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Barnes v. Molendyk

November 23, 2009

HELEN BARNES, TRUSTEE FOR BERGEN EASTERN PENSION TRUST, PLAINTIFF-RESPONDENT,
v.
WILLIAM MOLENDYK, INDIVIDUALLY AND AS EXECUTOR FOR THE ESTATE OF JOHANNA MOLENDYK, MARIA MOLENDYK, SOPHIA MOLENDYK AND STATE OF NEW JERSEY, DEFENDANTS.
LELAND AVENUE ASSOCIATES, LLC, APPELLANT.



On appeal from Superior Court of New Jersey, Chancery Division, Passaic County, Docket No. F-23547-07.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued October 14, 2009

Before Judges Carchman and Ashrafi.

In this tax foreclosure case, a prospective third-party investor appeals denial of its application to intervene and to redeem the tax sale certificate. The primary issue is whether the tax lien holder's settlement with a prior third-party investor effectively reinstated a judgment of foreclosure that had previously been entered, and thus, prevented any other third-party investor from attempting to intervene. We conclude that the trial court did not err in ruling that the matter had been resolved through the settlement. Therefore, we affirm the trial court's order denying intervention to the new third-party investor.

The property subject to foreclosure is located at 86 Hinchman Avenue in the Township of Wayne and was owned by Johanna Molendyk. Upon her death, her son, William Molendyk, became the executor of her estate. William allegedly did nothing beyond filing an initial application to probate the estate. He died in January 2008, and Johanna's daughter, Sophia Molendyk, became the substitute executrix of Johanna's estate.

In June 2002, plaintiff Helen Barnes, Trustee for Bergen Eastern Pension Trust, purchased a tax sale certificate at a public sale for $5,790.18 of unpaid taxes and interest for the subject property. Plaintiff continued paying property taxes for the next several years. In May 2007, plaintiff sent a notice of intent to foreclose on the property to William Molendyk, indicating that $52,680.87 was then due to plaintiff to redeem the tax sale certificate. In September 2007, plaintiff filed and served a foreclosure complaint in the Chancery Division under N.J.S.A. 54:5-86, naming as defendants William, Maria, and Sophia Molendyk, the estate of Johanna Molendyk, and the State of New Jersey. On February 14, 2008, the court entered an order setting a deadline of March 31, 2008, for redemption of the tax sale certificate, and $71,959.96 as the redemption amount.

In mid-March 2008, a third-party investor, Cherrystone Bay, LLC, attempted to contact a representative of Johanna Molendyk's estate to discuss redeeming the tax sale certificate and purchasing the property. On March 30, 2008, Sophia Molendyk entered into a contract on behalf of the estate for sale of the property to Cherrystone for $125,000.

The next day, March 31, the attorney for Cherrystone, Anthony Velasquez, filed an application with the court for an order to show cause seeking to stay entry of judgment, to intervene in the foreclosure action, and to redeem the tax sale certificate. Cherrystone's application was served upon plaintiff's attorney by hand delivery late the same day, and attorney Velasquez also sent a letter to the Foreclosure Unit of the Superior Court Clerk's Office in Trenton notifying it of Cherrystone's application to intervene. Although the Clerk's Office received the letter on April 1, the Foreclosure Unit entered a judgment of foreclosure on behalf of plaintiff on that date, apparently unaware that the case was no longer uncontested.

The court heard argument on Cherrystone's application on April 3 and entered an order to show cause with temporary restraints dated April 10, 2008. Included in the April 10 order was that "[p]ending the return date of this Order, by way of temporary restraint it is directed that Final Judgment not be entered against the Defendants in this matter until the resolution of the current Order to Show Cause application." (Emphasis added). The record on appeal does not reveal whether the foreclosure judgment entered by the Clerk's Office on April 1 was vacated or not.

After hearing argument on Cherrystone's application to intervene, the court entered an order dated June 11, 2008, which permitted Cherrystone to intervene, found that the purchase price of $125,000 was "above 'nominal consideration' under applicable law" and set a deadline for redemption of the property using the following language:

If no appeal is taken, and if no redemption is tendered after the expiration of two (2) weeks of the expiration of such appeal period, then the Plaintiff shall be permitted to move for entry of final judgment, in accordance with all other applicable laws governing this foreclosure action. [(Emphasis added).]

Plaintiff tax certificate holder filed a notice of appeal from the order of June 11, 2008.

A short time later, plaintiff and Cherrystone reached a settlement agreement, which they submitted to the court in the form of a consent order. The court executed the consent order on August 6, 2008. In the settlement, plaintiff agreed to withdraw its opposition to Cherrystone's intervention and redemption of the property, provided that Cherrystone was required to purchase the property within forty-five days in accordance with terms of the contract of sale previously approved by the court, and to pay the redemption amount to the tax ...


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