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December 1, 2010


On appeal from the Superior Court of New Jersey, Chancery Division, Burlington County, Docket No. F-24369-06.

Per curiam.


Submitted September 29, 2010 - Decided Before Judges Kestin and Coburn.

Defendants appeal from an order denying their motion to vacate a default judgment in a tax foreclosure regarding property in Cinnaminson Township. The substituted plaintiff is a successor in interest to the purchaser of the tax sale certificate.

In challenging the order, defendants contend that the trial court "erred . . . because the heirs [of the title owner] did not receive notice of the foreclosure" and "because they were denied notice and an opportunity to be heard on their motion to vacate the default." In response to an assertion in plaintiff's Appellate Division Case Information Statement, defendants also argue that "this appeal is not mooted by [plaintiff's] sale of the . . . property."

The complaint, captioned as an in personam tax foreclosure action to bar the right of redemption, see N.J.S.A. 54:5-85 to -104, was filed on December 21, 2006, by New Jersey Home Construction, Inc., which alleged it was the owner of a tax sale certificate.*fn1 The individual defendants named in the complaint were the decedent, Mary A. Faine a/k/a/ Mary R. Curry, the widowed title owner of the property, deceased on October 31, 2002, with "no estate pleadings . . . located"; and Toni E. Fleming, who was alleged to be "a known heir." The named defendants also included Faine/Curry's "heirs, devisees, and personal representatives and their or any of their successors in right, title, and interest" because, plaintiff alleged, it "has been unable to determine her heirs." On March 19, 2007, the complaint was amended to name as defendants Anthony Jones and Barbara Hawkins "because they are known heirs" of Faine/Curry.*fn2

Certifications by plaintiff's attorney, dated May 4, 2007, described Jones as Faine/Curry's grandson*fn3 and Hawkins as Faine/Curry's daughter. In another certification dated May 11, 2007, plaintiff's counsel stated: "We believe that Toni Fleming is also a daughter of Mary A. Curry."

On November 2, 2007, plaintiff's attorney certified that service had been made upon all named defendants and that none had filed an answer "or otherwise moved," and he requested the entry of default as to all. On the ultimate motion to vacate the default that was to enter, plaintiff asserted that both Barbara Hawkins and Anthony Jones had been served by certified and regular mail. A return receipt for the certified mail from Anthony Johns appears in the record. No return receipt from Barbara Hawkins was received, but plaintiff alleged that the regular mail sent to her had not been returned.

In an order dated November 2, 2007, on the recommendation of the Office of Foreclosure, see R. 1:34-6, the court had set the redemption amount at $19,025.02 plus costs of $1,180.26. On January 2, 2008, also on the recommendation of the Office of Foreclosure, in a form reciting that no redemption of the tax sale certificate had been made, a final judgment of foreclosure was entered against all named defendants, along with an order correcting the mis-designated address of the property from 706

S. Randolph Avenue to number 708.

Sixteen days later, on January 18, 2008, an "order pending

motion to vacate sale" was entered precluding transfer of the property because the "heirs [had] applied . . . to vacate Final Judgment[.]" A letter from plaintiff's counsel to the court, dated January 29, 2008, stated that the motion to vacate and redeem the property had been made "on behalf of Mallonease Scott, Barbara J. Hawkins, Anthony Johns, and Hiram R. Johnston, Jr." The record before us on appeal, however, does not include the papers filed in support of the motion.

The next document, chronologically, in the record on appeal is the May 2, 2008 decision of the trial court denying the motion to vacate the default judgment. That decision sets forth, in detail, the factual background and positions of the parties on the motion to vacate the default and allow redemption.

The movants contended that Mallonease O. Scott and defendant Barbara J. Hawkins, sisters who resided together in Texas, were the daughters of the intestate decedent and her only heirs at law. Scott had never been named as a defendant in the foreclosure proceeding. One named defendant, Anthony Johns, a Nevada resident who was Scott's son and decedent's grandchild, was not an heir at law; and another named defendant, Toni E. Fleming, was a stranger and unknown by the family. One of the movants, Hiram R. Johnston, Jr., was not a defendant but was a trusted family friend who had been "taking care of the property" and was there "on a daily basis between August, 2007 and January 2, 2008." He certified: "At no time during the aforementioned period did anyone post any form of notice on the property related to this foreclosure matter."*fn4

Central among the movants' arguments was that plaintiff had failed to engage in sufficient efforts to identify the decedent's heirs, and had, especially, failed to exercise reasonable diligence in identifying Mallonease Scott, whose name appeared on no document filed in the action; that plaintiff had not effected personal service upon all the heirs; and that plaintiff had misused the service by publication alternative.

