LEFT FIELD PROPERTIES, L.L.C. v. ANTONIO MANIERI, ET AL.

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-3300-03T1

LEFT FIELD PROPERTIES, L.L.C.,

Plaintiff-Respondent,

v.

JAMES F. KEENEY, L.L.C.,

FORTUNE ASSURANCE COMPANY, INC.,

PRIORITY ONE FINANCE, INC., and

FIRST UNION NATIONAL BANK AS CUSTODIAN,

Defendants,

and

PENN JERSEY MUSHROOM FARMS, INC.,

ANTONIO MANIERI, and THERESA MANIERI,

Defendants-Appellants.

__________________________________

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-6743-03T1

PRIORITY ONE FINANCE, INC.,

Plaintiff-Respondent,

v.

ANTONIO MANIERI, THERESA MANIERI

and PENN JERSEY MUSHROOM FARMS, INC.,

Defendants-Third-Party-

Plaintiffs-Appellants,

v.

JAMES KEENEY, JAMES F. KEENEY, L.L.C.,

Third-Party Defendants,

And

MICHAEL INGENITO and GLORIA INGENITO,

and LEFT FIELD PROPERTIES, L.L.C.,

Third-Party-Defendants-

Respondents.

__________________________________

 

Argued January 10, 2006 - Decided March 15, 2006

Before Judges Axelrad, Payne and Miniman.

On appeal from Superior Court of New Jersey, Chancery Division, Gloucester County, Docket Nos. F-16386-02 and C-70-03.

Sanford F. Schmidt argued the cause for appellants (Schmidt & Tomlinson, attorneys; Mr. Schmidt, on the brief).

Adam D. Greenberg argued the cause for respondent Left Field Properties, L.L.C. (Honig & Greenberg, attorneys; Mr. Greenberg, on the brief).

Anthony L. Velasquez argued the cause for respondent Priority One Finance, Inc.

John A. Fitzpatrick argued the cause for respondents Michael and Gloria Ingenito (Mylotte, David & Fitzpatrick, attorneys; Mr. Fitzpatrick, on the brief).

PER CURIAM

Defendants Antonio Manieri, Theresa Manieri, and their business, defendant Penn Jersey Mushroom Farms, Inc. (collectively "the Manieris"), appeal from a December 1, 2003 order granting a final judgment of foreclosure to M.D. Sass Municipal Finance Partners II, L.L.P., on a tax sale certificate and substituting plaintiff Left Field Properties, L.L.C., which had taken an assignment of the certificate while the foreclosure was pending, for M.D. Sass. They also appeal from two summary judgment orders dismissing their claims against plaintiff Priority One, Inc., which had filed an eviction action against the Manieris, and third-party defendants Michael and Gloria Ingenito relative to their loan to the Manieris in connection with the Manieris' attempt to avoid foreclosure. Finally, the Manieris appeal from a summary judgment order dismissing their third-party claims against Left Field, which alleged that they were an equitable mortgagee. Although these cases were not consolidated at the trial or appellate level, they were argued back-to-back and involve essentially the same facts. We hereby consolidate them now.

We conclude that neither of these appeals has merit and affirm.

I.

Antonio and Theresa Manieri were owners of about seventeen acres of property located at 162 Cohawkin Road in East Greenwich on which they operated their manure and mushroom-growing business. Mortgages, judgments, and tax liens had been lodged against the real estate prior to the events at issue here.

Between 1994 and 1997 East Greenwich Township issued and sold tax sale certificates with respect to the Manieris' property. Faced with a proceeding in August 1997 to foreclose their right of redemption, Theresa Manieri enlisted the assistance of her nephew Michael Ingenito. He referred Theresa Manieri to James Keeney, a mortgage broker with whom she consulted. Thereafter, Theresa Manieri told Michael Ingenito that, while Keeney said he could help, he could not obtain a mortgage until the immediate tax problem was resolved. Needing about $148,000 to pay off the holders of the tax sale certificates and having only $30,000, Theresa asked Michael for a loan. The Manieris sent their portion of the $148,000 payoff to Michael Ingenito by check dated December 3, 1997, which he endorsed and delivered to Keeney. Michael obtained $118,000 from his home equity credit line and also delivered it to Keeney.

Using the funds supplied by Theresa Manieri and Michael Ingenito, Keeney purchased the tax sale certificates for $129,295.80, keeping the difference for himself. The Manieris testified that they understood that Michael Ingenito, not Keeney, would make the purchase and hold the tax sale certificates as a "mortgage of sorts."

