When Is Time Really Of The Essence For Purposes Of Attacking A Final Judgment Or Order?

by:  Steven P. Gouin

In a recent decision, Orner v. Liu, the Appellate Division supplied some clarity on the issue of how long a party has to move for relief from a final judgment or order.  Unlike motions for relief from default judgments, which are routinely granted, motions under R. 4:50 are governed by a higher standard of proof, are appropriate in only six specific situations, and must be made “within a reasonable time” after entry of the final judgment or order.  What has caused some confusion is the requirement, found in Rule 4:50-2, that motions based on three of the six situations — mistake, newly discovered evidence, and fraud — must be brought “within a reasonable time . . . not more than one year after the judgment, order, or proceeding was entered or taken.”  Does this mean that one year is presumptively reasonable in these situations?  According to the Appellate Division in Orner, the answer to this question is no. While motions like these are always fact sensitive, Orner will be instructive going forward because there are only a handful of reported decisions construing the limits of reasonableness under Rule 4:50.

    In Orner, Plaintiff and Defendant failed to complete a time of the essence real estate transaction and, after the deal fell through, Plaintiff sued Defendant for defaulting on the time of the essence clause.  The parties ultimately entered into a settlement agreement on the record, which was supported by an order, whereby Plaintiff would keep the deposits paid by Defendant pursuant to the failed deal and the parties would execute new contracts for the same property by a specified deadline date.  Plaintiff would hold the deposits and Defendant would receive a credit at closing for the deposited amount.  However, the parties could not agree on the form of the new contracts by the deadline.  Plaintiff elected to walk away and keep Defendant’s deposits.  One day before the one year anniversary of the order memorializing the settlement agreement, Defendant filed a R. 4:50 motion for relief.   

The Appellate Division noted that “there are few reported decisions interpreting the relationship between the reasonableness requirement and the one-year provision of R. 4:50-2.”  Nonetheless, the Court relied on decisions interpreting Federal Rule of Civil Procedure 60(b), which is very similar to R. 4:50, to conclude that Plaintiff’s decision to wait nearly one year was unreasonable.  In upholding the Superior Court judge’s ruling, the Appellate Division stated that R. 4:50-2 “does not mean that it is [always] reasonable to file [a R. 4:50] motion within one year; [rather,] the one-year period represents only the outermost time limit for the filing of a motion based on [R. 4:50-1(a), (b), or (c)].”  Here, the Court held that waiting long past the settlement agreement’s self-imposed deadlines to file the R. 4:50 motion constituted “unreasonable” delay. 

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