Court Opinion

ID: 4431108
Source: CourtListenerOpinion
Date Created: 2019-08-20 19:52:17.944045+00
Date Added: 2024-06-11T14:51:04.599152
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE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 NOS. A-2996-16T1
                                                   A-2997-16T1
72 OAK STREET HOLDINGS, LLC,

        Plaintiff-Appellant,

v.

FRANK LEYRER and ANNA O. LEYRER,
his wife, their or either of
their heirs, devisees and
personal representatives, and
their or any of their successors
in right, title and interest,
and the STATE OF NEW JERSEY,

        Defendants,

and

NANCY LEYRER,

        Defendant-Respondent,

and

THOMAS STANOWSKI,

     Defendant/Intervenor-
     Respondent.
____________________________________

              Argued May 24, 2018 – Decided June 22, 2018

              Before Judges Reisner, Gilson, and Mitterhoff.
          On appeal from Superior Court of New Jersey,
          Chancery Division, Bergen County, Docket Nos.
          F-015048-13 and F-015049-13.

          Keith A. Bonchi argued the cause for appellant
          (Goldenberg, Mackler, Sayegh, Mintz, Pfeffer,
          Bonchi & Gill, attorneys; Keith A. Bonchi, of
          counsel and on the briefs; Elliott J. Almanza,
          on the briefs).

          John R. Edwards, Jr., argued the cause for
          respondent (Price, Meese, Shulman & D'Arminio,
          PC, attorneys; John R. Edwards, Jr., on the
          brief).

     Plaintiff 72 Oak Street Holdings, LLC appeals from an October

6, 2016 order, granting defendant Nancy Leyrer's1 motion to vacate

a final judgment of foreclosure on her home; a November 4, 2016

order, denying plaintiff's motion for reconsideration;     a February

16, 2017 order, requiring Nancy to reimburse plaintiff for counsel

fees, insurance premiums, and the title insurance fee, as a

condition of redemption; and a February 16, 2017 order permitting

Nancy's fiancé, Thomas Stanowski, to intervene in the matter on

her behalf to redeem the property.2   Finding no abuse of discretion

in any of the orders, we affirm.

1
   Because the Leyrer defendants all have the same last name, we
will refer to them by their first names, for clarity and intending
no disrespect.
2
    Nancy filed a motion to supplement the record with a
certification attesting that Stanowski used her funds to redeem
the property. In response, plaintiff clarified that it was not
challenging the merits of the February 16, 2017 redemption order,

                                 2                            A-2996-16T1
     Plaintiff did not obtain a stay of the orders, and it is

undisputed that the property has since been redeemed.               Thus,

plaintiff has been repaid for its investment in the tax sale

certificates, with eighteen percent interest, plus reimbursement

of insurance premiums, title insurance fees, and over $5000 in

counsel fees.      Nonetheless, plaintiff has pursued this appeal,

seeking to divest Nancy of her home, or in the alternative, seeking

an additional counsel fee award.

     Nancy's parents, Anna and Frank Leyrer, had owned their family

home on Chestnut Street in Washington Township for about seventy

years.      They also owned an adjoining wooded lot.         Plaintiff

purchased    tax   sale   certificates   on   the   properties,     filed

foreclosure complaints on May 3, 2013, filed amended complaints

on November 13, 2014, and obtained default judgments on August 6,

2015.    When the foreclosure complaints were filed in 2013, Anna

and Frank were deceased.     Nancy was living in the Chestnut Street

house and received her mail there.        Nonetheless, the original

foreclosure complaints did not name Nancy as a defendant, instead

referring in generic fashion to the unknown "heirs, devisees and

personal representatives" of Frank and Anna.

but rather was appealing only to obtain relief from the order in
the event we reverse the order vacating the default judgment.
Nonetheless, we have granted Nancy's motion to ensure a complete
record.

