Truestone Iowa Partners, LLC v. Shmuel Haikins

Opinion

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the internet, this opinion is binding only on the parties in the case and its use in other cases is limited . R. 1:36-3.

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION DOCKET NO. A-3353-24

TRUESTONE IOWA PARTNERS, LLC,

Plaintiff–Respondent,

v.

SHMUEL HAIKINS and BLIMI FRANKEL HAIKINS,

Defendants-Appellants,

and

BLUE CARE HOMES, LLC, BLUE HOME CARE INVESTMENTS, LLC, CORNELL MANOR, LLC, BCH OPERATIONS, LLC, RIDGEVIEW EQUITIES, INC., SHMUEL FRENKEL, YECHIEL FRENKEL, ARYEH GRUNWALD, MOSHE NEIMAN, ISAAC LABKOWSKY, ARINA LABKOWSKY and YOSSI RUBIN,

Defendants-Respondents.

Submitted June 15, 2026 – Decided July 8, 2026 Before Judges Sabatino and Rose.

On appeal from the Superior Court of New Jersey, Law Division, Ocean County, Docket No. L-0779-23.

Law Offices of Jan Meyer & Associates, PC, attorneys for appellants (Jan Meyer and Jonathan L. Leitman, on the briefs).

Sherman, Silverstein, Kohl, Rose & Podolsky, attorneys for respondent Truestone Iowa Partners, LLC (Jeffery P. Resnick and Laura C. Laszewski, on the brief).

PER CURIAM

In this complicated business dispute, defendants Shmuel Haikins

("Haikins") and his wife, Chana Blima Frenkel ("Frenkel"), appeal the trial

court's respective orders denying their motions: (1) to vacate, under Rule 4:50-

1, a $4,299,155.09 default judgment obtained against them by plaintiff

TrueStone Iowa Partners, LLC ("TrueStone"), an investor in the husband's

former nursing home business; (2) to dismiss Frenkel as codefendant; and (3)

for reconsideration.

For the reasons that follow, we vacate the order denying defendants relief

under Rule 4:50-1 and remand the case for an evidentiary hearing to resolve

disputed facts bearing upon their claims for relief. In addition, the trial court on

remand must address defendants' invocation of subsections (c) and (f) of that

A-3353-24 2 Rule, which it had not addressed in its prior rulings. However, we affirm the

court's denial of Frenkel's dismissal motion, but without prejudice to future

developments in the case.

We need not detail here the intricate facts and circumstances underpinning

this business dispute. It suffices to say for our purposes TrueStone alleges it

invested funds into nursing home ventures operated or owned by Haikins, and

after those ventures sustained financial difficulties, TrueStone was owed money.

TrueStone filed this civil action in the Law Division in April 2023 against

Haikins, Frenkel, and several other individual defendants. 1 The complaint

asserted multiple legal theories of recovery. Service of process was made on

defendants Haikins and Frenkel 2 that same day.

1 TrueStone eventually dismissed its claims against the other individual defendants, all "without prejudice," except for Yossi Rubin, who was dismissed with prejudice. We recognize that we could dismiss the appeal on jurisdictional grounds as interlocutory, as there is no final disposition as to all parties and all issues. See R. 2:2-3; Grow Co. v. Choksi, 403 N.J. Super. 443, 460 (App. Div. 2008). Nevertheless, since the other defendants have not participated in the litigation and this appeal, and the matter must be remanded anyway, we grant leave to appeal, sua sponte, in the interests of expediency. 2 For ease of discussion, we henceforth refer to Haikins and Frenkel as "defendants," unless the context otherwise indicates.

A-3353-24 3 On May 5, 2023, Haikins, who was then not yet represented by counsel,

contacted plaintiff's attorney and requested an extension of time for him and

Frenkel to respond to the complaint. Two days later, plaintiff's counsel informed

Haikins that his client would not agree to any extension for defendants to file a

responsive pleading.

Defendants did not file an answer to the complaint, and defaults were

entered by the court against them on May 10, 2023.