From January 1998 to March 2001, the Manieris made monthly payments of $1,200 to Gloria Ingenito, Michael's wife. They also paid current real estate taxes in the amount of $12,249.63 directly to East Greenwich Township on July 13, 1999, for the year 1998. In the meantime, Keeney prosecuted the August 1997 tax sale foreclosure proceeding to judgment on April 14, 1999.

Brian Barr was the president and owner of Sunshiner Maintenance Company, a commercial cleaning concern. Barr also was the sole owner of Priority One. Priority One purchased accounts receivable from small businesses and made modest commercial loans to such businesses. It engaged in approximately ten to fifteen loan transactions per year. Funds for the loans were derived from Barr's personal monies earned from his cleaning business. Priority One was operated solely by Barr out of a filing cabinet and a computer. Barr prepared all the documents, conducted background checks and did recordkeeping.

Barr subleased a portion of Sunshiner's rented space to Keeney on a month-to-month basis. After Keeney moved in, he borrowed $10,000 to $15,000 in short term loans from Priority One. These loans were repaid.

Priority One loaned Keeney $27,000 on August 19, 1999. The collateralized note between Keeney and Priority One recited that Keeney was the assignee of three tax sale certificates on the Greenwich property. Keeney guaranteed in the note that he would not sell, lease or otherwise transfer the collateral. The note also recited that the assignor of the tax sale certificates had instituted a foreclosure action and that Keeney would continue to prosecute it to foreclose the right of redemption, although that had already occurred months earlier. At the end of the three-month period, Keeney did not repay the amount due. Instead, Keeney borrowed additional money from Priority One. By December 8, 1999, Keeney had borrowed a total of $157,000 from it in a series of loans.

In the meantime, on October 18, 1999, Keeney purchased the Manieris' property at a sheriff's sale attended by Antonio Manieri. Manieri claims that he was under the impression that Keeney was purchasing the property for Michael Ingenito. The sheriff's sale cut off all other liens and gave clear title to Keeney. After Keeney purchased the property, the Manieris continued to make their $1,200 monthly payments to Gloria Ingenito.

Having acquired title from the sheriff, Keeney gave Priority One a mortgage on the property to secure the loans made during the second half of 1999. He also gave Priority One a balloon note dated December 1, 1999, in the sum of $160,000, which called for monthly interest payments at 18% per annum in the amount of $2,400. Despite assurances, Keeney never made any payment on interest and he did not pay the principal when due on December 2, 2001.

After Keeney purchased the property, the Manieris made tax payments directly to Keeney rather than the township as follows: $13,224.55 on May 23, 2000 (for the year 1999); $10,000 on May 22, 2001, and $5,840 on January 15, 2002. Keeney never remitted these payments to the Township. As a result, on June 28, 2000, the Township of East Greenwich sold a tax sale certificate for unpaid 1999 taxes in the amount of $13,458.54 to First Union National Bank for the account of M.D. Sass.

By 2000 Michael Ingenito wanted to get his credit line paid off, and he negotiated with Keeney to take him out of the loan to the Manieris. Keeney arranged a mortgage on the Ingenitos' home and paid $109,000 toward the refinancing, which was apparently the balance due on the loan to the Manieris. The closing on the mortgage took place in March 2001. Keeney told the Manieris that "he got it all taken care of for Michael." The Manieris then began to pay Keeney $1500 per month starting in April 2001. Payments to Keeney continued through February 2002 and totaled $16,500.

When payments from the Manieris were not forthcoming thereafter, Keeney instituted eviction proceedings against them on May 23, 2002. He alleged non-payment of rent in the total amount of $164,784.09. However, by letter dated June 20, 2002, Keeney asked the Special Civil Part for a dismissal of the landlord-tenant complaint without prejudice because the parties were engaged in settlement negotiations.

Barr did not discover until July or August 2002 that Keeney had not paid real estate taxes on the property, as required by the mortgage. Barr then confronted Keeney, who lamented that his marriage and business were falling apart. To resolve their differences, Keeney gave Priority One a deed to the property in lieu of foreclosure on August 8, 2002. Prior to taking the deed, Barr drove by the property in late July 2002. He described it as a "junk yard." During his twenty minute drive-by, he did not see anyone on the premises.

