Court Opinion

ID: 6112286
Source: CourtListenerOpinion
Date Created: 2022-01-25 15:08:17.452707+00
Date Added: 2024-06-11T08:54:22.967851
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NOT FOR PUBLICATION WITHOUT THE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 NO. A-3296-19

MILL RD. LLC,

          Plaintiff-Respondent,

v.

SCHEDULE 1 LOT 8 BLOCK 320
ASSESSED TO ANAMAR
HOLDINGS LLC,

     Defendant.
_____________________________

GEM REAL ESTATE
SOLUTIONS, LLC,

     Appellant.
_____________________________

                   Argued September 29, 2021 – Decided January 25, 2022

                   Before Judges Fuentes, Gilson, and Gummer.

                   On appeal from the Superior Court of New Jersey,
                   Chancery Division, Essex County, Docket No. F-
                   011460-19.
            Crew Schielke argued the cause for appellant (Law
            Offices of Crew Schielke, LLC, attorneys; Crew
            Schielke and Mark Faro, on the briefs).

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

PER CURIAM

      In this tax-foreclosure case, defendant GEM Real Estate Solutions, LLC

(GEM) appeals from a February 21, 2020 order denying its motion to intervene

and vacate a November 6, 2019 final judgment pursuant to Rule 4:50-1. Because

the final judgment was reached in an expedited procedure predicated on a

procedurally-flawed determination that the property at issue had been

abandoned and because of other anomalies, we reverse the February 21, 2020

order and vacate the November 6, 2019 final judgment.

                                      I.

      We glean from the motion record the following facts, which appear to be

largely undisputed.

                                     A.

      The property at issue contains a two-family dwelling and is located at 7

Krotik Place in Irvington Township. It was once owned by Rozelle Williams,

Jr. and was the subject of a foreclosure action brought by Finance of America

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Reverse LLC against Williams in 2014. See Fin. of Am. Reverse LLC v.

Williams, No. F-002421-14 (Ch. Div. June 26, 2018). Final judgment in that

foreclosure action was issued on June 26, 2018. A deed issued during the

pendency of the foreclosure action indicates Williams transferred ownership of

the property to Anamar Holdings LLC (Anamar) in exchange for a $20,000

payment. That deed was dated November 16, 2017, and recorded on May 15,

2018.

        As a result of the final judgment in the 2014 foreclosure action, the

property was listed at a December 4, 2018 sheriff's sale. Offering $116,000, 7

Krotik Place, LLC (the LLC) was the successful bidder. The sheriff issued the

deed to the LLC on February 7, 2019. The LLC recorded the deed with the

county clerk on February 14, 2019.

                                       B.

        After and unrelated to the December 4, 2018 sheriff's sale in the

foreclosure matter, a "public sale of lands for delinquent municipal liens" in

Irvington took place on December 27, 2018. Irvington then held a tax sale

certificate regarding the property. According to the certificate, the unpaid

municipal liens consisted of $359.92 in unpaid 2018 sewer charges assessed to

Anamar. With $23.67 in interest and $65.00 for the cost of sale, the total amount

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of the sale was $448.59. The certificate was notarized on January 7, 2019, but

not recorded until April 10, 2019.

                                      C.

      According to a deed dated February 22, 2019, GEM acquired the property

from the LLC for $161,000. GEM and the LLC have the same address. Before

GEM purchased the property, Majestic Title Agency, LLC (Majestic) conducted

a title search on GEM's behalf. In title-search documents with a November 18,

2018 commitment date, Majestic identified two certificates of sale for unpaid

municipal liens, one recorded on June 9, 2008, and the other recorded on March

16, 2016.    Another document, which indicates its contents are "accurate

according to the town records dating 12/6/2018," contains the following

information under the heading "LIENS": "NONE – TAX SALE SCHEDULED

FOR 12/20/2018; POSSIBLE ADDITIONAL COSTS, IF UNPAID; CONTACT

TAX OFFICE." Under the heading "SEWER ACCOUNT #," the following

information is provided: "14005600-0 2018: $359.92 OPEN + PENALTY;

$0.08 PAID." A continuation title-search document, with a January 23, 2019

commitment date, states the 2008 and 2016 certificates had been redeemed. It

makes no reference to the scheduled tax sale or the 2018 sewer charges.

