to dismiss, she concluded: “Defendant may receive the documents upon which [p]laintiff relies in this matter in discovery, upon request by [d]efendant.” Although an attorney would understand, on denial of the dismissal motion, that defendant was still required to file an answer and any affirmative defenses, it was not unreasonable for this pro se defendant to assume nothing further was required of him in light of the judge’s ruling on standing. Also, it was not unreasonable for defendant to assume from the order that the parties would thereafter engage in discovery. This circumstance formed a sound basis for relief pursuant to the excusable-neglect provision in Rule 4:50-1(a).

The trial judge also denied defendant’s Rule 4:50-1 motion because she determined defendant had not presented a meritorious defense. In seeking relief from a void judgment, however, a movant is not required to demonstrate a meritorious defense. In any event, defendant’s claim of plaintiff’s lack of standing constituted a legitimate defense.

Finding plaintiff was not entitled to apply for default without notifying defendant, the appellate panel reverses the order denying defendant’s motion to vacate the default and the default judgment, and remands for entry of an order providing defendant with a fair and adequate time to file an answer to the complaint.

Appellant Carl Albern Jr. appeared pro se. For respondent—Pressler and Pressler (Lawrence J. McDermott Jr. on the brief).