On September 3, 2002, M.D. Sass commenced a foreclosure action based upon the tax sale certificate that it had purchased. The original complaint named Keeney, L.L.C., Priority One and others as defendants. A subsequent amendment added the Manieris and Penn Jersey as defendants. Although Priority One paid some taxes after learning of Keeney's default, this did not forestall the ongoing M.D. Sass foreclosure.

By October 31, 2002, Priority One was aware that the Manieris were in possession of the property. On that date, Priority One filed an eviction action against them. The Manieris disputed title and moved to transfer the Special Civil Part eviction action to the Law Division. When the motion was granted, the Manieris filed a counterclaim and a third-party complaint against all third-party defendants except Left Field.

On May 6, 2003, the Manieris filed an answer to the M.D. Sass foreclosure action, which contained five affirmative defenses, including an allegation that the resolution of the foreclosure action "[was] dependent on ownership of the underlying realty," which could only be determined upon resolution of an action for possession pending in the Law Division.

While the foreclosure proceeded and a judgment barring redemption became imminent, Barr, through a new entity, Left Field, negotiated a purchase of the tax sale certificate from M.D. Sass on July 31, 2003. Rather than have Priority One redeem the tax certificate, Barr opted to have Left Field purchase it. He explained:

[T]here's also advantages to creating another entity as it relates to buying the tax cert, and doing the foreclosure based upon a clean title without any issues. It also, I believe, . . . it gives me some amount of protection regarding environmental issues that precede this whole thing.

II.

The procedural history then unfolded in the following manner: M.D. Sass filed a motion for summary judgment striking the Manieris' answer to the foreclosure action. In opposing the summary judgment, the Manieris argued that until they knew whether they were the owners of the property they had no right to redeem. The chancery judge pointed out that anyone claiming a right of ownership had the right to redeem and that occupants also had such a right. In addition, he stated that if the Manieris redeemed, they would have a claim against Priority One, which held record title. As a consequence, the chancery judge held that the dispute over ownership was not a defense to the tax sale foreclosure. Summary judgment was entered and the Manieris' answer was stricken.

The Manieris then sought and were granted an order compelling M.D. Sass to show cause why they should not be allowed to redeem the tax sale certificate held by M.D. Sass and compel the tax collector to deliver the uncancelled tax certificate to them so that they could be subrogated to the rights of M.D. Sass. They alleged that M.D. Sass had refused to assign the certificate to them. The genesis for the requested relief was the need to provide a lender with security for a loan to allow the Manieris to redeem the property. The Manieris contend that the chancery judge erred when he denied this application.

Before the return date on the order to show cause, M.D. Sass sold the tax sale certificate to Left Field. The Manieris at oral argument contended that Priority One and Left Field conspired with Keeney to defraud plaintiffs of their property. They also argued that Priority One should have redeemed rather than having a related company take an assignment of the certificate, a maneuver they feared would defeat their title claims upon entry of a final judgment in the foreclosure action.

The chancery judge held that there was no right to subrogation under the tax sale law, which had eliminated the common law right of subrogation. However, because final judgment had not yet been entered, the judge stayed entry of same in order to permit the Manieris to explore the relationship they alleged between Keeney, Priority One and Left Field. The judge observed that equity would cry out for some relief if their allegations were proven to be true. The judge also transferred the eviction action to the Chancery Division so that he could resolve the equitable mortgage issue expeditiously, although he refused to consolidate the two actions.

M.D. Sass then sought a plenary hearing to establish that Left Field and Priority One had no relationship with Keeney. The chancery judge determined not to conduct such a hearing, but he attached conditions to the stay. The Manieris were required to pay all outstanding real estate taxes for the period March 30 to October 20, 2003, and thereafter to pay the real estate taxes when they came due. In addition, the judge required that the Manieris pay rent in the amount of $2,000 per month commencing October 30, 2003. The rent was to be deposited into the attorney trust account of counsel to M.D. Sass. The order provided that if the conditions were not met, that M.D. Sass could apply for entry of final judgment.

When the Manieris failed to comply with the conditions imposed on the stay, on December 1, 2003 the court entered final judgment on the tax sale certificate and substituted Left Field as the plaintiff. The Manieris then moved for reconsideration on the ground of new evidence obtained through discovery in the Priority One action. At oral argument on their motion, the Manieris conceded that they could not prove that Barr, the principal of Priority One and Left Field, participated with Keeney in any fraud. However, they argued that Priority One could take no better title from Keeney than Keeney himself had because Priority One was aware of sufficient suspicious facts to be on constructive notice of the fraud Keeney had perpetrated on the Manieris. They contended that Priority One knew that the Manieris were in open and notorious possession of the property at all times and should have made inquiry of them. They also argued that Priority One and Left Field were one and the same, and thus Priority One essentially was the entity that redeemed. As a consequence, they urged that the tax sale foreclosure should be disregarded.

