On appeal from the Superior Court of New Jersey, Chancery Division, Bergen County, Docket No. F-13516-10.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Carchman and Messano.
Essex Partners LLC (Essex) appeals the October 1, 2010 order denying its motion to extend the closing date for the court-ordered sale of real property. We have considered the arguments raised in light of the record and applicable legal standards. We affirm substantially for the reasons expressed by Judge Robert P. Contillo in his oral decision.
The facts and procedural history leading up to the order under review are convoluted but essentially undisputed.
The property at issue is commercial real estate located at 113 Essex Street in Maywood (the Property). On January 3, 2008, defendant Tru Med Properties LLC (Tru Med) obtained an acquisition and construction loan in the amount of $6,800,000 from the Greater Community Bank, which later merged into plaintiff, Valley National Bank (Valley). The loan agreement and note extended a line of credit that could be drawn upon over a twenty-four month period, after which the loan balance would convert into a permanent mortgage loan with a ten-year term. The maturity date of the loan was January 3, 2010.
Vyto Kab and Scott Savastano each owned fifty percent of Tru Med, which intended to use the Property as a "[s]urgical [c]enter." On December 1, 2009, Valley served Tru Med with a notice of default based upon alleged misrepresentations Savastano made regarding his financial condition. The default notice also included Valley's allegation that its interests were no longer financially secure.
That claim was based, in part, on litigation Tru Med had commenced in October 2009 against Savastano (the Tru Med litigation). Tru Med alleged Savastano had misrepresented his financial condition and failed to contribute to the ongoing expenses of the Property. Tru Med sought to compel Savastano to convey his interests to Kab, or alternatively, dissolution of Tru Med.
After the note matured, on January 5, 2010, Valley sent Tru Med another notice of default declaring that all outstanding amounts were now due. On April 8, 2010, after repeated attempts to compel Tru Med to "cure any defaults," Valley instituted this foreclosure action.
The following day, Kab filed a motion on behalf of himself and Tru Med seeking: leave to intervene in the foreclosure action; to compel the sale of the Property pendente lite pursuant to N.J.S.A. 2A:50-31; to appoint a receiver for the Property; and to compel a public auction of the Property to the highest bidder within thirty days, with a closing within thirty days thereafter, and at which Kab and Savastano could bid "either individually or on behalf of an entity in which [they owned] an entity interest." Savastano also sought leave to intervene as a defendant in the foreclosure action.
Following oral argument, on May 10, the Chancery judge granted both Kab and Savastano leave to intervene and appointed Martin Dowd, an attorney, as "receiver for the purposes of securing and managing tenants." Kab filed another motion seeking to compel Dowd to sell the Property at a public auction.*fn1
On May 19, Savastano filed opposition to Kab's motion. In his certification, Savastano accused Kab of "unclean hands," alleging Kab's true motive was his desire to purchase the Property and lease it on his own, thereby "depriv[ing] Tru Med of . . . substantial equity" and denying Dowd his court-appointed right to find suitable tenants. On May 28, despite Savastano's objections, the Chancery judge granted Kab's motion and ordered Dowd to sell the Property at a public auction. The order provided that the Property "be offered for sale . . . for the highest and best price that . . . will bring in cash"; that the auction be held within forty-five days; that the "closing . . . occur as soon as practicable"; and that Kab and Savastano be permitted to make bids on the property "individually or on behalf of an entity . . . which [they] own." On June 14, the judge amended her order and extended the auction date for an additional thirty days.
On June 30, Dowd filed a notice of auction and sale to be scheduled for August 10. Dowd set the "minimum purchase price" at $5.7 million, acknowledged that the property would be sold "free and clear of all liens" and listed the loans encumbering the Property at that ...