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American Tax Funding, LLC v. Golaszewski

August 29, 2008

AMERICAN TAX FUNDING, LLC, PLAINTIFF-APPELLANT,
v.
JOHN M. GOLASZEWSKI, MRS. JOHN M. GOLASZEWSKI, WIFE OF JOHN M. GOLASZEWSKI, HELEN PRZYBYLOWSKI, DAVID DORFFMAN, ANITA DORFFMAN, GLADIATOR INVESTMENT PARTNERSHIPS-2, LLC, FIRST NATIONAL ACCEPTANCE CO., LLC, JOHN P. BRUNING, BAXTER GROUP, INC., RARITAN BAY MEDICAL CENTER, DENISE GRABOWSKI, AND THE STATE OF NEW JERSEY, DEFENDANTS, AND CHERRYSTONE BAY, LLC, DEFENDANT/INTERVENOR-RESPONDENT.



On appeal from Superior Court of New Jersey, Chancery Division, Middlesex County, Docket No. F-13291-05.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued April 21, 2008

Before Judges Graves and Sabatino.

Plaintiff American Tax Funding, LLC (plaintiff or ATF), appeals from an order entered on September 12, 2007, granting defendant Cherrystone Bay, LLC (defendant or Cherrystone) intervenor status and permitting it to redeem plaintiff's tax lien on property previously owned by John M. Golaszewski located at 26 Embroidery Street in Sayreville (the property or subject property). We affirm.

The property involved in this case was the subject of two separate tax liens acquired by third parties through the sale of tax certificates. The first tax sale certificate was purchased on July 2, 1996, and ultimately assigned to Gladiator Investment Partnership-2, LLC (Gladiator) on May 10, 2003. The second tax sale certificate was purchased by ATF at a public tax sale on November 27, 2001. In addition, the property was also subject to a mortgage held by David and Anita Dorffman (the Dorffman Mortgage).

At a date undisclosed in the record, Gladiator filed a tax sale certificate foreclosure action (F-4849-01) based upon outstanding taxes due on the property.*fn1 Similarly, on August 30, 2005, ATF filed a complaint to foreclose on its tax sale certificate (F-13291-05). Prior to the close of litigation in Gladiator's tax foreclosure action, Cherrystone negotiated with David Dorffman--a certified public accountant--to purchase the Dorffman Mortgage for $40,000. The Dorffman Mortgage was assigned to Cherrystone on August 21, 2006, apparently prior to final judgment in Gladiator's tax foreclosure proceeding. After acquiring the Dorffman Mortgage, Cherrystone moved to intervene in Gladiator's tax foreclosure action and to redeem Gladiator's tax lien. The trial court concluded the $40,000 Cherrystone paid to acquire the Dorffman Mortgage exceeded nominal consideration and, on October 10, 2006, it granted Cherrystone's motion to intervene and "to redeem the tax sale certificate of [Gladiator] . . . by paying to the tax collector of the Borough of Sayreville the sum of $59,798.15, which includes previously[] awarded counsel fees in the amount of $1,227.40."

Rather then redeem the tax lien from Gladiator, Cherrystone purchased an assignment of the tax sale certificate from Gladiator for a total of $79,798.15--the redemption value of the tax sale certificate ($59,798.15), plus a $20,000 premium. The assignment was recorded on October 23, 2006, giving Cherrystone two interests in the subject property--a mortgage and a tax lien. Thereafter, Cherrystone substituted its name for Gladiator as plaintiff in the F-4849-01 tax sale foreclosure action, and it moved for final judgment.

On November 14, 2006, an order was entered in ATF's foreclosure action declaring "the amount required to redeem the premises from [ATF's] Tax Sale Certificate is $54,724.95, which amount includes subsequent taxes, interest, together with lawful interest on said sum from March 30, 2006, together with costs of suit to be taxed in the sum of $335.00." The order also designated December 29, 2006, as the last day for redemption of the property.

At the time ATF filed its foreclosure complaint on August 30, 2005, Cherrystone held neither a mortgage interest (which it acquired from Dorffman on August 21, 2006) nor a tax lien interest (which was acquired from Gladiator and recorded October 23, 2006). Accordingly, Cherrystone was not a named defendant in ATF's foreclosure action. On December 27, 2006, therefore, Cherrystone filed a "Notice of Motion to Stay the Entry of Final Judgment, to be Granted Intervenor Status and to be Permitted to Redeem" in ATF's foreclosure action. Subsequently, on January 5, 2007, final judgment was entered in favor of Cherrystone in the F-4849-01 foreclosure case (the action initially instituted by Gladiator), and Cherrystone was "vested with an absolute and indefeasible estate of inheritance in fee simple to the [subject property]."

Oral argument on Cherrystone's motion to intervene and redeem in ATF's foreclosure action was held on February 2, 2007, and the trial court reserved its decision to afford the parties an opportunity to submit briefs in light of Simon v. Cronecker, 189 N.J. 304 (2007) and Simon v. Rando, 189 N.J. 339 (2007), which were decided on January 29, 2007. In a written decision dated August 14, 2007, the trial court granted Cherrystone's motion to intervene and redeem ATF's tax lien. The court's findings and conclusions included the following:

[C]herrystone undeniably holds and owns two redeemable interests under N.J.S.A. 54:5-54 and so they should be allowed to intervene in this foreclosure matter. N.J.S.A. 54:5-54 provides:

Right of redemption by owner or person having interest

Except as hereinafter provided, the owner, his heirs, holder of any prior outstanding tax lien certificate, mortgagee, or occupant of land sold for municipal taxes, assessment for benefits pursuant to [N.J.S.A.] 54:5-7 or other municipal charges, may redeem it at any time until the right to redeem has been cut off . . . by paying to the collector . . . of delinquent taxes on ...


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