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Sidney S. Kanter v. Malcolm Scharf


November 7, 2012


On appeal from the Superior Court of New Jersey, Law Division, Morris County, Docket No. L-2353-07.

Per curiam.


Argued October 1, 2012

Before Judges Espinosa and Guadagno.

Plaintiff Sidney S. Kanter appeals from a December 2, 2011 order dismissing his complaint for lack of subject matter jurisdiction. Because we agree with the sound conclusion of the Law Division judge that he lacked jurisdiction to hear this matter, we affirm.

On October 8, 1986, Malcolm Scharf purchased and recorded tax sale certificate #512 to property located at Block 59, Lot 73, on the tax map of Washington Township, New Jersey (the Property). The Property is a landlocked 3.57 acre parcel with an uninhabitable dwelling. Taxes were assessed against the Property in the names of "Harry K. and Elizabeth Peck Estate." A deed recorded in Morris County on March 23, 1977 conveyed the interest of James Ballentine in the Property to Harry K. Peck and Elizabeth Peck, his wife, as tenants in common, with Harry

B. Peck and Donna M. Peck, his wife, to hold their undivided one-half interest as tenants by the entirety. Elizabeth Peck died in 1998.

Scharf*fn1 paid the delinquent taxes for the year 1985 in the amount of $506.38 and continued to pay taxes on the Property through the fourth quarter of 2003. When taxes on the Property went unpaid during 2004, another tax sale certificate, #919, was issued by the Township of Washington. On December 16, 2004, Fernwood Funding, LLC, (Fernwood) purchased certificate #919 and assigned it to Kenneth Kanter on September 26, 2005.

When Scharf attempted to redeem certificate #919, Kenneth Kanter filed an order to show cause to prevent the redemption, naming Scharf and the Washington Township tax collector as defendants. A complaint filed by Scharf in 1999, which sought to foreclose on the Property, was dismissed in 2000. Since the dismissal order was marked "with prejudice," Kenneth claimed the dismissal voided certificate #512 and Scharf lacked standing to redeem certificate #919.

While the record on appeal does not indicate how the order to show cause was resolved, the Washington Township tax collector permitted Scharf to redeem certificate #919 and issued a check to Kenneth for $7,711.08 on October 21, 2005.

On October 3, 2005, Kenneth obtained a quitclaim deed from Harry K. Peck and Harry B. Peck, conveying all their right, title and interest in the Property to him for $1,000. Sidney Kanter, Kenneth's brother, signed the deed as a witness.

On October 24, 2005, Donna M. Peck executed a quitclaim deed to Fernwood, conveying all of her right, title and interest in the Property for $500. Sidney also witnessed her signature.

On November 2, 2005, Scharf filed a complaint in the Chancery Division, Morris County, to foreclose on his tax certificate. The complaint traced title in the Property back to 1883 when William and Susan Blaine acquired a deed of conveyance. Named as defendants in the complaint were Harry K. and Harry B. Peck, Donna M. Peck and thirty-seven other heirs, devisees and possible successors in right, title and interest.

Although Kenneth Kanter and Fernwood were not named in the complaint, Kenneth testified in a deposition that he was aware of the filing of the complaint, knew he had a right to intervene, but chose not to.

Scharf requested an updated title search of the Property from Foundation Title, LLC, who provided a report indicating that, as of December 21, 2005, the status of the Property remained unchanged with the following exception:

Deed #6470-193, dated 10-24-05, recorded 11-1-05 from Harry Peck, widower, executor of Elizabeth to Steven Peck Mortgage #19736-1, dated October 24, 2005, recorded 11-1-05 to Countrywide Home Loans.

On May 23, 2006, the Chancery Division judge issued an order setting the redemption amount for certificate #512 at $118,448.61, and establishing July 7, 2006 as the final date to redeem with the tax collector. R. 4:64-1(d).

On July 17, 2006, the Chancery Division judge entered a final judgment of foreclosure, awarding defendant "an absolute and indefeasible estate of inheritance in fee simple" in the Property. The judgment divested all named defendants and their heirs, devisees, personal representatives, and successors in right, title and interest.

On July 25, 2006, Kenneth Kanter executed a quitclaim deed, conveying a twenty percent interest in the Property to Sidney for twenty dollars.

On August 20, 2007, Sidney filed a complaint in the Law Division naming Scharf, Fernwood and Kenneth as defendants and seeking a declaratory judgment that he, Fernwood and Kenneth were owners of the Property. Later, Foundation Title and Action Title Research, LLC, were added as parties.

On March 16, 2010, Kenneth Kanter and Fernwood assigned their rights to the Property to plaintiff. On December 3, 2010, Fernwood and Kenneth were dismissed as parties. On August 5, 2011, the Law Division judge denied Scharf's motion for summary judgment, finding that Kenneth Kanter and Fernwood had no obligation to intervene in the foreclosure proceedings "because Scharf didn't join them."

While the Law Division matter was still pending, Scharf moved in the Chancery Division to reopen the foreclosure action to add Sidney Kanter as a defendant. On October 6, 2011, the Chancery Division judge heard oral argument. When the judge asked Sidney why he brought his action in the Law Division as opposed to moving to reopen the foreclosure, Sidney indicated that he was not challenging the foreclosure judgment:

THE COURT: Mr. Kanter, why didn't you come here instead of going to the Law Division?

