May 21, 2012
ARIANNA HOLDING COMPANY, LLC, PLAINTIFF-RESPONDENT,
STEVEN BUDGE, DEFENDANT-APPELLANT.
On appeal from the Superior Court of New Jersey, Chancery Division, Middlesex County, Docket No. F-25131-08.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued March 27, 2012 -
Before Judges Kennedy and Guadagno.
Defendant Steven Budge appeals from an order denying his motion to vacate a final judgment of foreclosure involving a tax sale certificate, and from a subsequent order denying reconsideration. The substituted plaintiff is a successor in interest to the purchaser of the tax sale certificate. For the reasons that follow, we affirm.
Steven and Janet Budge*fn1 are the owners of real property identified as Block 1082, Lot 242.11 on the tax map of the Township of Old Bridge (Township), and more commonly known as 242 Outlook Boulevard, Old Bridge, New Jersey (subject property). After the owners failed to pay the property tax on the subject property, the Township sold a tax sale certificate to Wachovia Bank, NA, as Custodian for Phoenix Funding, Inc., for $3,211.95, on March 8, 2006.
In 2008, Wachovia filed an action to foreclose on the tax sale certificate. Budge responded by filing a motion seeking an extension of time to pay the taxes. The Foreclosure Unit of the Superior Court Clerk's Office deemed Budge's filing to be an answer contesting the foreclosure. Wachovia cross-moved to strike the pleading, deny Budge's motion for additional time and return the matter to the Foreclosure Unit as an uncontested matter.
By order entered February 23, 2009, Budge's motion for additional time to pay the property taxes was denied and Wachovia's cross-motion to strike Budge's pleadings was granted. The matter was returned to the Foreclosure Unit as uncontested.
Wachovia then moved for the entry of default and sought an order setting the amount, time and place of redemption. On March 10, 2011, default was entered and an order was filed setting $41,418.12 as the amount required for redemption, plus $1,272 in costs. The order set April 26, 2011 as the redemption deadline.
Budge moved to vacate the default and Judge Ciuffani heard oral argument on April 29. Budge conceded that he had not paid taxes on the subject property since 2006, and Judge Ciuffani denied his motion, finding no basis to grant relief.
On May 4, Wachovia assigned the tax sale certificate to Arianna Holding Company for $55,000, and an order substituting Arianna as plaintiff was entered on May 25. A final judgment of foreclosure was also entered on May 25.
Budge then retained counsel and moved to vacate the final judgment and for reconsideration of the April 29 order denying his motion to vacate default. At oral argument before Judge Ciuffani, Budge claimed that Arianna was improperly substituted as plaintiff because the assignment of the tax sale certificate was completed prior to the entry of the substitution order.
Counsel for Arianna explained the connection of Arianna and Phoenix: Arianna Holding Company is an entity that is controlled by the same princip[als] as Phoenix Funding. Phoenix Funding, because of the way that they are funded - - for purchasing Tax Sale Certificates from Wachovia Bank is not permitted to hold property in that same entity as a result of their banking relationship with Wachovia.
So all of Phoenix Funding's Tax Sale Certificates as they come to fruition and if they become deeded through the entry of final judgment, upon application are always assigned to Arianna. It's the same entity.
By order entered June 28, 2011, Judge Ciuffani denied Budge's motion to vacate final judgment and his motion for reconsideration of the April 29 order.
Budge moved for reconsideration of this order and, again, challenged Arianna's standing. On August 5, 2011, Judge Ciuffani denied reconsideration, explaining:
This is defendant's fourth attempt to delay these proceedings over a three year period and his second motion for reconsideration of this court's orders on the same factual grounds. As the first motion for reconsideration was unsuccessful, so too is the instant motion, as it does not include any new factual or legal theories to assist defendant's cause.
On appeal, defendant claims that the trial court erred in denying his motion to vacate the default judgment; Arianna lacked standing to move for final judgment; and there was "clerical error" that mandated vacating the May 25 final judgment. Having reviewed the record, we find all of these arguments to be without sufficient merit to warrant discussion in a written opinion, Rule 2:11-3(e)(1)(E), and we affirm. We add only the following comments.
Defendant's allegations of "fraud, misrepresentation and improper notice" are unsubstantiated. His claim that he contacted plaintiff's counsel to pay the taxes and was told the taxes had already been paid was vehemently denied by plaintiff's counsel in a sworn certification. Defendant has had several years to redeem the certificate and has made no effort to do so.
Defendant also claims that the assignment of the tax sale certificate to Arianna was improper and barred by N.J.S.A. 54:5-98 and N.J.S.A. 54:5-89.1. N.J.S.A. 54:5-98 provides that "[a]fter the [foreclosure] complaint has been filed redemption shall be made in that cause only, provided notice of the suit has been filed in the office of the tax collector." Requiring that a post-complaint redemption occur "in that cause only" under N.J.S.A. 54:5-98 supports the conclusion that a person seeking to redeem a tax certificate must be either a party to the action or a person intervening in the action. Simon v. Cronecker, 189 N.J. 304, 320-321 (2007).
Defendant does not challenge plaintiff's representation that Arianna Holding Company is controlled by the same principals as Phoenix Funding. Even if this were not true, the assignment of the tax sale certificate and the substitution of Arianna as plaintiff fully complied with the Tax Sale Law, N.J.S.A. 54:5-1 to -137.
N.J.S.A. 54:5-89 and -98 provide that after the filing of the foreclosure complaint, both the property's sale and the redemption procedure are subject to court supervision. This is primarily to protect property owners from exploitation by third-party investors. See Cherokee Equities v. Garaventa, 382 N.J. Super. 201, 209 (Ch. Div. 2005), appeal dismissed per stipulation, 186 N.J. 598 (2006). The statute requires that third-party investors who seek either directly or indirectly to acquire the property and redeem the tax sale certificate intervene in the foreclosure action. See Simon v. Rando, 374 N.J. Super. 147, 154 (App. Div. 2005), aff'd, 189 N.J. 339 (2007).
In order to redeem a tax sale certificate while a foreclosure action is pending, the redeeming person or entity must be a party to the action. Phoenix Funding, Inc. v. Krute, 403 N.J. Super. 261, 266-67 (App. Div. 2008). Where a person or entity is not named in the foreclosure complaint and seeks to redeem, he or it must move to intervene in the action. Cronecker, supra, 189 N.J. at 336. Here, the substitution of Arianna as plaintiff was authorized by a court order entered on May 25, 2011.
N.J.S.A. 54:5-87 addresses setting aside a tax foreclosure judgment and provides in pertinent part:
The judgment shall be final upon the defendants, their heirs, devisees and personal representatives, and their or any of their heirs, devisees, executors, administrators, grantees, assigns or successors in right, title or interest and no application shall be entertained to reopen the judgment after three months from the date thereof, and then only upon the grounds of lack of jurisdiction or fraud in the conduct of the suit. Such judgment and recording thereof shall not be deemed a sale, transfer, or conveyance of title or interest to the subject property under the provisions of the "Uniform Fraudulent Transfer Act," R.S. 25:2-20 et seq.
Defendant provides no proof of fraud in either the transfer of the certificate or the prosecution of the foreclosure that would justify reopening the judgment. The assignment of the certificate was undertaken in full compliance with the Tax Sale Law, N.J.S.A. 54:5-89.1.
The record supports Judge Ciuffani's conclusion that defendant's repetitive motions were designed only to delay the proceedings. Defendant testified that the appraised value of the home he owned "free and clear" was $260,000, and admitted that he had the ability to pay the taxes, but chose not to as he considered the tax sale process "tantamount to a high interest loan."