                                   3                              A-2996-16T1
     Plaintiff claimed that attempts at personal service on Nancy

failed because she evaded service and refused to answer the door

when the process server knocked.              Plaintiff therefore contended

that mailed service of the complaints, naming unknown parties, was

sufficient.     Nancy denied evading service and attested that the

process server's affidavit was false.3

     The     trial   court    vacated        the   final   judgments    because

plaintiff's initial foreclosure complaints failed to include Nancy

as a named defendant, and plaintiff failed to attempt personal

service on Nancy after amending the complaints to include her as

a named defendant.     In so ruling, the court considered plaintiff

counsel's    admission,      at   oral   argument,     that   when     plaintiff

initially attempted personal service on Nancy, it was in her

capacity "as a representative of the estate."              The judge concluded

that, when the complaint was amended to include Nancy, by name,

in her personal capacity, rather than as an unnamed fiduciary,

plaintiff was obligated to serve her personally with the amended

complaint.    The judge also found insufficient evidence that Nancy

3
   Nancy's brief asserts that the affidavits of service, used to
support the entry of default, were invalid because they were not
actually signed by the process server. Instead, they were signed
by someone else, under a power of attorney purporting to generally
authorize the process server's employer to sign his name to
affidavits of service. We will not address the propriety of this
procedure, because the issue was noted in the statement of facts
but not included in the argument section of the brief.

                                         4                               A-2996-16T1
evaded personal service of the original complaint.          He therefore

rejected plaintiff's argument that an attempt to personally serve

her with the amended complaint would have been futile.

      Our review of a trial court's decision to vacate a final

judgment pursuant to Rule 4:50-1 is limited.       We will affirm the

trial court's decision, absent "a clear abuse of discretion."             US

Bank Nat. Ass'n v. Guillaume, 209 N.J. 449, 467 (2012); see also

M & D Assocs. v. Mandara, 366 N.J. Super. 341, 350 (App. Div.

2004).   We review for abuse of discretion a judge's decision

whether to assess counsel fees or other conditions when vacating

a judgment under Rule 4:50-1.      ATFH Real Prop., LLC v. Winberry

Realty P'ship, 417 N.J. Super. 518, 528 (App. Div. 2010).          We will

not second-guess a trial court's decision as to the amount of a

fee award, except in the rarest case and only where there is a

clear abuse of discretion.     See Rendine v. Pantzer, 141 N.J. 292,

317   (1995).    We   review    the    trial   court's    denial     of    a

reconsideration motion for abuse of discretion.          See Cummings v.

Bahr, 295 N.J. Super. 374, 384 (App. Div. 1996).

      We must consider these principles in reviewing the trial

court's decision of a motion to vacate a tax sale foreclosure:

          An application to vacate a judgment based on
          R. 4:50-1 is within the sound discretion of
          the trial court and "should be guided by
          equitable principles in determining whether
          relief should be granted or denied."     The

                                   5                               A-2996-16T1
           application is "viewed with great liberality,
           and every reasonable ground for indulgence is
           tolerated to the end that a just result is
           reached."     In the tax sale certificate
           foreclosure context considerations of public
           policy and equity are also taken into account.

           [M & D Assocs., 366          N.J.   Super.   at   350
           (citations omitted).]

     Moreover, in cases involving tax sale foreclosures, where a

plaintiff may obtain a huge windfall at a defendant's expense, the

court   should   hold   the   plaintiff   to   strict   compliance     with

procedural rules. To that end, the court should closely scrutinize

the plaintiff's affidavit of diligent inquiry.

           [W]here there is substituted service, as well
           as a tremendous disparity between the amount
           due on the tax certificates and the value of
           the property subject to foreclosure (here
           approximately   $4,500   versus   potentially
           $100,000 to $200,000 for the property),
           careful scrutiny of the affidavit of inquiry
           requires the Chancery Judge to demand more
           than cursory inquiries or recitals not only
           as a matter of due process, but also of
           fundamental fairness. The Chancery Judge in
           such foreclosure cases should be alerted when
           the face of the documentation indicates that
           a significant windfall might result if
           adequate scrutiny of the affidavit of inquiry
           is not undertaken.

           [Id. at 354 (citation omitted).]

Rule 4:26-5(b), permitting a foreclosure plaintiff to name unknown

heirs and representatives, requires the same proof of diligent

inquiry that Rule 4:4-5(a)(3) requires for substituted service.

