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Wachovia Cust. for Plymouth Park Tax Service, L.L.C. v. Pitts

June 24, 2010

WACHOVIA CUST. FOR PLYMOUTH PARK TAX SERVICE, L.L.C., PLAINTIFF-APPELLANT,
v.
THOMAS SAMUEL PITTS, INDIVIDUALLY, THOMAS SAMUEL PITTS AS CO-EXECUTOR OF THE ESTATE OF DOLORES M. PITTS, MRS. THOMAS SAMUEL PITTS, WIFE OF THOMAS SAMUEL PITTS, CHARLES JOSEPH PITTS, INDIVIDUALLY, CHARLES JOSEPH PITTS AS CO-EXECUTOR OF THE ESTATE OF DOLORES M. PITTS, MRS. CHARLES JOSEPH PITTS, WIFE OF CHARLES JOSEPH PITTS, FORD MOTOR CREDIT CO., ESSEX COUNTY BOARD OF SOCIAL SERVICES, DIANNE WHITE, MONMOUTH COUNTY, LAVERNNE PITTS, ANTHONY MASSI, DEANNA WEBB, WEST JERSEY HEALTH SYSTEMS, FRANK BURTON & SONS INC., SURGICAL GROUP OF SOUTH JERSEY, VIRTUA WEST JERSEY HEALTH SYSTEM, STATE OF NEW JERSEY, DEFENDANTS, AND UNIPRO PROPERTY GROUP, L.L.C., INTERVENOR-RESPONDENT.



On appeal from the Superior Court of New Jersey, Chancery Division, Camden County, Docket No. F-1128-08.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued April 26, 2010

Before Judges Lisa and Baxter.

This appeal implicates the right of a third-party investor to intervene in a tax foreclosure action, in accordance with the principles set forth in Simon v. Cronecker, 189 N.J. 304 (2007).

Plaintiff, Wachovia Custodian for Plymouth Park Tax Service, L.L.C. (Wachovia) purchased a tax sale certificate for unpaid taxes on a property in Stratford owned by defendants Thomas and Charles Pitts (collectively referred to as "Pitts"). Wachovia initiated the tax foreclosure action. Prior to the entry of a judgment of foreclosure, Unipro Property Group, L.L.C. (Unipro) entered into a contract with Pitts for the sale of the property to Unipro. Unipro then moved to intervene in the foreclosure action and to be allowed to redeem the tax sale certificate.

By order of July 16, 2008, Judge Colalillo granted the intervention motion and authorized redemption under certain conditions as set forth in the order. The court retained jurisdiction to monitor compliance with the conditions. By order of May 13, 2009, the judge granted Wachovia's motion to dismiss the action. That order also contained a provision for disposition of the proceeds of the sale of the property if such sale should occur during the pendency of the anticipated appeal.

Wachovia appeals from those orders. It argues that Unipro failed to meet the statutory requirements to be permitted to redeem, that Unipro's intervention motion sought an advisory opinion, and that Unipro failed to provide proof that it paid more than nominal consideration as required by Cronecker. We reject these arguments.

Wachovia purchased the tax sale certificate for $3338.11 on June 22, 2005. It began the foreclosure action on January 8, 2008. In the interim, it had paid property taxes as they became due, and the amount required for redemption as of April 28, 2008 was approximately $12,000.

On April 1, 2008, Unipro entered into an agreement with Pitts, by which Unipro would pay all outstanding liens and judgments affecting title to the property, title would then transfer to Unipro, and Unipro would list the property for sale with an independent realtor for fair market value. Upon selling the property, Unipro would be reimbursed for its expenses in clearing title, after which 35% of the remaining proceeds would go to Unipro and 65% would go to Pitts. Until the ultimate sale was consummated, Pitts would be permitted to remain in the home rent-free. The agreement further provided that if Unipro was not successful in its motion to intervene, the agreement would be null and void.

In connection with the intervention motion, Unipro provided competent evidence from which the court could estimate the amount that ultimately would be paid to Pitts. Unipro estimated the costs of clearing title at approximately $26,000. It provided evidence of the fair market value of the property, with a suggested market price of between $170,000 and $190,000. The assessed value was $87,400. It proposed to list the property with an unrelated local real estate broker at a commission not to exceed 6%. It agreed to pay certain expenses, including the realty transfer fee. And, as we have stated, Pitts was given the right to remain in the property rent-free until it was sold.

Based upon this information, Judge Colalillo concluded that Unipro had offered Pitts more than nominal consideration. She also found that the contract gave Unipro a legal right to the property and rendered it a party entitled to intervene and redeem. The July 16, 2008 order required that the property be immediately listed for sale at a price recommended by a local real estate agent representing fair market value, that it could not be sold to any party connected with Unipro, that Unipro's costs of clearing title would be capped at $26,000, that the realtor's commission could not exceed 6%, and that the court would retain "continuing jurisdiction over the subject contract until full compliance with all of the terms of said contract."

On February 18, 2009, Unipro informed Judge Colalillo that it had recently tendered the redemption amount to the tax collector and had listed the property for sale for $129,900 through Weichert Realtors, which would receive a 5.5% commission. On March 16, 2009, Wachovia apparently refused to surrender the certificate to Unipro and instead filed a motion to dismiss its own foreclosure action and to stay the matter pending appeal. Wachovia wished to appeal the intervention order, but could not do so unless a final order was entered. This resulted in the May 13, 2009 order dismissing the action, ordering Wachovia to immediately surrender the certificate to Unipro, and (if Wachovia timely appealed) directing Unipro to deposit its share of the proceeds from the sale of the property with the court pending the outcome of the appeal. If no appeal was filed, Unipro would not be required to deposit its share with the court, but could retain it. Whether or not an appeal was filed, the 65% of the net proceeds due to Pitts would be paid to Pitts.

On June 2, 2009, the tax sale certificate was fully paid and surrendered to Unipro. On June 19, 2009, Unipro sold the house for $120,000. The realtor received a commission of $6325. Unipro's costs to clear the title amounted to $21,813. After all other costs of sale, the net proceeds were $85,950.82. Unipro disbursed $60,000, representing nearly 70% of the net ...


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