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      According to Majestic employee Corinne Scala, she called Irvington's tax

office at or around the time of the closing to "inquire about any unpaid property

taxes and/or water/sewer charges." A tax office representative told her the only

open charge was a $360 sewer charge due on March 1, 2019. At the closing,

Majestic collected $360 to pay that sewer charge. Scala later confirmed with a

tax office representative that the tax office had received and accepted that

payment on February 26, 2019.

      GEM recorded the deed and the mortgage it had obtained regarding the

property with the county clerk on March 25, 2019. On that same day, the LLC

applied for a construction permit for electrical and plumbing work on the

property. Irvington issued the permit on April 30, 2019. On May 13, 2019, the

LLC applied for a construction permit for fire-protection work on the property.

Irvington issued that permit on May 24, 2019. According to GEM shareholder

Jutta Sayles, GEM has invested over $74,000 in renovations on the property,

which it began sometime between March 25, 2019, and May 20, 2019.

                                       D.

      On March 1, 2019, Irvington addressed and attempted to send by certified

mail to Anamar a notice that the property had "been determined to be Abandoned

Properties" pursuant to the Abandoned Properties Rehabilitation Act, N.J.S.A.

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55:19-78 to -107. The notice stated, "[u]pon the determination that the property

is abandoned, the township intends to either sell or transfer the tax lien(s)

attached to the property at a special tax sale to a purchaser who intends to

foreclose on its tax sale certificate pursuant to the accelerated provisions of the

Tax Sale Law." The notice also advised "an owner" had a right to "challenge

the inclusion of a property on the abandoned property list" and a right to a

hearing and provided information regarding the procedure that had to be

followed for that challenge.

      Pursuant to N.J.S.A. 55:19-55(d)(1), Irvington was required to send a

notice to "the owner of record." Irvington addressed its notice to Anamar even

though, based on the latest recorded deed, the LLC was the owner of the

property. The notice Irvington attempted to send by certified mail to Anamar

was returned on March 27, 2019, as "unclaimed, unable to forward."

      Pursuant to N.J.S.A. 55:19-55(d)(1), Irvington also was required to

publish the abandoned property list, "setting forth the owner of record."

Irvington had published in the March 7, 2019 issue of the Irvington Herald a list

of the properties it had deemed abandoned. The list included the property but

identified Anamar as the owner, even though the latest recorded deed showed

the LLC as the owner of the property.

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      On May 20, 2019, Genia C. Philip, Irvington's abandoned property public

officer, signed an "abandoned property certification." She identified Anamar as

the "last registered owner" of the property, even though by then Irvington had

issued building permits regarding the property to the LLC and, according to the

most recently recorded deed, GEM was the owner of the property. According

to her certification, the property had been deemed abandoned because it had not

been "legally occupied" within the last six months before the date of the

certification and because one installment of property tax was unpaid, the

property was a nuisance pursuant to N.J.S.A. 55:19-82, and the property needed

rehabilitation. Even though Irvington had issued building permits within the

last two months, she certified the property had not received rehabilitation in the

past six months. In support of GEM's motion, GEM shareholder Sayles certified

that at the time Philip issued the certification, "not only had permits been issued

but work had commenced on the renovation." It isn't clear when Philip signed

the certification. Although Philip's signature was dated May 20, 2019, the

notary stated the certification was "sworn to and subscribed" before her on May

31, 2019.

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                                       E.

      According to a Special Tax Sale Assignment of Tax Sale Certificate dated

May 21, 2019, before Philip's signature on the abandoned property certification

was notarized, plaintiff Mill Rd., LLC purchased an assignment of Irvington's

tax sale certificate regarding the property for $65,000 and recorded it on June

24, 2019. The signatures on the assignment were notarized on May 30, 2019.

The assignment stated it was made pursuant to N.J.S.A. 55:19-101, which

permits municipalities to hold "special tax sales with respect to those properties

eligible for tax sale pursuant to [N.J.S.A.] 54:5-19 which are also on an

abandoned property list established by the municipality."

      The same day it recorded the assignment, plaintiff filed a "Complaint in

Rem," seeking to foreclose the tax sale certificate. In opposition to GEM's Rule

4:50-1 motion, Michael Pellegrino, the attorney who filed the complaint on

behalf of plaintiff, certified that plaintiff had brought its foreclosure matter

pursuant to N.J.S.A. 54:5-86(b), asserting the property was abandoned.