MR. KANTER: I never had a dog in the fight. We weren't named. It wasn't our interest being foreclosed.

THE COURT: I'm not going to ask the question again. It seems to me if I were you, I would have come here instead of having Mr. Scharf come here because you are the one who is really seeking to open the foreclosure.

MR. KANTER: I'm not, judge.

THE COURT: You are not. Okay. I will put that in the order. You don't want the foreclosure opened.

MR. KANTER: I totally agree with the foreclosure judgment. I always have had that position. I do not challenge it. It did not affect us, we were not parties to the action.

The Chancery judge refused to reopen the foreclosure as the Law Division had not yet determined whether Sidney had an interest in the Property. The judge also rejected Sidney's claim that Scharf's failure to pay taxes on the Property in 2004-2005 rendered his certificate void pursuant to N.J.S.A. 54:5-79, finding that Scharf's complaint was filed within the twenty-year period which began when he acquired the certificate.

On November 30, 2011, a different Law Division judge heard argument on Scharf's pretrial motion to exclude evidence of Sidney's ownership of the property. Scharf claimed that the final judgment of foreclosure had settled the issue of ownership. The judge viewed this motion as addressing his jurisdiction to hear the matter and found that the relief sought by Kanter constituted an impermissible collateral attack on a valid judgment of the Chancery Division:

I think this is a matter where this court, the [L]aw [D]ivision, does lack jurisdiction. I think it is a collateral attack. No matter how it may be characterized. Whatever wording [Sidney] may want to use on the judgment of foreclosure, in a tax [foreclosure] matter, granting a fee simple to [Scharf].

The judge dismissed the complaint without prejudice to Sidney's ability to move to reopen the foreclosure judgment pursuant to Rule 4:50-1. This appeal followed.

Sidney argues that the Law Division has jurisdiction to render a declaratory judgment establishing his interest in the Property. We disagree. Our Declaratory Judgment Act is designed to "afford relief from uncertainty and insecurity with respect to rights, status and other legal relations." N.J.S.A. 2A:16-51. However, in addressing such uncertainty, the courts are to act "within their respective jurisdictions . . . ."

N.J.S.A. 2A:16-52. "It is clear that relief by way of a declaratory judgment should be withheld when the request is in effect an attempt to have the court adjudicate in advance the validity of a possible [claim or] defense in some expected future law suit." Donadio v. Cunningham, 58 N.J. 309, 325 (1971).

After the entry of the judgment of foreclosure in the Chancery Division, vesting Scharf with absolute and indefeasible estate of inheritance in fee simple, Sidney sought to obtain a judgment in the Law Division subverting and superseding that judgment. Sidney concedes that he was aware of the foreclosure proceeding in the Chancery Division and knew he had a right to intervene. He chose not to.

A foreclosure action involving lands situated in this State is brought in the Chancery Division. See R. 4:3-1(a)(1); Countrywood Estates, Inc. v. Donnelly, 42 N.J. Super. 456, 459 (App. Div. 1956). Once the Chancery Division asserts jurisdiction over a complaint seeking equitable relief, it has the power to dispose of all ancillary legal claims. Brennan v. Orban, 145 N.J. 282, 293 (1996) citing Mantell v. Int'l Plastic Harmonica Corp., 141 N.J. Eq. 379, 393 (E. & A. 1947).

Sidney denies that his action was an attack on the final judgment of foreclosure, claiming that judgment only divested the "named defendants." This argument ignores the plain language of the judgment which covers any interest that may have passed to Sidney through the various quitclaim deeds:

IT IS . . . ORDERED AND ADJUDGED that the defendants, Harry K. Peck, Harry B. Peck, Donna M. Peck . . . or any of their, successors in right title and interest . . . stand absolutely debarred and foreclosed of and from any and all right, and equity of redemption, in and to the [Property].

In addition, N.J.S.A. 54:5-87 provides that a judgment in an action to foreclose the right of redemption, "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 . . . ."

The remaining arguments advanced by plaintiff lack sufficient merit to warrant extensive discussion. R. 2:11-3(e)(1)(E). We add only the following.

Sidney argues that Scharf's tax sale certificate expired pursuant to N.J.S.A. 54:5-79. Scharf purchased the tax sale certificate on October 8, 1986, and obtained a judgment of foreclosure on July 17, 2006, within the twenty-year statute of limitations. The missed tax payments in 2004-05 did not affect the validity of his certificate.

Sidney also argues that the trial court improperly decided the motion in limine as a dispositive motion within thirty days of the trial date. Although plaintiff cites no authority, we presume he is referring to Rule 4:46-1 which requires motions for summary judgment to be returnable no later than thirty days before trial. However, the issue of subject matter jurisdiction "may be raised at any time." Macysyn v. Hensler, 329 N.J. Super. 476, 481 (App. Div. 2000); see also R. 4:6-2. A court can raise the issue of jurisdiction sua sponte as a court cannot entertain a case when it lacks subject matter jurisdiction. Prime Accounting Dep't. v. Twp. of Carney's Point, 421 N.J. Super. 199, 212 (App. Div. 2011) (citing Peper v. Princeton Univ. Bd. of Trs., 77 N.J. 55, 65-66 (1978)).


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