As detailed in a certification he filed in connection with the motion

practice, Haikins claims that he and his accountant, Shulem Rosenbaum,

cooperated, at least to some extent, during the summer of 2023 in a review of

defendants' financial materials conducted with plaintiff's forensic accountant,

Elliot Saad. Additionally, Haikins asserts, in June 2023, plaintiff's counsel

communicated to Haikins through defendants' accountant Saad that plaintiff

"was not looking to aggressively pursue . . . claim[s] against [him]," and that,

instead of retaining counsel, the best course of action in plaintiff's counsel's view

was for Haikins to be transparent and send "further financial information to

[p]laintiff."

After receiving no response from defendants to the complaint, plaintiff

filed a request on September 17, 2024, for entry of default judgment against both

A-3353-24 4 defendants in the liquidated amount of $4,298,283.57. However, the court

apparently denied plaintiff's request, as more than six months had elapsed since

the original entry of default. See R. 1:13-7. Plaintiff then moved to reopen the

case against defendants on October 9, 2024. The court reinstated the complaint

two weeks later, on October 23, 2024.

According to Haikins's certification, soon thereafter in late October 2024,

plaintiff's counsel allegedly once again communicated to Haikins, through

defendants' accountant, that it would be a "bad idea" for defendants to obtain

legal counsel in the ongoing dispute, "as it would upset his clients, [who] would

then be more aggressive in enforcing the default and collecting on a potential

judgment."

Plaintiff's counsel filed an opposing certification dated May 1, 2025. In

that certification, the attorney denied Haikins's claims of false assurances and

misrepresentations about the lack of need to respond to the lawsuit.

17. Haikins['s c]ertification either infers or explicitly states that throughout this process I encouraged him not to get counsel, and indicated that I would not be pursuing a court case against him. None of these things are true.

18. At no time did I tell Haikins, directly or through [defendants' accountant], not to get counsel. I also did not tell defendants, directly or through [their

A-3353-24 5 accountant], that plaintiff was not interested in pursuing the case against defendants.

Plaintiff filed an additional request to enter default judgment against

defendants on November 13, 2024. On that same day, the court entered a final

default judgment against defendants in the amount of $4,299,155.09. On

December 3, 2024, plaintiff served defendants with notice of the judgment and

an information subpoena.

When its information subpoena received no response from defendants,

plaintiff next moved to enforce litigant's rights approximately three months later

on March 19, 2025. The following month, defendants moved on April 23, 2025,

to vacate the default judgment against them. The motion was filed with the

representation of counsel, and since that time defendants have been represented

in the trial court and on this appeal. Defendants' motion was grounded under

three alternative provisions of Rule 4:50-1: subsection (a) ("excusable

neglect"), subsection (c) ("misrepresentation"), and subsection (f) (the "catch-

all" provision). Plaintiff opposed the motion, relying on the aforementioned

certification of its attorney.

Oral argument on defendants' motion to vacate the default judgment was

conducted on May 9, 2025. No testimony was presented or invited by the court.

In an oral decision from the bench, the court denied defendants' motion under

A-3353-24 6 subsection (a), finding there was no showing of "excusable neglect" or any

"meritorious defense" raised by either defendant. In its brief oral ruling, the

court mentioned the fact that plaintiff might be prejudiced in having voluntarily

dismissed other defendants. A corresponding order was issued that same day.

On May 29, 2025, defendants each moved to reconsider the denial of the

motion to vacate. In addition, Frenkel moved to dismiss the complaint against

her, contending that she was not involved in her spouse's business dealings with

TrueStone. Plaintiff opposed the motions.

After hearing oral argument on June 19, 2025, the court denied defendants'

application. The court reiterated its perception that Haikins, as an experienced

businessperson, should have recognized his need to file a response to the

complaint despite the alleged assurances made by plaintiff's representatives.

The court also declined to dismiss Frenkel as a codefendant on the judgment.

Corresponding orders were issued later that same day without any further

elaboration of the court's reasoning.