Generally, a private tax lienholder must wait two years from the date the

certificate is sold to file a foreclosure complaint. See N.J.S.A. 54:5-86(a).

Subsection (b) provides an exception for abandoned properties from that two-

year requirement:

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            Any person holding a tax sale certificate on a property
            that meets the definition of abandoned property as set
            forth in [N.J.S.A.] 55:19-78 [to -107], either at the time
            of the tax sale or thereafter, may at any time file an
            action with the Superior Court . . . demanding that the
            right of redemption on such property be barred pursuant
            to the "tax sale law," [N.J.S.A.] 54:5-1 [to -137], or the
            In Rem Tax Foreclosure Act (1948) [N.J.S.A.] 54:5-
            104.29 [to -104.75].

            [N.J.S.A. 54:5-86(b).]

N.J.S.A. 54:5-86(b) requires a plaintiff asserting the right to evade the two-year

requirement based on the purported abandoned status of the property at issue to

include a "certification by the public officer or the tax collector" that the

property is abandoned pursuant to N.J.S.A. 55:19-83(d).

      To support its assertion the property was "abandoned," plaintiff attached

to the complaint the May 20, 2019 abandoned property certification. In the

complaint, plaintiff identified GEM as the property's titleholder, referencing the

February 22, 2019 deed recorded on March 25, 2019. Thus, plaintiff knew when

it filed its complaint GEM was owner of the property as of February 22, 2019.

Nevertheless, in support of its assertion that the property was abandoned,

plaintiff attached the May 20, 2019 abandoned property certification, which

inaccurately identified Anamar, not GEM, as the "last registered owner" of the

property.

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      Plaintiff served a copy of the complaint on GEM's registered agent on

June 27, 2019. GEM did not file an answer. Instead, it sent a check dated July

16, 2019, in the amount of $448.50, the face value of the tax certificate, to

plaintiff's attorney, Pelligrino.   Pelligrino returned the check with a note,

informing defendant, "You must pay the tax collector directly. Do not send

payment to my office." GEM apparently did not pay the tax collector. On

October 9, 2019, plaintiff requested entry of final judgment. With no answer

having been filed, the trial court entered final judgment pursuant to Rule 4:64-

7(g) in favor of plaintiff on November 6, 2019. The final judgment barred any

right of redemption in the property.

      The entire foreclosure action was disposed of in less than five months

from its filing and in less than a year from the issuance of the tax sale certificate.

                                         F.

      After learning about this litigation from GEM's legal counsel, Majestic

employee Scala contacted a representative of Irvington's tax office.             That

representative advised Scala for the first time that Irvington had placed a lien on

the property for 2018 sewer charges on December 27, 2018, and that a tax sale

certificate dated January 7, 2019, in the amount of $448.59 was sold and not

recorded until April 10, 2019. The tax office representative had no explanation

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for the four-month delay in the recording of the tax sale certificate. According

to Scala, the representative confirmed Scala had been misinformed previously

about the sewer charges, agreed she should have been told the outstanding

amount due, and conceded Irvington should not have accepted the payment for

the 2019 sewer charges until the lien for the 2018 sewer charges were paid in

full.

        On November 22, 2019, GEM filed a complaint seeking to quiet title to

the property. See GEM Real Est. Sols., LLC v. Mill Rd., LLC, No. ESX-C-

0223-19 (Ch. Div. Nov. 22, 2019). In plaintiff's foreclosure action, GEM moved

to intervene; to vacate the November 6, 2019 final judgment pursuant to Rule

4:50-1(a), (c), and (f); to consolidate GEM's quiet-title action with plaintiff's

foreclosure action; and to permit GEM to redeem and avoid a forfeiture. GEM

argued, among other things, plaintiff had foreclosed on the property in an

expedited manner based on the property's purported abandoned status, even

though plaintiff knew or should have known the property recently was sold at a

sheriff's sale and subsequently purchased by GEM.            GEM asserted the

"expedited nature of the foreclosure action deprived GEM of any meaningful

opportunity to defend itself or to pay the redemption amount of the Lien ."

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      After hearing oral argument on February 21, 2020, the motion judge

denied GEM's motion, stating her decision on the record and issuing a written

order. The motion judge held no "mistake, inadvertence surprise, or excusable

neglect" existed that warranted setting aside the final judgment Rule 4:50-1(a).

