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Sagi v. Sagi

July 18, 2006


On appeal from Superior Court of New Jersey, Chancery Division, Family Part, Morris County, FM-14-773-98.

The opinion of the court was delivered by: Collester, J.A.D.



Submitted December 6, 2005

Before Judges Coburn, Collester and Lisa.

Brae Asset Fund, L.P. (Brae), intervenor in the matrimonial action of Zsigmond L. Sagi (Mr. Sagi) v. Borbala M. Sagi (Mrs. Sagi), appeals the May 26, 2005, order of the Family Part judge following our earlier remand in which the judge reaffirmed his May 24, 2004, order making permanent restraints ordered on December 30, 2003. That order directed any funds paid by Mr. Sagi to Brae "shall be immediately forwarded to defendant's attorneys" to satisfy an "Order of Execution and Levy of Judgment" imposed on December 11, 2003, specifying that all of Mr. Sagi's assets were to be delivered in satisfaction of judgments and his obligations to Mrs. Sagi consistent with the August 8, 2003, judgment for separate maintenance.

The procedural history of this case can only be described as labyrinthian. It begins with a July 10, 1990, $479,900 mortgage loan from Citizen's National Bank secured by the marital home at 25 Arden Road in Denville, where Mrs. Sagi still lives, and which Mr. and Mrs. Sagi own as tenants by the entirety. After the loan fell into default, Brae as the assignee of Citizens National filed a foreclosure action and recorded a final judgment of $578,826.38 on February 13, 2001. However, the Chancery judge found that Mrs. Sagi's signature on the note and mortgage was a forgery. Therefore, the final judgment of foreclosure covered only Mr. Sagi's interest in the Denville home.*fn1 Mrs. Sagi was awarded damages against Mr. Sagi in the amount of $1 compensatory damages and $100,000 punitive damages. Brae sued Mr. Sagi in the Law Division for a money judgment in the amount adjudged due and owing in the foreclosure action. Although Mr. Sagi defaulted, the Law Division judge declined to enter judgment, holding that Brae had to effect a sheriff's sale of Mr. Sagi's interest and then seek judgment for the deficiency. Brae filed an appeal which was subsequently withdrawn on May 26, 2004.

Meanwhile, a separate action was proceeding in the Family Part. Mr. Sagi filed a complaint for divorce in February 1998, and Mrs. Sagi counterclaimed for divorce. On July 28, 2003, Brae obtained an order permitting leave to intervene in the dissolution action. Two days later, on July 30, 2003, the dissolution hearing took place. Mr. Sagi did not appear and his complaint was dismissed.*fn2 Mrs. Sagi was permitted to orally amend her counterclaim to seek a judgment of separate maintenance, which the Family Part judge granted. After hearing the proofs submitted by Mrs. Sagi, the judge entered a judgment directing Mr. Sagi to pay $8,000 per month in support and maintenance for Mrs. Sagi as well as paying the mortgage and taxes on the marital residence. Mr. Sagi also was restrained from disposing or transferring any marital assets including the marital residence. Finally, the judge entered a monetary judgment in favor of Mrs. Sagi and against Mr. Sagi for $134,751.78, representing alimony arrears of $41,000 and real estate tax arrears of $93,751.78. The judgment provided that,

The defendant may submit a Judgment providing that all assets owned by the plaintiff, including stocks and stock options, in the name of plaintiff and in which he has interest, shall be held by defendant's attorney for purposes of satisfying by levy and sale existing judgments and obligations of the plaintiff to the defendant, as well as future support obligations of the plaintiff to the defendant.

A month later, on September 5, 2003, Brae filed a motion as intervenor to amend the judgment for separate maintenance "to clarify [that] the defendant's receipt of $93,751.78 for tax arrears be dependent upon satisfaction of the taxes due." Counsel for Brae certified that a tax foreclosure proceeding was pending and that while the monetary judgment of $134,751.78 awarded to Mrs. Sagi included a tax arrearage, the judgment did not require Mrs. Sagi to pay the tax liability from any such sums she received from Mr. Sagi. Brae argued that as a result, its security and lien position was severely jeopardized if the taxes were not timely redeemed and Brae, as mortgagee, would then have to pay the tax liability and seek recoupment of the tax amount from Mr. Sagi. Therefore, Brae sought an amendment of the separate maintenance judgment to specify that the amount necessary to redeem the real estate taxes be turned over to the Denville Township tax collector directly rather than including that amount as part of the judgment payable to Mrs. Sagi.

Although Brae's motion regarding payment of the real estate taxes was filed on September 3, 2003, the order denying Brae relief was not entered until June 14, 2004. That order stated the following:

The court denies Brae Asset's most recent application as it determines that Defendant has no obligation to pay the real estate taxes on the marital premises by using funds which may become available to her. Whether Defendant chooses to apply such funds to such purposes is her option. Defendant has no obligation to make any payments which even incidentally benefit . . . Brae Asset.

Based on the above, Brae Asset's application is denied.

Brae next scheduled the sheriff's sale of the marital premises for September 29, 2003. It was at this point that Mr. Sagi appeared through an attorney, Z. Lance Samay, Esq., who telefaxed Brae's attorneys on September 22, 2003, stating Mr. Sagi's interest in satisfying the mortgage debt. Brae adjourned the sale, and several weeks later reached a settlement whereby Brae would not have the marital home sold at sheriff's sale if Mr. Sagi ...

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