June 18, 2008
CARF REALTY 1997, L.L.C., PLAINTIFF-RESPONDENT,
STEVEN STRAUSS, DEFENDANT-APPELLANT, AND MRS. STRAUSS (WIFE OF STEVEN STRAUSS), THOMAS A. GIOVARELLI, LIBRO A. GIOVARELLI, JR., WACHOVIA BANK, N.A., SUCCESSOR TO FIRST UNION NATIONAL BANK, F/K/A FIRST FIDELITY BANK, N.A., DISCOVER BANK, DEFENDANTS.
On appeal from the Superior Court of New Jersey, Chancery Division, Warren County, Docket No. F-19761-03.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued May 20, 2008
Before Judges Coburn, Grall and Chambers.
In this tax sale certificate foreclosure case, defendant Steven Strauss appeals from the orders denying his motion to vacate the default judgment against him and of his two motions for reconsideration. The trial court was correct because defendant was aware of the proceedings and could have sought to enter the litigation long before the final judgment was entered and the property was sold to a bona fide purchaser for value. We affirm.
In 1994, defendant was the owner of property located at 465-467 South Main Street, Phillipsburg. Due to his failure to pay the 1994 taxes on the property in the sum of $3,281.04, those unpaid taxes became a lien on the property in accordance with N.J.S.A. 54:5-6. When the taxes remained unpaid for the requisite statutory time period, Phillipsburg held a tax sale on July 12, 1995, in accordance with N.J.S.A. 54:5-19. At the taX sale, the lien was sold in the form of a tax sale certificate (number 95-147) to First Union National Bank as Custodian/National Tax Fund, for the sum of $4,064.90, with a rate of redemption of three percent. Plaintiff, CARF Realty 1997, L.L.C., which thereafter became the holder of the tax sale certificate, commenced this tax foreclosure action on the certificate in 2003.
Plaintiff was served on April 29, 2004, but did not file an answer. The case proceeded as an uncontested matter, and on August 26, 2005, an Order Setting Time, Place and Amount of Redemption was entered. The order provided that the amount necessary to be paid in order to redeem the property was $77,147.22, together with interest for February 28, 2005, and costs of suit in the sum of $1,017.
The deadline for exercising the right of redemption was October 12, 2005, between the hours of 9:00 a.m. and 4:00 p.m. at the tax collector's office in Phillipsburg. The order further provided that if defendant failed to redeem the property by that deadline, he was "absolutely debarred and foreclosed of and from all right and equity of redemption on, in and to said lands and premises and every part thereof, and the plaintiff shall have an absolute and indefeasible interest of inheritance in fee simple, to said land and premises." The order also provided that "[a]nything to the contrary notwithstanding, redemption shall be permitted up until the entry of final judgment including the whole of the last date upon which judgment is entered."
On October 12, 2005, ten minutes before expiration of the deadline fixed in the order for redemption, defendant appeared at the tax collector's office in Phillipsburg and attempted to pay off the tax certificate. The checks presented were rejected because they were stale. Defendant's personal check was also rejected because it was not certified and it was not in the correct amount.*fn2 By letter dated October 14, 2005, Phillipsburg advised defendant that the lien holder was willing to accept full payment and requested that defendant contact the tax collector's office immediately.
On September 26, 2006, almost a year after defendant's unsuccessful effort to redeem the property, a final default judgment was entered vesting title in plaintiff CARF Realty 1997, L.L.C. The property was thereafter sold to Atlantic REO Services, L.L.C., which in turn sold the property on November 30, 2006, to Richard Halley for the sum of $150,000. The court later determined that Halley was a bona fide purchaser for value, since he was unaware of defendant's unsuccessful efforts to redeem.
In January 2007, defendant moved to vacate the final judgment of September 26, 2006. Halley, as the party in interest having purchased the property, appeared in opposition to the motion.*fn3 The motion was denied by order dated February 21, 2007, and the trial court issued a written decision. On March 13, 2007, defendant filed a motion for reconsideration, raising issues regarding his attempt to exercise his right of redemption on October 12, 2005. The trial court addressed the motion for reconsideration on the merits in a written decision and denied the motion by order dated March 30, 2007. Defendant's second motion for reconsideration was filed on April 19, 2007, and was denied by order dated May 11, 2007. This appeal was filed on June 25, 2007.
Defendant raises the following issues on appeal:
I. JUDGE DERMAN SHOULD HAVE CONSIDERED THE DEFENDANT'S SECOND MOTION FOR RECONSIDERATION SINCE HER PRIOR OPINION CONTAINED INACCURACIES AND AS WRITTEN IS PREJUDICIAL TO THE DEFENDANT ON APPEAL.
