On appeal from the Superior Court of New Jersey, Chancery Division, Essex County, Docket No. F-181-05.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Parrillo, Gilroy and Baxter.
In this tax foreclosure action, plaintiff, Robert DelVecchio, Trustee of the Robert DelVecchio Pension Trust, appeals from an April 25, 2006 order of the General Equity Part vacating final judgment. Respondent, Cherrystone Bay, L.L.C. (Cherrystone), cross-appeals from the court's September 12, 2006 final order denying its motion to intervene and to compel redemption, nullifying its contract with defendant Cynthia Ruckel, and imposing a constructive trust, in plaintiff's favor, with respect to the purchase contract. For reasons that follow, we affirm on the appeal, and reverse on the cross-appeal.
On November 21, 2000, Gertrude Ruckel died owning residential property in Nutley where her fifty-year-old daughter Cynthia has lived her entire life. By virtue of Gertrude's last will and testament, the property passed to her estate, which was held in trust for the benefit of Cynthia, who is apparently mentally incapacitated and unable to handle her own affairs. Gertrude's grandson, defendant Jerome Banks, was appointed executor of her estate and trustee for the benefit of Cynthia.
As trustee, Banks, who lives in California, never paid municipal real estate taxes and, on August 22, 2002, plaintiff purchased the tax sale certificate from the township for $6,747.86. Plaintiff also paid all subsequent accruing taxes on the property. Almost two-and-one-half years after his purchase of the tax sale certificate, plaintiff filed a complaint to foreclose the tax sale certificate and the property, naming as defendants Banks, in his capacities both as executor of the estate and trustee for the benefit of Cynthia, and the State of New Jersey. Plaintiff attempted service on Banks by mailing the summons and complaint, certified and regular, to his residence in San Francisco. The certified mail sent to Banks' residence was not claimed and was returned to plaintiff's counsel.
On February 22, 2005, plaintiff moved to enter default judgment in the foreclosure action on the basis that plaintiff attempted service on Banks by certified mail, but that the mail went unclaimed. Following default, the court entered an order setting April 8, 2005, as the date when Banks was required to redeem the tax sale certificate. The order was served on Banks who did not tender the redemption price. Thereafter, final judgment was entered on April 18, 2005, vesting title to the property in plaintiff and foreclosing the equity of the redemption. A copy of the final judgment was served on Banks on April 27, 2005. Cynthia, however, was never served with a summons and complaint.
On July 18, 2005, an attorney who represented Banks and Cynthia filed a notice of motion to vacate the April 18, 2005 judgment and permit Banks to tender redemption funds on the basis that Banks had received no notice of the action, only learned of the foreclosure in June 2005, and that the estate had sufficient funds to satisfy the unpaid taxes on the property. On October 21, 2005, that attorney notified the court that his client Banks wished to withdraw the motion, and that he was withdrawing his representation "due to a potential conflict of interest."
In January 2006, Cynthia signed a contract to sell the property to Cherrystone for $250,000. On January 26, 2006, on application by Cynthia's counsel, the Equity Part judge signed an order to show cause that stayed the eviction action and directed plaintiff to show why final judgment should not be vacated and a guardian ad litem appointed for Cynthia, and why Cynthia should not be permitted a reasonable time to redeem the certificate and prevent foreclosure. In support of her application, Cynthia claimed that Banks had breached his fiduciary duty by failing to protect her interests, and requested that she be permitted to complete a sale of the property to Cherrystone based on the signed contract between the two.
Seeking to protect its interest in the contract, Cherrystone filed a motion to intervene on February 22, 2006, requesting permission to purchase the property from Banks and opposing any claim by plaintiff for a constructive trust. Plaintiff filed opposition and requested discovery. At the March 24, 2006 hearing, the judge initially determined that service was defective because plaintiff had failed to file an Affidavit of Inquiry prior to the time when service by mail was attempted as required by Rule 4:4-5. In addition, the judge held due process required "something more" than service by certified and regular mail in this particular situation. Consequently, on April 25, 2006, the court denied Cherrystone's motion to intervene, but vacated the foreclosure judgment and permitted Cynthia or Cherrystone until April 26, 2006, to redeem the tax sale certificate, which the judge later extended to May 25, 2006.
On May 26, 2006, following tender of the redemption, plaintiff moved to bar the redemption or, alternatively, for the imposition of a constructive trust, and sought reconsideration of the motion to vacate the judgment. Cherrystone filed a cross-motion to intervene and to affirm the sale and compel redemption.
At the June 16, 2006 hearing on plaintiff's motion for reconsideration, the judge clarified her earlier March 14, 2006 decision, reiterating her conclusion that under the totality of the circumstances presented, including the fact that Cynthia was considered incapable of managing her affairs, there was a violation of due process because plaintiff failed to give her notice.
Relying on then existing case law in Wattles v. Platts, 120 N.J. 444, 453-54 (1990), overruled in part by Simon v. Cronecker, 189 N.J. 304 (2007), in which the Supreme Court disapproved of "heir hunters" and imposed a constructive trust whereby the lienholder replaced the heir hunter in the sale contract between the homeowner and the heir hunter, the judge granted plaintiff's alternative motion to void the conveyance to Cherrystone and to impose a constructive trust in favor of plaintiff. The judge recognized that in this case, Cherrystone had paid more than a nominal fee for the property and performed "to some degree, some valuable service" with respect to the homeowner. Moreover, "redemption should be permitted unless there is some countervailing, and overpowering, ...