Plaintiff contended that, before the complaint had been filed, counsel had engaged in a title search, a vital statistics search, and skip tracing procedures. None of these efforts had produced any name other than that of Toni E. Fleming. Only after the complaint had been filed, did plaintiff receive the information from the municipal tax collector that resulted in an amendment to the pleadings naming Hawkins and Johns as defendants by reason of their status as presumed heirs of the decedent.

In denying the motion to vacate the default judgment of foreclosure, the trial court found that, with respect to all parties in interest, plaintiff had satisfied the requirements of Rule 4:4-4(b)(1)(C) for mail service and Rule 4:4-5 for service by publication. Movants do not impugn the factual bases of this decision regarding the named defendants, and we have no independent ground for questioning the findings. See Pascale v. Pascale, 113 N.J. 20, 33 (1988) (the substantial evidence rule governs appellate review of findings in a general equity matter). Moreover, as a general rule, we are bound to respect a trial court's discretionary determinations to the extent they are based on undisputed fact. See Scott v. Salerno, 297 N.J. Super. 437, 446-48 (App. Div.), certif. denied, 149 N.J. 409 (1997). Thus, we are persuaded that the result as to Hawkins and Johns could remain undisturbed.*fn5

The application to vacate the default judgment that had been entered on the basis of the trial court's May 2, 2008 decision came before the trial court on three subsequent occasions. On April 3, 2009, the initial motion was denied following an in-court proceeding in which movants' attorney did not appear. Counsel has since certified that he received no notice of that argument date. Thereafter, the trial court treated an order to show cause to reinstate the motion as a motion for reconsideration and, in a June 26, 2009 written decision, denied it, as well. Another order to show cause was filed, and, in an order entered on November 13, 2009, the relief sought was again denied for reasons stated on the record in an October 15, 2009 proceeding.

In the face of the reality that the heirs stand to lose their right to the full value of the property, whatever that may be, for failure to pay some $20,000 on a tax sale certificate, a default judgment as to Mallonease Scott cannot be countenanced without specific findings based on further proofs as to whether plaintiff engaged in reasonably diligent efforts to identify and serve her. See, e.g., I.E.'s, L.L.C. v. Simmons, 392 N.J. Super. 520, 529-32 (Law Div. 2006). Given that Scott resided in Texas, it is clear that service by publication in a newspaper circulating in Burlington County, New Jersey, was not likely to provide her with actual notice of the foreclosure proceeding and her right to redeem. That she resided with her sister, Hawkins, raises the question whether plaintiff's failure to identify her as a potential defendant in this matter could be seen to satisfy the "diligent inquiry" standard of Rule 4:4-5(3) that governs the effectiveness of service by publication. On the other hand, a trier of fact would also be confronted with another question based on the apparent fact that Scott and Hawkins resided together: whether mail service on one of them can fairly be deemed to be adequate service on the other.

Because, "where service on even one of multiple title owners is defective, operation of the tax sale law requires that the entire judgment be vacated[,]" id. at 536 (citing M & D Associates v. Mandara, 366 N.J. Super. 341, 356-57 (App. Div. 2004), certif. denied, 180 N.J. 151 (2004)), the heirs of the decedent are entitled to a hearing to test the factual premises upon which a default judgment was entered or may enter against Scott.

On the current record, plaintiff cannot prevail on its contention that the appeal is moot because the property has been sold to a bona fide purchaser.

Where it is made to appear that one has acquired title to property and has paid a valuable consideration therefor, the purchaser is presumed to be a bona fide purchaser for value without notice until the contrary appears, and the burden of showing to the contrary rests upon the party alleging that title was acquired by the purchaser with notice of an outstanding equity or claim. [Venetsky v. West Essex Bldg. Supply Co., 28 N.J. Super. 178, 187 (App. Div. 1953).]

This issue was never addressed by the trial court and, therefore, no factual findings were made as to whether the subsequent purchaser actually paid "valuable consideration" and is thus presumed to be a "bona fide purchaser for value," ibid., or whether the subsequent purchaser had notice of defendants' claim to the property. Before we can address the question, factual findings must be made by the trial court.

The trial court's denial of the motion to vacate the default judgment must be partially and provisionally reversed as to Mallonease Scott, and the matter remanded for a hearing to establish the basis upon which a default judgment may be entered in respect of her interest in the property. If the court determines that no valid default could be entered with regard to Scott, the judgment shall be vacated. See M & D Assocs., supra, 366 N.J. Super. at 356-57; Simmons, supra, 392 N.J. Super. at 534-37.

Reversed and remanded.

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