                                    6                              A-2996-16T1
       After reviewing the record, we find no abuse of the trial

court's discretion in granting the motion to vacate the foreclosure

judgments.4   There was at least prima facie evidence before the

trial court that foreclosure would result in both an enormous

windfall for plaintiff and a draconian loss for Nancy of her house,

which had been her family's home for seventy years.   On the record

in the trial court, plaintiff admitted it did not name Nancy as a

defendant in her personal capacity until it filed the amended

complaint.    Nor did the original complaint include her name at

all.   And plaintiff made no effort to personally serve Nancy with

the amended complaint pursuant to Rule 4:4-4(a), although she was

being added as a party.

       We also agree with Nancy's argument that plaintiff did not

make a diligent inquiry before naming fictitious parties in the

original complaint.    See R. 4:26-5(b) (permitting plaintiff to

name "unknown heirs, devisees or personal representatives" if

4
   We agree with the trial judge that Nancy's motion was properly
deemed as filed within the one-year time limit set forth in Rule
4:50-2. Within one year of the foreclosure judgments, Nancy filed
a complaint in General Equity seeking to undo the foreclosure
judgments and redeem the property.      The General Equity judge
dismissed that complaint without prejudice, reasoning that the
proper procedure was to file a motion in the foreclosure case
rather than filing a new complaint. We find no abuse of discretion
in the judge's equitable decision to treat Nancy's subsequent
foreclosure motion as relating back to the filing date of her
complaint.

                                 7                          A-2996-16T1
their names and addresses cannot be determined after diligent

inquiry).    Therefore, plaintiff's reliance on Rule 4:26-5, raised

for the first time in its reconsideration motion, was unavailing.

Even if the original complaint were deemed to name Nancy as an

unknown heir, it did not comply with the Rule.

       The generalities in the motion certification of plaintiff's

former counsel do not satisfactorily explain why the complaint did

not list Frank and Anna's known relatives, and specifically Nancy,

by name.      See M & D Assocs., 366 N.J. Super. at 353-55.                   A

comprehensive internet report, obtained before the complaint was

filed, revealed that "Nancy Leyrer" was living at the Chestnut

Street house, the same address associated with "Frank Leyrer."                A

later internet search revealed that Nancy was a "first degree"

relative of Frank and Anna and was about thirty years younger than

Anna.    On the reconsideration motion, plaintiff's manager, Howard

Rothschild,      certified that plaintiff "came to believe" that Nancy

was an heir, but did not explain how or when plaintiff arrived at

that    belief    and   why   it   was   not   capable   of   obtaining   that

information before the complaint was filed.

       Plaintiff argues that once a defendant, designated only as

an unknown heir, has been personally served, or served by mail if

personal service cannot be made, Rule 4:26-5(e) permits subsequent

amended complaints to be served on that defendant by mail only.

                                         8                            A-2996-16T1
That argument is unavailing here.    If a defendant is not properly

designated as an unknown heir under Rule 4:26-5(b), then Rule

4:26-5(e) does not excuse the failure to personally serve that

defendant when the complaint is later amended to list her by name.

Plaintiff's reliance on Farrell v. Votator Division of Chemetron

Corporation, 62 N.J. 111 (1973), is misplaced, because in that

case the plaintiff properly employed fictitious pleading.    Id. at

120.

       Additionally, Nancy's certification in support of the motion

to vacate the judgments provided evidence of excusable neglect for

her failure to open mailed notices from plaintiff.    That evidence

included her physical and mental health issues, and her efforts

to care for her dying brother and other ailing relatives.    See R.

4:50-1(a); Bergen-Eastern Corp. v. Koss, 178 N.J. Super. 42, 45-

46 (App. Div. 1981).   Further, Nancy had the ability to redeem the

property with her own funds, and did so when given the opportunity.

Id. at 46.

       For all of the above reasons, we find no abuse of the trial

judge's discretion in granting Nancy's motion to vacate the final

                                 9                          A-2996-16T1
foreclosure judgments.5    See M & D Assocs., 366 N.J. Super. at

350.

       Finally, Nancy agreed to pay plaintiff more than $12,000 in

counsel fees, insurance premiums and other costs, as a condition

of vacating the default.    We find no abuse of the trial court's

discretion in denying plaintiff's application for thousands of

dollars in additional counsel fees.

       Affirmed.

5
  Any arguments not specifically addressed are without sufficient
merit to warrant discussion in a written opinion.       R. 2:11-
3(e)(1)(E).

                                10                         A-2996-16T1