The chancery judge found that Keeney took an assignment of the tax sale certificates, that he got the assignment legally, and then foreclosed on those certificates. The judge found that there was a sheriff's sale, which foreclosed all the other liens on the property, and that Antonio Manieri was present when Keeney bought the property at the sale. The judge found that Keeney then mortgaged the property to Priority One and after he defaulted, Priority One took a deed in lieu of foreclosure. The judge concluded that there were no facts presented in any of the materials that indicated that there was any fraudulent activity or shrewd dealings on the part of Priority One.

The chancery judge also found that M.D. Sass bought a subsequent tax certificate on the property and was an innocent third party. He concluded that it was inconsequential that Left Field was owned, operated and controlled by the principal of Priority One. Accordingly, he denied the motion for reconsideration on January 29, 2004, and denied a stay pending appeal.

After the Left Field action had been prosecuted to a final judgment, the chancery court retained jurisdiction of the eviction action. In lieu of an answer to the amended third-party complaint, Left Field moved to dismiss all claims against it. In ruling on the motion, the court concluded on May 6, 2004, that the claims made by the Manieris in the eviction action were identical to the arguments they made in opposition to the foreclosure on the tax sale certificate. The court again concluded that it was inconsequential that Barr was a principal of both Priority One and Left Field, and that no facts had been developed regarding any fraudulent activity that would delay the foreclosure. He concluded that res judicata barred the third-party complaint against Left Field in the eviction action. The order dismissing those claims was entered on June 9, 2004.

It was on that same date that the court heard argument on the motions for summary judgment filed by Priority One and the Ingenitos. Priority One argued that there was no evidence of an equitable mortgage because Antonio Manieri was present when Keeney bought the property at the sheriff's sale. Even if there were such a mortgage, Priority One argued that it engaged in an arms-length transaction with Keeney in loaning him money and then conducting a title search through a reputable company before accepting the mortgage. It pointed out that there was no evidence of any joint venture or agency relationship. The court adopted these arguments and dismissed the counterclaim against Priority One.

The court also heard argument on the motion for summary judgment filed by the Ingenitos. They pointed out that the evidence developed during discovery proved beyond question that they had borrowed $118,000 from their bank to loan to Michael's aunt and her husband in order to help them out. There was, they contended, absolutely no evidence that the Ingenitos ever obtained a tax sale certificate, a mortgage, a lien on the property, or title to the property. They did nothing more than loan money to the Manieris. They argued that the Manieris knew long before they involved the Ingenitos in the matter that there was a tax sale certificate foreclosure and that there was nothing illegal about an installment payment plan, although no such plan even existed. Finally, there were no facts that would support the existence of an equitable mortgage. Based on these arguments and the absence of evidence to support the Manieris claims, the court granted summary judgment to the Ingenitos.

III.

On appeal, the Manieris contend that the chancery judge erred when he granted summary judgment to M.D. Sass, striking their answer on June 13, 2003. They argue that the issue of ownership was material to the tax sale foreclosure action, and, because it was in dispute, summary judgment was improper. They raised a question of law, which we decide without deference to the trial court's interpretation. Manalapan Realty v. Manalapan Twp. Comm., 140 N.J. 366, 378 (1995).

New Jersey's tax sale law governs redemption of tax sale certificates and provides:

Except as hereinafter provided, the owner, his heirs, holder of any prior outstanding tax lien certificate, mortgagee, or occupant of land sold for municipal taxes, . . . may redeem it at any time until the right to redeem has been cut off in the manner in this chapter set forth, by paying to the collector, or to the collector of delinquent taxes on lands of the municipality where the land is situate, for the use of the purchaser, his heirs or assigns, the amount required for redemption as hereinafter set forth.

[N.J.S.A. 54:5-54.]

We have held that the right of redemption under the tax sale law can be exercised only by the owner or other person having an interest in the land. Bron v. Weintraub, 70 N.J. Super. 106, 112 (App. Div. 1963), rev'd on other grounds, 42 N.J. 87 (1964). We have recognized that a person claiming an ownership interest is entitled to redeem upon a prima facie showing of ownership and possession. Manning v. Kasdin, 97 N.J. Super. 406, 415-16 (App. Div. 1967), certif. denied, 51 N.J. 182 (1968); Wills v. Windish, 106 N.J. Eq. 449, 451 (Ch. Div. 1930).

