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Morgan Home Management, LLC v. Shtatman

Court of Common Pleas of Delaware

July 26, 2019

MORGAN HOME MANAGEMENT, LLC, Defendant-Below/Appellant,
v.
ANDREA T. SHTATMAN and NICHOLAS REPINE, Plaintiffs-Below/Appellees.

          Submitted: July 12, 2019

          Richard L. Abbott, Esquire Attorney for Appellant

          Donald L. Gouge, Jr., Esquire Attorney for Appellees

          MEMORANDUM OPINION AND ORDER ON DEFENDANT-BELOW/APPELLANT'S MOTION TO VACATE DEFAULT JUDGMENT

          Hon. Robert H. Surles, Judge

         Defendant-Below/Appellant, Morgan Home Management, LLC (hereinafter "Appellant"), appeals a Justice of the Peace Court 13 ("J.P. Court") order dated March 22, 2019, denying Appellant's application to vacate a default judgment previously entered against it. In the court-below, Andrea T. Shtatman and Nicholas Repine (hereinafter "Appellees"), filed a claim against Appellant for issues arising out of a real estate transaction. On October 17, 2018, J.P. Court entered default judgment in favor of Appellees. On January 22, 2019, Appellant moved J.P. Court to vacate default judgment. On February 18, 2019, a hearing was conducted on the motion to vacate and the motion was denied. On April 5, 2019, Appellant filed the instant appeal and Motion to Vacate Default Judgment.

         On July 12, 2019, the Court heard argument from both parties on the instant Motion.

         PARTIES' CONTENTIONS

         Appellant contends that the Motion on appeal from the J.P. Court should be heard de novo pursuant to 10 Del. C. §§ 9571, 9572 and Court of Common Pleas Civil Rule 72.3. In support, Appellant argues that it had not been served with the complaint in the court-below and thus is entitled to have judgment vacated. Further, Appellant asserts that a showing of excusable neglect is not necessary to succeed on a Rule 60(b) Motion if service of the complaint was not perfected. Appellant contends that it has a meritorious defense and substantial prejudice to the Appellees would not result if the Motion was granted.

         Appellees assert that the Motion on appeal should be heard using an abuse of discretion standard pursuant to Court of Common Pleas Civil Rule 72.2(b)(3). Appellees argue that when the issue on appeal was decided using judicial discretion in the court-below, the standard of review on appeal is abuse of discretion. Appellees also contend that Appellant was properly served with notice of the complaint in the court-below.

         DISCUSSION

         Standard of Review

         "A denial of an application to vacate a default. . . judgment possesses all the attributes of finality, and thus, is subject to appeal."[1] Review of a denial of a motion to vacate default shall only be subject to a review of the order denying relief and not the default judgment itself.[2] In reviewing the denial of the motion to vacate default judgment, this Court shall use an abuse of discretion standard. "An abuse of discretion will only be found 'when the trial judge exceed[s] the bounds of reason in view of the circumstances and has so ignored recognized rules of law or practice so as to produce injustice.'"[3] This Court need not determine whether it would have reached a different outcome; rather, the Court must determine whether the court-below's denial was "the product of logic based upon the facts and reasonable deductions to be drawn therefrom."[4] This evaluation must bear in mind Delaware's public policy favoring a resolution on the merits.[5]

         Appellant's contention, that the standard of review should be de novo, is refuted by case law.[6] An opinion was rendered in this Court, in June 2019, which directly addressed whether the Court of Common Pleas should apply an abuse of discretion standard or de novo standard in reviewing a motion to vacate.[7] The Court found that an abuse of discretion standard was appropriate in this instance. Statutory law also supports this notion. While 10 Del. C. § 9571 states that an appeal "from any final order, ruling, decision, or judgment of the Court in a civil action there shall be a right of appeal to the Court of Common Pleas . . . [and] [t]he appeal shall be a trial de novo," Court of Common Pleas Civil Rule 72.2(c)(3) provides clarity. Rule 72.2(c)(3) states that where "[t]he issue on appeal is one of judicial or administrative discretion," a party can move to affirm the decision by showing that there was no abuse of discretion. While the instant motion is not an expedited motion to affirm, the same standard should apply here where the same issue is being evaluated. Public policy supports this determination not to permit an appellant to "attack the underlying judgment for an error which he could have complained of on appeal from it, "[8] under Rule 60(b). "There are two significant values implicated by Rule 60(b). The first is ensuring the integrity of the judicial process and the second, countervailing, consideration is the finality of judgments."[9]

         Rule ...


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