On their present appeal, defendants argue the trial court misapplied Rule

4:50-1 in denying them relief. They contend that they did present competent

evidence of excusable neglect under subsection (a) through Haikins's

certification. They also point out that the court never addressed their alternative

A-3353-24 7 claims for relief under subsections (c) and (f) of the Rule. Defendants further

assert that, at the very least, the court should conduct an evidentiary hearing

with testimony to resolve the disputed facts presented in the conflicting

certifications. Lastly, defendants once again urge that Frenkel be dismissed

from the case entirely.

The various subsections of Rule 4:50-1 as mechanisms to obtain relief

from a judgment are well known, and we need not recite them here. We note

only that, regarding timeliness, Rule 4:50-2 provides, for a motion brought under

subsections (a), (b) or (c) of Rule 4:50-1, the defendant must file the motion

within one year of the entry of the challenged order. Here, defendants filed their

motions invoking in part subsections (a) and (c) well within that one-year outer

limit. Moreover, it is evident from the record under the subsection (f) catch-all,

defendants' motion was filed within the requisite "reasonable time."

We ordinarily apply deference to trial courts in their rulings to grant or

deny relief under Rule 4:50-1. Romero v. Gold Star Distrib., L.L.C., 468 N.J.

Super. 274, 293 (App. Div. 2021); see also Coryell, L.L.C. v. Curry, 391 N.J.

Super. 72, 79 (App. Div. 2006). Where, as here, the motion is one to vacate a

judgment obtained by default, our courts generally view such applications "'with

great liberality.'" Mancini v. EDS ex rel. N.J. Auto. Full Ins. Underwriting

A-3353-24 8 Ass'n, 132 N.J. 330, 334 (1993) (quoting Marder v. Realty Constr. Co., 84 N.J.

Super. 313, 319 (App. Div. 1964)). We also must bear in mind principles of

equity, see MTAG v. Tao Invs., L.L.C., 476 N.J. Super. 324, 333 (App. Div.

2023), as well as the general principle that cases, where possible, are best

resolved on their merits rather than based on procedural defects, Alpha Beauty

Distribs., Inc. v. Winn-Dixie Stores, Inc., 425 N.J. Super. 94, 102 (App. Div.

2012); see also Ragusa v. Lau, 119 N.J. 276, 284 (1990).

Applying these principles, we are persuaded that the trial court's order

denying relief under Rule 4:50-1 should be vacated without prejudice, and the

matter should be remanded. That prudent course of action is warranted for

several important reasons.

First, the court should not have resolved the factual issues concerning

excusable neglect based on the conflicting certifications. See Pami Realty,

L.L.C. v. Locations XIX Inc., 468 N.J. Super. 546, 559 (App. Div. 2021);

Conforti v. Guliadis, 245 N.J. Super. 561, 565 (App. Div. 1991). We remand

for an evidentiary hearing to explore and resolve those disputed facts, with

testimony to be elicited from the parties and perhaps also their counsel (subject

to RPC 3.7), their respective accountants, and any other pertinent fact witnesses.

A-3353-24 9 Second, the trial court is required to make explicit findings under Rule

4:50-1 subsections (c) and (f), which can furnish an independent basis for relief

even if the court ultimately denies defendants relief under subsection (a).

Third, the court should not place undue reliance on the fact that plaintiff

chose to dismiss the various codefendants, and should ascertain the feasibility

of whether the without-prejudice dismissals can be reinstated on motion by

plaintiff.

Fourth, in reassessing this matter on remand, the court should bear in mind

the interests of justice, the policies favoring merit-based adjudication, the

considerable size of the nearly $4.3 million judgment, and defendants' vigilant

efforts to move for relief within one year of the entry of that judgment against

them. That said, we intimate no views on the proper outcome of the case on

remand.

Lastly, we affirm, but without prejudice to the future course of the case,

the existing decision not to dismiss Frenkel from the case and remove her name

from the judgment. It is premature to ascertain with finality if she had no

involvement in the dispute or whether there has been a commingling of assets

or any concerning transfer of them.

A-3353-24 10 Affirmed in part, vacated in part, and remanded. We do not retain

jurisdiction.

A-3353-24 11