If a defendant does not respond to a complaint initiating a lawsuit, and the plaintiff files a motion for default judgment on that basis, what is the standard for the Court to determine whether entry of the default judgment should be denied? In Jacobs v Fannie Mae, Superior Court of New Jersey, Appellate Division (Docket No. A-5197-11T4), the Court set forth that standard.
In that case, the plaintiff filed a quiet title action to obtain a finding that the mortgagee had no right to force him to make mortgage payments on his home because the assignment to the mortgagee was not recorded in the chain of title. On that basis, he took the position that the mortgagee had no right to enforce the terms of the mortgage.
In response, the mortgagee provided the appropriate documentation, including the mortgage, promissory note and assignment. In response, the plaintiff asked for more documentation. When he did not receive it within his self-imposed deadline, he filed suit against the mortgagee to quiet title.
Unfortunately, the mortgagee was late in answering the complaint. On that basis, the plaintiff thereafter, entered default and subsequently, filed a motion to enter default judgment. The court agreed that the defendant was late in answering; however, the court took the opportunity to determine whether the case should have been brought at all. It decided that there was no viable cause of action, and therefore, default should not be entered. Instead it dismissed the case sua sponte (on its own initiative).
Plaintiff appealed. The Appellate Division upheld the lower court’s determination. It held that the lower court had been right in determining that a lawsuit to quiet title was not meant for this purpose. Instead it was solely meant to address situations in which there was a cloud on title of the property. Therefore, the dismissal had been appropriate.