Neither Priority One nor M.D. Sass contends that the Manieris did not have a right to redeem, nor does Left Field make that claim here. Indeed, the chancery judge recognized that the Manieris had made out a prima facie claim of ownership because he granted them the right to redeem. Resolution of the title dispute between the Manieris and Priority One was thus not material to the tax sale foreclosure action per se as the Manieris were not required by the statute or the cases interpreting it to prove undisputed title.

We would reach the same result analyzing the right to redeem as an occupant. A tenant for years of realty sold for taxes is an occupant or other person having an interest in the realty entitling them to redeem. Hannold v. Cundey, 131 N.J.L. 87, 88 (Sup. Ct. 1944). Priority One recognized the Manieris' right of occupancy by filing an action for possession in landlord-tenant court. If it did not, it would have had to bring an action for ejectment. Thus, it was undisputed that the Manieris came into possession lawfully. They had a right to redeem, and the chancery judge protected that right. As the chancery judge correctly observed, if it were ultimately determined that Priority One owned the property, the Manieris would be entitled to recover the amount of the redemption from it.

The Manieris' argue, in essence, that the court below erred in giving them the right to redeem without consolidating the actions and resolving the title dispute first. This contention grows out of the inability of the Manieris to redeem without securing a loan with the tax sale certificate as collateral and/or giving a mortgage on the property. R. 4:38-1 provides for consolidation of actions involving common questions or law or fact arising out of the same transaction. The decision is committed to the sound discretion of the trial court. The Allan-Deane Corp. v. Twp. Of Bedminster, 121 N.J. Super. 288, 291 (App. Div. 1972). Here, because both actions were pending before the chancery judge and proceeded in tandem, we are not persuaded that there was any abuse of discretion in denying consolidation.

In order to avoid foreclosure, the Manieris sought and were granted an order compelling M.D. Sass to show cause why the Manieris should not be allowed to redeem the tax sale certificate held by M.D. Sass and compel the tax collector to deliver the uncancelled tax certificate to the Manieris so that they could be subrogated to the rights of M.D. Sass. When the application was heard, the chancery judge correctly held that subrogation is no longer available under the tax sale law. At one time the tax sale law provided:

When the redemption is made by a mortgagee or other person not primarily liable to pay the municipal lien, but having a lien or interest in or on the land, the person so paying, if he so elect, shall succeed to the municipal lien paid by him. . . .

[N.J.S.A. 54:5-56.]

However, that provision was repealed in 1965. L. 1965, c. 187, 3. Thus, mortgagees or other persons not primarily liable to pay the municipal lien have no right to be subrogated to the certificate holder.

The Manieris also argue that as equitable owners they should have been given the benefit of either common-law or equitable subrogation. We have specifically held that a redeeming party may no longer require that the tax sale certificate be assigned to it. Gov't Sec. Co. v. Waire, 94 N.J. Super. 586, 589 (App. Div.), certif. denied, 50 N.J. 84 (1967). Subrogating a redeeming party to the rights of the certificate holder would effectively nullify this rule. The chancery judge properly rejected the Manieris' application. They were given the right to redeem, and redemption ends the foreclosure. Walter v. Sands, 191 N.J. Super. 362, 367-68 (App. Div. 1983); N.J.S.A. 54:5-55.

Because the Manieris argued that Priority One and Left Field conspired with Keeney to defraud them of their property, the judge stayed entry of final judgment. M.D. Sass sought a plenary hearing to establish that Left Field and Priority One had no relationship with Keeney. The chancery judge determined not to conduct such a hearing, but on reconsideration he attached conditions to the stay of the final judgment of foreclosure.

Although the Manieris contend that the judge erred in imposing these conditions, it was within his discretion to do so. Zoning Bd. of Adjustment v. Serv. Elec. Cable T.V. of N.J., Inc., 198 N.J. Super. 370, 379 (App. Div. 1985). We find no abuse of discretion here. The Manieris had been in possession of the premises without paying taxes since January 15, 2002. They had not made any payments on the alleged equitable mortgage since February 2002, and they had not paid any rent to Priority One. Requiring the Manieris to pay rent into escrow and to pay 2003 real estate taxes was well grounded on the facts and law. State v. Madan, 366 N.J. Super. 98, 109 (App. Div. 2004). The chancery judge did not abuse his discretion when he denied the Manieris' motion for modification of the stay. As a result, the entry of the final judgment foreclosing the right of the Manieris and Priority One to redeem was properly entered.

