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Tuesday, July 26, 2011

RANGAR ASSOCIATES V. VINCI A-5607-09T4 June 16, 2011



DOCKET NO. A-5607-09T4











Argued May 3, 2011 – Decided June 16, 2011

Before Judges Wefing, Baxter and Koblitz.

On appeal from Superior Court of New Jersey,

Law Division, Sussex County, Docket No. L-617-06.

Walter G. Luger argued the cause for appellant

(Walter G. Luger & Associates, attorneys; Mr. Luger,

of counsel and on the brief; Vincenzo M. Mogavero,

on the brief).

Philip A. Parziale argued the cause for



Defendant Robert J. Pellechio, Jr., appeals from a trial court order denying his motion to vacate a default judgment entered against him. After reviewing the record in light of the contentions advanced on appeal, we modify the trial court’s order and, as modified, we affirm it.

Pellechio, together with defendants John J. Montefusco, Jr. and Matthew S. Vinci, was a principal in a limited liability company, MPA Insurance Agency, L.L.C. (“MPA”), which was engaged in selling personal and commercial lines of insurance. Plaintiff Rangar Associates, L.L.C. (“Rangar”) is a limited liability company whose principals are Mark Ranucci and Robert C. Garofalo, Esq. In December 2004, Rangar and MPA formed a new limited liability company, MPA Insurance Agency/South, L.L.C. (“MPA/South”); and in March 2004, Rangar invested $100,000 in MPA/South. According to Rangar's complaint, MPA, in return, was to provide MPA/South with access to insurance carriers, computer software and technology.

In July 2005, the principals of MPA dissolved that entity, and defendant Pellechio thereafter formed his own business, Pellechio Insurance Agency. The record indicates that following that dissolution, defendant Montefusco continued for a period of time to provide insurance services to MPA/South. Eventually a dispute arose between plaintiff and Montefusco with respect to commissions to which plaintiff claimed entitlement, but Montefusco did not pay. In August 2006, Rangar filed suit, seeking damages for what it alleged was MPA’s breach of the operating agreement for MPA/South and commissions plaintiff alleged were due to it. Plaintiff named as defendants MPA and its principals, Montefusco, Vinci and Pellechio.1

Pellechio was served both at his residence and his place of business; on each occasion service was achieved through service on his wife. Pellechio did not file an answer, and default was entered against him on November 28, 2006. On July 31, 2007, the clerk entered a default judgment against Pellechio for $100,000, the damages claimed in plaintiff’s complaint.

Defendant did not formally seek relief from that judgment until May 2010, when, nearly three years after its entry, he filed a motion under Rule 4:50-1(a) to vacate that default judgment. In the interim, plaintiff was contacted on three occasions by different attorneys on behalf of Pellechio with respect to setting aside that default judgment. Defendant supported his motion with certifications denying that proper service had been made. The certifications noted that the return of service indicated service had been achieved at One Wilson Avenue in Randolph while Pellechio lived at One Wilson Avenue in Chester. The certifications also noted a dispute as to the physical description of Mrs. Pellechio, the person upon whom service had been achieved.

In opposing defendant’s motion to vacate the default judgment, plaintiff pointed out that One Wilson Avenue in Randolph is the same location as One Wilson Avenue in Chester; Randolph is merely the address that is used for purposes of mailing. Plaintiff also enclosed a copy of a letter its attorney had received in March 2007, before the default judgment was entered, enclosing a consent order vacating the default. The letter raised no issue with respect to service. Plaintiff also enclosed a copy of a second letter, dated June 4, 2008, from the attorney who filed the motion seeking relief from the default judgment. In that letter, the attorney acknowledged the outstanding judgment, but set forth his position that there was no basis for a judgment against Pellechio, individually. He requested that the judgment be removed. This letter, sent nearly two years before the motion was filed, again raised no question with respect to service.

After hearing oral argument, the trial court denied defendant’s motion, finding that the nearly three-year delay in seeking relief precluded the court from concluding that there was excusable neglect for defendant’s failure to act. This appeal followed.

Defendant presents a variety of arguments on appeal, only one of which, in our judgment, has any legal merit. With respect to the bulk of his contentions, we agree entirely with the trial court that defendant failed to establish that he had acted with reasonable diligence and that any delay on his part was due to excusable neglect.

Defendant brought his motion under subsection (a) of Rule 4:50-1, which permits a trial court to set aside a judgment entered as a result of mistake, inadvertence, surprise, or excusable neglect. Rule 4:50-2 specifies, however, that applications under subsection (a) must be brought within one year of entry of the judgment. Here, the more than three-year delay removed plaintiff from the scope of this subsection of the rule.

In its brief oral opinion, the trial court also noted that to the extent defendant sought relief under any other portion of the rule, he was required to act within a reasonable time of the judgment having been entered. R. 4:50-1(f); R. 4:50-2. Before the trial court and before us, defendant attempted to attribute a large portion of this delay to inaction on the part of the first attorney defendant had retained to set aside the judgment and difficulties the second attorney allegedly experienced in locating plaintiff’s attorney after that attorney relocated his office. Even if we were to assume that those two factors played some role in the delay, defendant was obligated to take reasonable steps to see that his interests were being protected. We agree with the trial court that the record precludes a conclusion that defendant acted with anything approaching reasonable diligence and that the three-year period between entry of the judgment and filing the motion could not be considered a reasonable time in the context of this matter.

We do agree, however, that judgment for $100,000 was improperly entered by the clerk. Under Rule 4:43-2(c), the clerk may, in the event of a default, enter judgment for a sum certain. Plaintiff’s claim for damages, however, cannot be fairly categorized as a book account.

Plaintiff was required to prove its damages at a proof hearing after which the trial court would conclude whether, and to what extent, plaintiff had established that it was entitled to monetary relief, as well as the party against whom relief should be granted. We thus remand this matter to the trial court for further proceedings, which shall include such a proof hearing. The manner and extent to which defendant shall be permitted to participate in that proof hearing is a matter that rests within the discretion of the court presiding over that proof hearing.

We thus affirm the order of the trial court denying defendant’s motion to set aside his default, vacate the judgment that had been entered, and remand the matter to the trial court for further proceedings.

1 The record indicates that Montefusco has filed bankruptcy; it is silent with respect to Vinci.

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