LVNV Funding, LLC v. DeAngelo, 464 N.J. Super. 103 (App. Div. 2020). What does a court do when each party is, for different reasons, in the wrong? That is the question that Judge Fisher had to answer in his opinion for the Appellate Division today. He largely answered that question by deferring to the fact-findings of the Law Division below.
The appeal was from a Law Division decision to vacate a default judgment against defendant in a debt collection case, and to dismiss the complaint. After discovery and a plenary hearing, these were the facts that the Law Division found.
In 2001, defendant got a loan to buy a Mercedes Benz vehicle. Defendant defaulted on his payment obligations no later than March 2004. The original lender transferred the loan and, in 2007, the loan was re-transferred to plaintiff. Plaintiff filed a collection case in 2009 and got a default judgment in 2010. After other collection efforts did not succeed, plaintiff was able to garnish defendant’s wages in 2017. Having failed to bestir himself before then, defendant moved in 2018 for relief from the default judgment.
Plaintiff violated the Fair Debt Collection Practices Act, 15 U.S.C. 1692 et seq., because it failed to bring suit within four years after a cause of action for non-payment by defendant had accrued. But defendant failed to act for many years, which the Law Division held was “inexcusable neglect” that could not satisfy the “excusable neglect” standard of Rule 4:50 for relief from the judgment. If both sides were wrong, who was right (or less wrong)?
“In weighing these conflicting circumstances, the [Law Division] judge concluded that plaintiff’s breach of the Fair Debt Collection Practices Act outweighed defendant’s inexcusable neglect; relying on Rule 4:50-1(f) [a “catch-all” provision for relief from judgment in “exceptional circumstances”], the judge granted the motion [for relief from the judgment] and dismissed the time-barred complaint.” Judge Fisher found no abuse of discretion in that action, and the panel affirmed that result.
Judge Fisher emphasized that “a court’s power to vacate a judgment is based on equitable principles. Hodgson v. Applegate, 31 N.J. 29, 37 (1959). Courts must often choose the weightier of two competing equitable rights; at times they may even have to choose the least blameworthy of two competing wrongs. This case seems to fall in the latter category.”
The Law Division, Judge Fisher said, “ultimately viewed the decision as turning not on which of the parties acted worse but on the weight of the competing public policies.” Plaintiff filed a time-barred collection claim in violation of a federal statutory policy against “abusive debt collection practices.” Defendant’s delay in moving for relief from the default judgment undermined, according to plaintiff, “the strong interest in finality of judgments and judicial efficiency.” The Law Division determined that the former policy outweighed the latter. The Appellate Division declined to override that choice.