The motion judge acknowledged GEM "may not have . . . been given the full

information from the township" but faulted GEM for failing to take advantage

of the "various procedures available to it," including "request[ing] an official

tax search." The motion judge held that because GEM "had within [its] hands

the ability to correct the mistakes," she could not "find that this is an honest

mistake on the part of" GEM. The motion judge found GEM had not met the

Rule 4:50-1(f) standards because "[t]here was nothing extraordinary about this

situation."   As for GEM's argument about the flawed abandonment-

determination procedure, the motion judge found Irvington had not "acted in any

improper manner," even though Irvington had failed to notice, by mail or

publication, the property's "owner of record" and Irvington's abandoned

property public officer had certified incorrectly that Anamar was the "last

registered owner" of the property on the abandonment certification.

      This appeal followed.

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                                          II.

       "A motion to vacate default judgment implicates two oft-competing goals:

resolving disputes on the merits, and providing finality and stability to

judgments." BV001 REO Blocker, LLC v. 53 W. Somerset St. Props., LLC, 467

N.J. Super. 117, 123 (App. Div. 2021). It is well established that trial courts are

to "view 'the opening of default judgments . . . with great liberality,' and should

tolerate 'every reasonable ground for indulgence . . . to the end that a just resul t

is reached.'" Mancini v. EDS, 132 N.J. 330, 334 (1993) (quoting Marder v.

Realty Constr. Co., 84 N.J. Super. 313, 319 (App. Div.), aff'd, 43 N.J. 508

(1964)). "Although the movant bears the burden of demonstrating a right to

relief, . . . a court should resolve '[a]ll doubts . . . in favor of the part[y] seeking

relief.'"   BV001 REO Blocker, LLC, 467 N.J. Super. at 123-24 (quoting

Mancini, 132 N.J at 334). In deciding whether to vacate a default judgment, a

court "should be guided by equitable principles," Hous. Auth. of Morristown v.

Little, 135 N.J. 274, 283 (1994), which support the "notion that courts should

have the authority to avoid an unjust result in any given case," Manning Eng'g,

Inc. v. Hudson Cnty. Park Comm'n, 74 N.J 113, 130 (1977).

       "So guided, trial courts are to exercise their sound discretion and their

decisions will not be disturbed absent an abuse of discretion." Reg'l Constr.

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Corp. v. Ray, 364 N.J. Super. 534, 541 (App. Div. 2003). An abuse of discretion

occurs when a court's decision "'rest[s] on an impermissible basis,' 'was based

upon a consideration of irrelevant or inappropriate factors,' 'fail[ed] to take into

consideration all relevant factors and whe[ther] [the] decision reflects a clear

error in judgment.'" State v. S.N., 231 N.J. 497, 515-16 (2018) (alterations in

the original) (quoting State v. C.W., 449 N.J. Super. 231, 255 (App. Div. 2017)).

In addition, "a trial court mistakenly exercises its discretion when it 'fail[s] to

give appropriate deference to the principles' governing the motion." BV001

REO Blocker, LLC, 467 N.J. Super. at 124 (alteration in original) (quoting Davis

v. DND/Fidoreo, Inc., 317 N.J. Super. 92, 100-01 (App. Div. 1998)).

      The motion judge abused her discretion by failing to give "appropriate

deference" to the equitable principles governing GEM's motion and by failing

to take into consideration all relevant factors concerning the fatally-flawed

abandonment determination on which plaintiff based its case. BV001 REO

Blocker, LLC, 467 N.J. Super. at 124 (quoting Davis, 317 N.J. Super. at 100-

01); see also S.N., 231 N.J. at 515-16.

      Plaintiff has repeatedly argued that any flaws in the abandonment-

determination procedure did not matter. But they did matter. As plaintiff's

attorney recognized in his certification in opposition to GEM's motion,

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plaintiff's foreclosure case "was brought pursuant to N.J.S.A 54:5-86(b), since

the subject property was abandoned." As counsel stated, that statute "permits a

private third-party lienholder to proceed under the expedited in rem procedures

usually available to municipalities, provided the lienholder obtains a

certification from the public officer that the property is abandoned." Thus,

plaintiff's case was premised on the determination that the property was

abandoned. But for that determination, plaintiff could not have filed its lawsuit

under the expedited in rem procedures. See N.J.S.A. 54:5-86.

