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M. Credit, Inc. v. Sexton

June 19, 2008

M. CREDIT, INC., PLAINTIFF-APPELLANT,
v.
RUSSELL SEXTON, JR., AS EXECUTOR OF THE ESTATE OF MARGARET RICHARDSON, LINDA SEXTON, METROPOLITAN FEDERAL SAVINGS, J. W. PIERSON CO. AND THE STATE OF NEW JERSEY, DEFENDANTS, AND CHERRYSTONE BAY, L.L.C., DEFENDANT/INTERVENOR-RESPONDENT.



On appeal from the Superior Court of New Jersey, Chancery Division, Essex County, Docket No. F-9502-06.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued June 2, 2008

Before Judges Parrillo and S.L. Reisner.

Plaintiff M. Credit, Inc. appeals from a March 9, 2007 trial court order, granting Cherrystone Bay, L.L.C. intervenor status in plaintiff's tax foreclosure action concerning property owned by Cecil Sexton, and permitting Sexton to sell the property to Cherrystone for $130,000 which the court found to be more than nominal consideration. We affirm.

I.

These are the most pertinent facts, drawn from the record presented to us on this appeal. Plaintiff purchased a tax sale certificate issued with respect to a property located at 749-751 10th Street in Newark (the property). On May 31, 2006, after the required two years elapsed without redemption, plaintiff filed an in personam tax foreclosure complaint. However, the complaint named the wrong party as owner of the property.

The property was part of the estate of Margaret Richardson. According to Cecil Sexton's undisputed certification, she was the estate's executor and had held recorded title to the property since September 9, 2004. However, the complaint named Russell Sexton, Jr. as the executor and did not name Cecil Sexton. Nor was Cecil served with the complaint. As a result, although plaintiff eventually obtained entry of default and an order setting amount, time, and place of redemption (OST) from the Foreclosure Unit, setting a redemption deadline of December 28, 2006, that deadline was meaningless with respect to Cecil because plaintiff had not named or served the correct owner.*fn1

Plaintiff finally served Cecil Sexton with an amended complaint on December 17, 2006. On December 21, 2006, Cecil Sexton entered into a contract to sell the property to Cherrystone for $130,000. Based on that contract, Cherrystone filed a motion on January 2, 2007, seeking to intervene in the tax foreclosure action, to stay entry of final judgment, and to redeem the tax certificate.*fn2

The redemption amount set by the OST was $64,756.46. According to Cherrystone's motion papers, the property was worth $225,000, although it needed $75,000 in repairs. Plaintiff filed a response indicating that the property was worth between $300,000 and $315,000. Thus, according to plaintiff's proofs, if plaintiff obtained final judgment in its foreclosure action, it would reap a windfall of up to $250,000, at the expense of the estate which would receive nothing. On the other hand, if the sale went through, Cecil would redeem the property out of the sale proceeds and realize between $59,000 and $65,000 for the estate.

Relying on Simon v. Cronecker, 189 N.J. 304 (2007), Judge Kenneth Levy reasoned that Cherrystone had properly moved to intervene in the action. Consistent with Simon, the motion allowed the court to determine whether Cherrystone was offering the property owner only nominal consideration, in violation of N.J.S.A. 54:5-89.1,*fn3 or whether Cherrystone was legitimately seeking to help the owner to realize some value from the property. Applying the factors in Simon, Judge Levy concluded:

[U]nder all the circumstances, the contract price to be paid by Cherrystone is not nominal. While the approximately $59,000 that Sexton . . . will be left with after tendering redemption to the tax collector is far less than the full fair market value of the property . . . it is not an unconscionably low estimate of her equity in the property.

The Court cannot say that even $59,000 is nominal. $59,000 represents a substantial amount of equity that Sexton held in the property that would have otherwise been forfeited. And the $130,000 purchase price to be paid by Cherrystone is not an insubstantial investment on its part.

In her certification, Sexton points to the expenses she will avoid by making this sale, including substantial repairs that the property would require to make it marketable and the expense required to list the property with a real estate agent. Sexton's certification is unequivocal that the ...


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