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Corestates/New Jersey National Bank v. Chas. Schaefer sons

October 3, 2008

CORESTATES/NEW JERSEY NATIONAL BANK, BY ITS ASSIGNEE SCHAEFER SALT RECOVERY, INC., PLAINTIFF-APPELLANT,
v.
CHAS. SCHAEFER SONS, INC., A NEW JERSEY CORPORATION, SCHAEFER PROPERTIES, INC., A NEW JERSEY CORPORATION, JAMES K. BARBOUR, AND CAROLE BARBOUR, CHARLES F. BOEDDINGHAUS, III, JUDY L. BOEDDINGHAUS, DEFENDANTS.
CORESTATES/NEW JERSEY NATIONAL BANK, BY ITS ASSIGNEE SCHAEFER SALT RECOVERY, INC., PLAINTIFF-APPELLANT,
v.
CHAS. SCHAEFER SONS, INC., A NEW JERSEY CORPORATION, SCHAEFER PROPERTIES, INC., A NEW JERSEY CORPORATION, JAMES K. BARBOUR, CAROLE BARBOUR, CHARLES F. BOEDDINGHAUS, III, JUDY L. BOEDDINGHAUS, THE STATE OF NEW JERSEY, THE UNITED STATES OF AMERICA, AND THE DOW CHEMICAL COMPANY, DEFENDANTS.
CAROL SEGAL, BY HER ASSIGNEE SHERWOOD GROUP ASSOCIATES, LLC, PLAINTIFF-RESPONDENT,
v.
JAMES K. BARBOUR, MRS. JAMES K. BARBOUR, WIFE OF JAMES K. BARBOUR, CHARLES F. BOEDDINGHAUS, III, JUDY BOEDDINGHAUS, WIFE OF CHARLES F. BOEDDINGHAUS, III, FIRST UNION NATIONAL BANK, N/K/A WACHOVIA BANK, AMERICAN EXPRESS CENTURION BANK, ATLANTIC HIGHLANDS HARBOR COMMISSION, THE DOW CHEMICAL COMPANY, OCCIDENTAL CHEMICAL, N/K/A CLONE CHEMICAL CORP., STATE OF NEW JERSEY, DEFENDANTS.
CAROL SEGAL, BY HER ASSIGNEE SHERWOOD GROUP ASSOCIATES, LLC, PLAINTIFF-RESPONDENT,
v.
SCHAEFER PROPERTIES, INC., ICC CHEMICAL CORPORATION, PRIOR CHEMICAL CORPORATION, AND STATE OF NEW JERSEY, DEFENDANTS, AND SCHAEFER SALT RECOVERY, INC., ASSIGNEE OF FIRST UNION NATIONAL BANK F/K/A THE NATIONAL STATE BANK OF ELIZABETH, NJ, N/K/A WACHOVIA BANK, DEFENDANT-APPELLANT.
CAROL SEGAL, BY HER ASSIGNEE SHERWOOD CORPORATION, LLC, PLAINTIFF-RESPONDENT,
v.
CHAS. SCHAEFER SONS, INC., FIRST UNION NATIONAL BANK, N/K/A WACHOVIA BANK, VIMAX INDUSTRIES, INC., RENNERT-DIANA OF NEW YORK, INC., TAKEDA, U.S.A., INC., OCCIDENTAL CHEMICAL, CONSOLIDATED RAIL CORP., ICC CHEMICAL CORPORATION, PRIOR CHEMICAL CORPORATION, THE DOW CHEMICAL COMPANY, STATE OF NEW JERSEY, DEFENDANTS.



On appeal from the Superior Court of New Jersey, Chancery Division, Union County, Docket Nos. C-164-94, F-15886-94, F-17783-99, F-18075-99 and F-18078-99.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued September 9, 2008

Before Judges Wefing, Yannotti and LeWinn.

Schaefer Salt Recovery, Inc. (Recovery) appeals from an order entered by Judge John F. Malone on August 14, 2007, which denied Recovery's motion to intervene in certain actions commenced by Carol Segal and Sherwood Group Associates, LLC (Segal) to foreclose on their tax sales certificates. For the reasons that follow, we affirm.

I.

Schaefer Properties, Inc. (SPI) is the owner of certain property in the Township of Union. In 1985, SPI issued a mortgage on the property to the New Jersey Economic Development Authority (NJEDA) as security for a loan. Corestates/New Jersey National Bank (Corestates) subsequently became the holder of the loan and mortgage. In 1995, SPI defaulted on the loan.

Thereafter, Corestates instituted an action to foreclose on the mortgage. Corestates also instituted a separate action against SPI seeking a monetary judgment for the amounts due on the loan. SPI did not contest either action. Accordingly, a default judgment of foreclosure was entered for Corestates, as well as a default judgment in the amount of $5,708,965.81.

In 1999, Huskie Portfolio, LLC (Huskie) paid Corestates $323,705 for the purchase of a portfolio of assets, which included the mortgage and judgment on the subject property. Although one of Huskie's employees testified at a deposition that Huskie believed that it paid $60,000 for the purchase of the subject mortgage and judgment, it appears that Huskie never made a formal allocation of the amounts paid for each asset within the portfolio that it had acquired from Corestates.

In addition to defaulting upon the NJEDA loan, SPI failed to pay taxes assessed upon the property. Beginning in 1994, the municipality sold the property for the unpaid taxes and Segal began acquiring tax sale certificates at those sales. Segal later filed tax foreclosure actions and, after defaults were entered against the defendants in those actions, the trial court established the dates for redemption of the property from the tax liens.

On May 5, 2004, Huskie assigned the Corestates mortgage and judgment to Recovery. Recovery paid Huskie $20,000, and agreed to pay Huskie an additional $200,000 if Recovery realized more than $45,000 in profit from the property.

On July 6, 2004, Recovery filed an answer to Segal's tax foreclosure complaints and asserted a right to redeem the property from the tax liens. Recovery also filed a motion to intervene in the tax foreclosure actions. On August 13, 2004, the trial court struck Recovery's answers as untimely and denied its motion to intervene. In November 2004 and January 2005, the trial court entered final tax foreclosure judgments in favor of Segal.

We reversed those judgments. Corestates/N.J. Nat'l Bank v. Charles Schaefer Sons, Inc., 386 N.J. Super. 554, 558 (App. Div. 2006). We noted that N.J.S.A. 54:5-89.1 precludes a person from intervening in a tax sale foreclosure action if, after the action was filed, the person acquires an interest in the realty for "nominal consideration." Id. at 562. We observed that under the case law, there was no "bright line test" for determining whether the person paid "nominal consideration." Id. at 564.

We stated, however, that the primary purpose of the statute was to address situations where the sum paid to the owner or his heirs was disproportionate to the "windfall" that the third-party purchaser may reap from its investment. Ibid. (quoting Savage v. Weissman, 355 N.J. Super. 429, 443 (App. Div. 2002)). We noted that the term "windfall" generally means "a disproportionate gain after the fair market value of the property, as set by an arm's length sale or appraisal, is reduced by any legitimate ...


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