II. TAXES WERE CALCULATED INCORRECTLY BECAUSE 18% INSTEAD OF 8% WAS NOT ALWAYS CALCULATED ON THE FIRST $1500 AND THE LOWER COURT BRUSHED OFF THIS ARGUMENT WITHOUT MUCH IF ANY CONSIDERATION.
III. THE PLAINTIFF RELIED ON A FRAUDULENT DOCUMENT TO OBTAIN FINAL JUDGMENT AND THE LOWER COURT DID NOT EVEN COMMENT ON IT.
IV. THE WORDING OF THE ORDER SETTING TIME, PLACE AND AMOUNT OF REDEMPTION IS AMBIGUOUS TO THE POINT THAT THE AMOUNT DUE COULD BE INTERPRETED TWO WAYS.
V. UNDERSTATING THE AMOUNT DUE IN THE ORIGINAL COMPLAINT AND WITHHOLDING PAYOFF FIGURES AND TOTAL AMOUNTS DUE IS PATENTLY UNFAIR.
We will first address Halley's contention that this appeal was filed out of time. Rule 2:4-1(a) allows a party forty-five days from entry of a final judgment to file an appeal. In this case, the order denying defendant's application to vacate the final judgment was entered on February 21, 2007. Thus, defendant had forty-five days from that date to appeal the denial of his motion.*fn4 Under Rule 2:4-3(e), the time period was tolled from the time defendant filed each motion of reconsideration until the motion was decided. When the calculations are made, we discover that the forty-five day deadline has been exceeded by forty days. Since we may not provide an extension of the time to appeal beyond thirty days under Rule 2:4-4(a), this appeal of the order of February 21, 2007 (denying defendant's motion to vacate the default judgment) is time barred. Similarly, the appeal of the order of March 30, 2007, denying defendant's first motion for reconsideration, is out of time by about eighteen days. The order of May 11, 2007, denying defendant's second motion for reconsideration, is properly before us since the appeal was filed within forty-five days of that order.
As noted above, the only ruling below that is properly before us is the denial of defendant's second motion for reconsideration. A motion for reconsideration must "state with specificity the basis on which it is made, including a statement of the matters or controlling decisions" which the movant believes the court has overlooked. R. 4:49-2. Reconsideration of a matter falls within the sound discretion of the court and should be exercised in the interest of justice. Cummings v. Bahr, 295 N.J. Super. 374, 384 (App. Div. 1996). A matter will be reconsidered when the court's decision is "based, upon a palpably incorrect or irrational basis," when "it is obvious that the Court either did not consider, or failed to appreciate the significance of probative, competent evidence," or when the party seeks to bring additional or new information to the attention of the court which it could not provide on the first application. D'Atria v. D'Atria, 242 N.J. Super. 392, 401 (Ch. Div. 1990).
In his second motion for reconsideration, defendant maintained that he was unable to redeem his property because he had not been provided with an exact payoff figure, the payoff figure was incorrectly calculated, and his personal check was improperly refused. He further contended that the trial court incorrectly concluded that he was not ready, willing and able to redeem the property. These points were raised in his first motion for reconsideration and addressed by the trial judge in her written decision at that time. Thus, the trial judge was well within her discretion to deny the second motion for reconsideration.
Even were we to reach the merits of the trial court's decision denying the motion to vacate the default judgment, we would affirm for the following reasons. The standards for setting aside a default judgment are set forth in Rule 4:50-1, which provides:
On motion, with briefs, and upon such terms as are just, the court may relieve a party or the party's legal representative from a final judgment or order for the following reasons: (a) mistake, inadvertence, surprise, or excusable neglect; (b) newly discovered evidence which would probably alter the judgment or order and which by due diligence could not have been discovered in time to move for a new trial under R. 4:49; (c) fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party; (d) the judgment or order is void; (e) the judgment or order has been satisfied, released or discharged, or a prior judgment or order upon which it is based has been reversed or otherwise vacated, or it is no longer equitable that the judgment or order should have prospective application; or (f) any other reason justifying relief from the operation of the judgment or order.
The decision on whether to vacate a judgment under the terms of this rule is left to the sound discretion of the trial court and will not be overturned on appeal absent a mistaken exercise of that discretion. Mancini v. EDS, 132 N.J. 330, 334 (1993). Generally, such motions are granted with "great liberality" and the court "should tolerate 'every reasonable ground for indulgence'" with a view to opening default judgments in order "that a just result is reached." Ibid. (quoting Marder v. Realty Constr. Co., 84 N.J. Super. 313, 319 (App. Div.), aff'd, 43 N.J. 508 (1964)).
