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CCTS, L.L.C. v. Daugherty

December 18, 2008

CCTS, L.L.C., PLAINTIFF-APPELLANT,
v.
JOHN F. DAUGHERTY, HIS HEIRS, DEVISEES AND PERSONAL REPRESENTATIVES, AND HIS, THEIR OR ANY OF THEIR SUCCESSORS IN RIGHT, TITLE AND INTEREST; PRUDENTIAL INSURANCE COMPANY OF AMERICA; STATE OF NEW JERSEY; THE PUBLIC GUARDIAN FOR ELDERLY ADULTS; AND JOHN F. DAUGHERTY, JR., DEFENDANTS, AND CHERRYSTONE BAY, L.L.C., INTERVENOR-RESPONDENT.



On appeal from the Superior Court of New Jersey, Chancery Division, Camden County, Docket No. F-15781-05.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued December 8, 2008

Before Judges Carchman and Sabatino.

In this tax foreclosure matter, plaintiff CCTS, L.L.C. ("CCTS") appeals the Law Division's order of January 18, 2008, denying its post-judgment motion for sanctions against intervenor, Cherrystone Bay, L.L.C. ("Cherrystone"). We affirm that order, as we are satisfied that the motion judge did not abuse her discretion in declining to impose sanctions, particularly after the underlying matter had already concluded to judgment.

We will not recite in full the rather complicated facts and procedural history of this matter, except to the extent pertinent to our analysis of the narrow issue before us. The appeal arises out of a tax foreclosure against John and Helen Daugherty, owners of a house at 954 Clements Bridge Road in Barrington. The realty taxes on the residence were not paid in 2002. Consequently, CCTS obtained a tax sale certificate for the property at auction. Thereafter, in October 2005, CCTS filed a foreclosure action in the Law Division against the Daughertys.

In February 2007, the Law Division fixed the amount required to redeem the premises from tax sale at $17,256.16.

Subsequently, a representative of Cherrystone approached the Daughertys. He offered to have Cherrystone buy the Daughertys' home and satisfy the tax indebtedness.

As the result of their discussions with the representative, the Daughertys signed a form contract on April 24, 2007, agreeing to sell Cherrystone their property for $75,000 ("the $75,000 contract"). The form contract, which was prepared by Cherrystone, included a merger clause stating that "[t]his Contract is the entire and only agreement between the Buyer and the Seller as to this sale of property from Seller to Buyer." The signed Contract was scanned into a computerized database maintained by Cherrystone.*fn1

On April 26, 2007, pursuant to Simon v. Cronecker, 189 N.J. 304 (2007), Cherrystone moved to intervene in CCTS's tax foreclosure action, to establish its right to purchase the Daugherty property and "to close on the sale of this property in accordance with the current contract[.]" In preparing that intervention motion, Cherrystone's counsel contends that he accessed only the company's database, with the "mistaken belief that all documents related to the [Daugherty] case were contained therein."

CCTS opposed Cherrystone's motion to intervene. In doing so, CCTS advised the court that Cherrystone had entered into an "buyback" agreement with a homeowner in an unrelated tax foreclosure case in Bergen County and had not timely disclosed that agreement to the court. CCTS suggested that Cherrystone may have entered into a similar undisclosed buyback arrangement with the Daughertys, which might affect whether or not the property was being conveyed to Cherrystone for more than nominal consideration as required by Cronecker. Id. at 321-22. In its reply papers on the intervention motion, Cherrystone denied that such a buyback agreement existed here.

After hearing oral argument, the trial court granted Cherrystone's intervention motion on July 10, 2007, finding that the contract price of $75,000 exceeded nominal consideration. The court simultaneously ordered that Cherrystone redeem the certificates on or before August 14, 2007. Meanwhile, CCTS's law firm transmitted correspondence to Cherrystone's closing attorney and to other parties connected with the proposed sale, announcing that CCTS intended to appeal the court's order granting intervention. Cherrystone then requested the trial court to extend the deadline for redemption and closing, which the court denied.

Because Cherrystone had failed to redeem and close by the stated deadline, the trial court issued an order on August 17, 2007, directing the foreclosure unit to recommend entry of final judgment in favor of CCTS. Cherrystone filed a notice of appeal contesting the entry of the foreclosure judgment. Shortly thereafter, however, Cherrystone voluntarily dismissed its appeal, as the Daughertys had amassed sufficient funds to pay off the tax certificate, and CCTS had decided to avoid further litigation with the Daughertys, allowing them to retain the property.

Meanwhile, it came to light that when Cherrystone's representative met with them on April 24, the Daughertys had, in fact, entered into a separate "buyback" agreement, authorizing them to repurchase their premises from Cherrystone for $100,000. That buyback agreement was generated at the same time as the $75,000 contract with a laptop computer and a portable printer. However, according to a certification from Cherrystone's principal, Michael Bonner, the buyback agreement had not been promptly scanned into Cherrystone's electronic database when its representative returned to the company's office in ...


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