July 25, 2008
ROBERT DEL VECCHIO, TRUSTEE OF THE ROBERT DEL VECCHIO PENSION TRUST, PLAINTIFF-RESPONDENT,
BARBARA LEE CHARTOIRE, INDIVIDUALLY AND AS EXECUTRIX OF THE ESTATE OF MARION D. RICHARD, MR. CHARTOIRE, HUSBAND OF BARBARA LEE CHARTOIRE, AND THE STATE OF NEW JERSEY, DEFENDANT-RESPONDENT. CHERRYSTONE BAY, LLC, PROPOSED INTERVENOR-APPELLANT.
On appeal from Superior Court of New Jersey, Chancery Division, Bergen County, F-13004-06.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued April 9, 2008
Before Judges Axelrad and Payne.
Cherrystone Bay, LLC, the Proposed intervenor in a tax sale foreclosure action instituted by plaintiff Robert Del Vecchio, trustee of the Robert Del Vecchio Trust, against property owner Barbara Lee Chartoire, individually and as executrix of the estate of Marion D. Richard, appeals from the January 2, 2007 order of the Chancery Division 1) denying Cherrystone's motion to intervene and redeem; 2) granting the motion of Del Vecchio to impose a constructive trust on the contract between Cherrystone and Chartoire; 3) voiding the recordation, on November 14, 2006, of the deed conveying the Fort Lee property owned by Chartoire to Cherrystone; 4) requiring that any redemption monies paid to the municipal tax collector be returned to Cherrystone; and 5) staying the matter pending appeal while prohibiting encumbrance or alienation of the property and permitting Chartoire to remain in the premises pending the outcome of this appeal.
On appeal, Cherrystone presents the following arguments:
Cherrystone's application should not have been denied as untimely, since the motion was attempted to be filed on the same date as redemption, and since the public policy rationale for the motion was fully satisfied.
The redemption has not yet occurred.
The sale exceeded nominal consideration.
The Plaintiff failed to comply with N.J.S.A. 54:5-98, and thus this statute cannot be used as a basis to deny redemption.
The record discloses that on December 3, 2003, Del Vecchio successfully bid for tax sale certificate no. 2003-04 at a tax sale conducted in Fort Lee, paying the sum of $4,882.46, plus a $1,500 premium. Following expiration of the statutorily-required two year period, on July 25, 2006, Del Vecchio filed a complaint for foreclosure. On September 15, 2006, an order was entered setting the amount of redemption as $48,351.21, the office of the Fort Lee tax collector as the place for redemption, and October 30, 2006 as the last day for redemption.
On October 30, 2006, Cherrystone having learned of the foreclosure action through a public records search, contracted for the purchase of the property "as is" from Chartoire for the sum of $200,000. It appears that the purchase was consummated on the same day. The deed was recorded on November 14, 2006. On October 30, Cherrystone also tendered the redemption amount to the Fort Lee tax collector, in Chartoire's name, utilizing the deposit money under the property sale agreement for that purpose pursuant to an agreement that the amount would be deducted from the purchase price at closing if redemption were permitted.*fn1 Thereafter, Cherrystone moved to intervene in the foreclosure action for the purpose of staying the entry of judgment in Del Vecchio's favor and redeeming the tax sale certificate. However, Cherrystone's messenger did not deliver the intervention motion to the courthouse for filing until October 31, 2006, the day after the period for redemption had expired.
On November 7, 2006, Del Vecchio filed a cross-motion to bar redemption, and on November 30, 2006, Chartoire moved to affirm the validity of the redemption and sale of the property. Following a hearing in the matter the chancery judge denied Cherrystone's motion to intervene and redeem, as well as Chartoire's motion to affirm the redemption and purchase, entering, on January 2, 2007, the order that we have previously described. The court based its decision on our opinions in Caput Mortuum, L.L.C., 366 N.J. Super. 323 (App. Div. 2004) and Simon v. Rando, 374 N.J. Super. 147 (App. Div. 2005). It found no need to determine whether more than nominal consideration had been provided. N.J.S.A. 54:5-89.1. We likewise decline to address that issue, and do not remand the matter for argument on that point, since Chartoire, through her counsel, has expressed her willingness to accept $200,000 as the purchase price for the property.
While the parties' motions remained pending, on November 14, 2006, Cherrystone deeded the Chartoire property to its president, Michael Bonner. One day later, Castle Point Mortgage placed a $450,000 mortgage on the property to secure a loan to Bonner. Neither occurrence was disclosed to the chancery judge before or at the December hearing. However, when the matter was later brought to the judge's attention, he extended the restraints contained in his January 2007 order to Bonner. A subsequent motion to intervene filed on behalf of Castle Point was denied by the chancery judge because of lack of jurisdiction, the case then being on appeal. A similar motion before us was denied as well.
On appeal, Cherrystone*fn2 advances its well-worn argument that the procedures that it employed in this matter (as in others) substantially complied with the provisions of the Tax Sale Law. However, in Simon v. Cronecker, 189 N.J. 304 (2007) and Simon v. Rando, 189 N.J. 339 (2007) the Supreme Court rejected Cherrystone's position that substantial compliance with governing statutory provisions was sufficient, holding that, once a foreclosure action has been filed, timely intervention into that action is required prior to redemption, along with payment to the property owner of more than nominal consideration for the property. Cronecker, supra, 189 N.J. at 311; Rando, supra, 189 N.J. at 343; also N.J.S.A. 54:5-98 (requiring intervention in the cause before attempting to redeem). Although Cronecker and Rando were decided after this matter was heard in the Chancery Division, the decisions were held to be retroactive in Malinowski v. Jacobs, 189 N.J. 345, 351-54 (2007). As a consequence, we find that Cherrystone's failure to timely intervene in the foreclosure action is fatal to its position here. We also conclude that a constructive trust was properly imposed on the sale as a safeguard to Chartoire's property rights. Cronecker, supra, 189 N.J. at 338.
Cherrystone argues additionally that the redemption in this case never officially took place, and thus Cherrystone was free to file its intervention motion and seek approval of the sale and redemption without risk of its motion being filed "after" redemption. For this reason, Cherrystone argues the court was incorrect in concluding that the motion was filed post-redemption, and it therefore should have reached the issue of nominal consideration. However, this argument was not presented to the motion judge, and we decline to consider it. Nieder v. Royal Indem. Ins. Co., 62 N.J. 229, 234 (1973). We note, however, that the procedural posture of the present case is substantially similar to that set forth in Cronecker, 189 N.J. at 312, and there the court did not required full compliance on the part of the lienholder with the redemption provisions of N.J.S.A. 54:5-55 prior to an adjudication of the rights of the lienholder and proposed third-party intervenor.
We likewise decline to address Cherrystone's argument that, because Del Vecchio failed to comply with the notice of suit provisions of N.J.S.A. 54:5-98, that statute cannot be utilized as a basis for denying redemption, noting that the argument was not presented to the chancery judge, and its factual support is contested.