      The abandonment determination and the process that led to it were rife

with error. Irvington failed to give the required statutory notice, either by mail

or by publication, to the property's owner of record, which at the time was the

LLC. By failing to give the required notice, Irvington deprived the property

owner of its right to challenge the inclusion of the property on the abandoned -

property list. Unless its inclusion on the abandoned-property list is challenged

by the owner, a property is "presumed to be abandoned." N.J.S.A. 55:19 -55(e).

      The abandoned property certification, with a different signature date than

that stated by the notary, was issued based on the incorrect belief that Anamar

was the "last registered owner," had been notified the property was on the

abandoned-property list, and had not challenged it, leaving in place the

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presumption the property had been abandoned. Correctly identifying GEM as

the property's titleholder in its complaint, plaintiff knew when it filed the

complaint that GEM, not Anamar, owned the property. Nevertheless, to support

its assertion that it was entitled to an expedited foreclosure procedure based on

the property's abandoned status, plaintiff attached to its complaint a clearly

erroneous abandoned property certification, inaccurately identifying Anamar

was the "last registered owner."

      GEM could fairly argue that its default and the final judgment were, at

least, the products of mistake and excusable neglect, and, at worst, the results of

misrepresentation, entitling GEM to a vacation of the judgment pursuant to

subparts (a) ("mistake, inadvertence, surprise, or excusable neglect") and (c)

("fraud . . ., misrepresentation, or other misconduct of an adverse party") of Rule

4:50-1. But we need not reach those issues because we are convinced that the

flawed abandonment-determination procedure and the many other anomalies of

this case justify relief from the judgment under subpart (f) of Rule 4:50-1.

      Under Rule 4:50-1(f), a movant may request vacation of final judgment

for "any other reason justifying relief from the operation of the judgment or

order." Subsection (f) provides the basis "for relief in exceptional situations

. . . [a]nd in such exceptional cases its boundaries are as expansive as the need

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to achieve equity and justice." Ct. Inv. Co. v. Perillo, 48 N.J. 334, 341 (1966);

see also BV001 REO Blocker, LLC, 467 N.J. Super. at 125. Subsection (f)

permits relief "even when a defendant's response or failure to respond to a

complaint was found . . . to be inexcusable." LVNV Funding, LLC v. DeAngelo,

464 N.J. Super. 103, 109 (App. Div. 2020). In deciding if relief is warranted

under subsection (f), "a court may consider the movant's delay, the justification

for its request, and potential prejudice to the responding party." BV001 REO

Blocker, LLC, 467 N.J. Super. at 126.

      No doubt, the better course for GEM would have been to submit a written

request for tax lien information.    That fact does not erase Irvington's (i)

admission that it provided inaccurate information to Majestic's employee; (ii)

admission it failed to disclose the existence of the outstanding 2018 sewer

charges; (iii) admission it should not have accepted payment for the 2019 sewer

charges until the lien for the 2018 sewer charges was paid in full; and (iv)

inexplicable failure to record the tax sale certificate for over four months.

Naming Anamar as the "last registered owner," Irvington's Abandoned Property

Public Officer clearly based her abandoned property certification on dated,

inaccurate information. If she was wrong about the "last registered owner," was

she also wrong, as GEM asserts, about no rehabilitation work being done on the

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property? Did she know Irvington had issued building permits regarding the

property? The inconsistency on the abandoned property certification between

the date of Philip's signature and the date it was notarized may seem like a minor

issue, but it isn't.   If, consistent with the notary's date, Philip signed the

abandoned property certification on May 30, 2019, then how could the Special

Tax Sale Assignment have been issued to plaintiff on May 21, 2019?

      The motion judge's reliance on dicta from Simon v. National Community

Bank of New Jersey, 282 N.J. Super. 447 (App. Div. 1995), the only case she

cited, was misplaced. In Simon, unlike this case, we focused on and affirmed

on the basis of the application of the New Jersey Tort Claims Act, N.J.S.A. 59:1-

1 to 12-3, to a cause of action against a township based on its employee's

misinformation about tax liens.

      Finally, we see no prejudice to plaintiff in reversing the February 21, 2020

order, vacating the November 6, 2019 final judgment, permitting GEM to

intervene, and allowing the case to proceed on the merits.

      Reversed, vacated, and remanded for proceedings consistent with this

opinion. We do not retain jurisdiction.

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