Despite this liberal standard, based on this record, defendant is not entitled to vacation of the default judgment. Since defendant was admittedly served, was aware of the order of redemption, and indeed attempted to redeem the property, subsection (a), regarding "mistake, inadvertence, surprise, or excusable neglect" does not apply. Subsections (b), (c), (d), and (e) are inapplicable.
Defendant seeks to rely on subsection (f) of Rule 4:50-1. Subsection (f) allows a judgment to be set aside for "any other reason justifying relief from the operation of the judgment or order." R. 4:50-1(f). As a general matter, subsection (f) is applied "sparingly, in exceptional situations" to prevent grave injustice. Cmty. Realty Mgmt., Inc. v. Harris, 155 N.J. 212, 237 (1998) (quoting Hous. Auth. of Morristown v. Little, 135 N.J. 274, 289 (1994)). Further, the interest in repose plays a larger role in applications brought under subsection (f) than the other subsections. First Morris Bank & Trust v. Roland Offset Serv., Inc., 357 N.J. Super. 68, 71 (App. Div.), certif. denied, 176 N.J. 429 (2003). Nonetheless, that interest in the finality of judgments must be "weighed in the balance with the equally salutary principle that justice should be done in every case." Hodgson v. Applegate, 31 N.J. 29, 43 (1959). The Court has indicated that applications for relief from default judgments under subsection (f) are to be treated "indulgently." Mancini v. EDS, supra, 132 N.J. at 336.
With this standard in mind, we have reviewed the record, and do not find that defendant is entitled to the exceptional relief afforded under subsection (f) of Rule 4:50-1. All of the issues raised by defendant could have been raised before the final judgment was entered on September 26, 2006, and before the property was thereafter sold to a bona fide purchaser for value. Defendant acknowledges that he was served and thus was aware of the suit on April 29, 2004. Further, he attempted to redeem the property in October 2005.
Defendant contends that the complaint did not give him adequate notice of the amount due and that this was patently unfair. He maintains that when he received the complaint he thought that the $4,000 sum mentioned in the complaint was the sum that needed to be paid in order to avert foreclosure. However, the redemption order of August 26, 2005, clearly advised him that he needed over $77,000 to redeem the property. As a result, he knew that the $4,000 figure was not the redemption amount before his right to redeem expired, and he made no application to the court for relief at that time, if indeed the statement in the complaint somehow prejudiced him.
Defendant also contends that the wording of the order fixing the right of redemption was ambiguous. That language stated: the amount required to redeem the premises referred to in the aforementioned tax sale certificate is the sum of $77,147.22, which includes the amount due on said tax sale certificate and subsequent taxes and interest, together with interest on said sums from February 28, 2005, together with costs of suit duly taxed in the sum of $1,017.00.
Defendant contends that based on this language, he thought the only sum he had to pay was $77,147.22, and that the other charges mentioned were included in that sum. However, once defendant went to redeem the property, he learned that a larger sum was needed. At that point, since final judgment had not yet been entered, he still could have redeemed the property for the correct sum, or he could have sought any necessary relief from the court. It was not until almost a year later that final judgment was entered.
Defendant also maintains that Phillipsburg improperly charged him eighteen percent interest per annum on the first $1,500 of the lien rather than eight percent per annum as required by N.J.S.A. 54:4-67(a). However, when defendant was unsuccessful in his attempt to redeem the property on October 12, 2005, any mistake in the calculations by Phillipsburg or in its rejection of his attempt to redeem the property should have been known to defendant and he should have then sought relief from the court if necessary.*fn5
All of these asserted irregularities could have been addressed by defendant while the action was pending. He voluntarily failed to participate in the litigation and to seek any redress from the court at that time. He took no action until after final judgment had been entered and after the property had been sold to a bona fide purchaser for value. Relief under Rule 4:50-1(f) is granted to prevent a grave injustice and where it is equitable to do so. Here, defendant delayed in taking any action over an extended period of time after he was aware of the proceeding and indeed after his attempt to redeem was unsuccessful. "Equity aids the vigilant, not those who sleep on their rights." Desiderio v. D'Ambrosio, 190 N.J. Super. 424, 430 (Ch. Div. 1983). When weighing defendant's failure to act against the conduct of a bona fide purchaser for value, the equities clearly lie with the latter.
Indeed, if relief were granted to defendant, a grave injustice would occur to the bona fide purchaser for value, and the integrity of the State's tax sale certificate foreclosure procedure and its ability to provide clear title would be placed in question. The provisions in the tax sale law should "be liberally construed as remedial legislation to encourage the barring of the right to redemption by actions in the Superior Court to the end that marketable titles may thereby be secured." N.J.S.A. 54:5-85.