On appeal from Superior Court of New Jersey, Chancery Division, Hudson County, Docket No. C-85-06.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued September 22, 2008
Before Judges Carchman, Sabatino and Simonelli.
In this tax certificate foreclosure matter, defendants Michael Savo and Patricia Savo appeal from the March 30, 2007 order granting summary judgment to plaintiff MMU, LLC, and imposing a constructive trust on property located at 17 Meadow Street, Bayonne (the property), which defendants purchased in April 2004. Defendants also appeal from the order of August 21, 2007, setting forth the specific terms of the constructive trust. Plaintiff cross-appeals from that portion of the August 21, 2007 order awarding defendants a credit of $11,700 for repairs made to the property. We affirm.
Madeline Kulish owned the property. She died intestate on January 21, 1997. Her only child, Paul Kulish (Kulish), acquired the property but failed to pay the real estate taxes. As a result, on September 28, 2001, the Bayonne tax collector held a public auction sale and sold a tax sale certificate (the certificate) to Federal Warranty SVC Corp. (Federal) for $3904.55.
On December 9, 2003, Federal assigned the certificate to plaintiff. On January 26, 2004, plaintiff's counsel advised the tax collector that it was filing a tax sale foreclosure complaint. On February 2, 2004, plaintiff filed a foreclosure complaint, naming Madeline Kulish, John Doe, the Federal Deposit Insurance Corporation and an entity identified as Community Development Office as defendants. On March 31, 2004, plaintiff recorded a lis pendens on the property. Neither the complaint nor the lis pendens named The Estate of Madeline Kulish, Kulish, or defendants as parties.
Because of the property's dilapidated condition, not many people were interested in purchasing it. However, Kulish asked defendants if they would purchase the property to help him pay his debts.*fn1 On January 15, 2004, Kulish and defendants entered into a contract, where defendants agreed to purchase the property for $85,000,*fn2 and to permit Kulish to continue living there as a tenant. The closing occurred on or about April 22, 2004.*fn3 Defendants' counsel paid the amount necessary to redeem the certificate from the $45,016.82 Kulish received from the sale proceeds.
On April 23, 2004, the tax collector notified plaintiff that the certificate had "been redeemed and the redemption funds [were] deposited into the City's Tax lien Redemption Account."
Plaintiff believed that because the tax collector accepted the redemption monies, there was a lawful redemption. Thus, plaintiff surrendered the certificate to the tax collector.
Plaintiff later discovered that the property was redeemed by persons who were not parties to and did not intervene in the foreclosure action. On May 1, 2006, plaintiff filed a complaint against defendants, seeking to declare the redemption unlawful, to impose a constructive trust upon the property and to allow plaintiff to obtain title to the property for $85,000.
On October 16, 2006, plaintiff filed a motion for summary judgment. On November 3, 2006, defendants filed a cross-motion for summary judgment. On March 30, 2007, Judge Olivieri issued his opinion after our Supreme Court's decision in Simon v. Cronecker, 189 N.J. 304 (2007), finding as follows:
These cases, specifically [Cronecker], dealt with a third-party investor who had purchased two properties after a foreclosure complaint was filed, and the court held that it would not be permitted to take action without intervening in the underlying foreclosure action. In order to redeem a tax sale certificate, that party must be a party to the underlying foreclosure action. Additionally, the Cronecker court held that redemptions that are done, either directly or indirectly, are still subject to judicial review.
This court does not have to get to the issue of whether or not there was any familial or close relationship, thereby triggering this nominal consideration analysis. It's clear, based upon the statutes, the Court Rules and the aforementioned cases, that since there was no motion to intervene, the appropriate remedy in this matter is for a ...