IV.

The Manieris next contend that the trial court erred in not granting their motion for reconsideration of the final judgment of foreclosure. A party seeking reconsideration of a trial court ruling has the burden to demonstrate that the decision was based on plainly incorrect reasoning or that the court failed to consider evidence or that there was good reason to consider new evidence. Cummings v. Bahr, 295 N.J. Super. 374, 384-85 (App. Div. 1996).

First, the Manieris argue that the trial court should have reconsidered the judgment of foreclosure because he failed to apply the law of constructive notice. They contend that Priority One should be charged with the information it would have acquired had it contacted the local zoning officer and the Manieris as well as the landlord/tenant court. They assert that they were in open and notorious possession of the property, that they had been convicted of contempt and operating a junkyard on complaint of the zoning officer, and that Keeney had sued to evict them in 2002, but withdrew the suit to work out a settlement. Because of the relationship between Left Field, it too was chargeable with what Priority One could have learned from a reasonable investigation.

We have held that "[c]onstructive notice may be brought home to a mortgagee by known circumstances." Howard v. Diolosa, 241 N.J. Super. 222, 232 (App. Div.), certif. denied, 122 N.J. 414 (1990). "If a purchaser or lienor is faced with extraordinary, suspicious, and unusual facts which should prompt an inquiry, it is equivalent to notice of the fact in question." Ibid. Exclusive possession must be inconsistent with record title and open and notorious. Michalski v. United States, 49 N.J. Super. 104, 108-9 (Ch. Div. 1958).

Relying on this case law, the Manieris argue that Priority One and Left Field had constructive notice of the Manieris' equitable mortgage with Keeney. The facts do not support that contention. Priority One knew in December 1999 that the Manieris were the prior owners who had lost their property through a tax sale foreclosure and sheriff's sale and that they were still in occupancy in October of 1999. Their continued occupancy was not extraordinary, suspicious or unusual, nor should it have prompted an inquiry. Of course they were there, and Keeney could permit them to remain there without raising any suspicions on the part of a mortgagee. Had Priority One made itself aware of the eviction proceeding in 2002, this would only have corroborated a perfectly reasonable assumption that Keeney had worked out a rental agreement with the Manieris, and they were in default. Nothing would have alerted Priority One and Left Field to an equitable mortgage.

Second, the Manieris contend that the chancery judge erred when he found that this case was not governed by the rule of Hyland v. Kirkman, 204 N.J. Super. 345 (Ch. Div. 1985). Specifically, they assert that Priority One could not avoid the title dispute by using a related entity to purchase the tax sale certificate from M.D. Sass. They argue that the judge should have found that the result of that purchase was a redemption by Priority One.

In Hyland, the court found that there were "wild deeds," which the chancery court defined as "written instruments, in the form of a deed, acknowledged and recorded wherein the named grantor, knowing he, she or it has absolutely no title of any kind to the premises described therein nonetheless executes the instrument." Id. at 357-58. The grantee, knowing that a quiet title judgment in his favor was worthless, let the taxes go unpaid in order to set up a tax sale foreclosure. Id. at 374. The court found that the judgment of tax sale certificate foreclosure so procured, although entirely regular on its face, did not perfect title. Id. at 374-75.

The court finds it fraudulent for a corporation which has procured a wrongful assessment in its name through a wild deed and a quiet title judgment by fraud on the court to default on its taxes permitting a related corporation to buy the tax sale certificates which it then forecloses.

[Id. at 375-76.]

This case is a far cry from Hyland. Priority One did not attempt to perpetrate a fraud by deliberately failing to pay taxes for the year 1999. It did not even have a duty to pay taxes as it was a mere mortgagee at that time. Neither did Priority One perpetrate a fraud in taking the mortgage or deed in lieu of foreclosure. It was engaged in an arms-length transaction with Keeney, whose title was apparently good. Thus, the Hyland case did not require that the chancery judge reconsider the final judgment of foreclosure.

Third, the Manieris assert that Priority One was not a bona fide purchaser for value because it had constructive notice of their equitable mortgage with Keeney. They contend that this should have caused the chancery judge to reconsider the final judgment of foreclosure in favor of Left Field. This claim was rejected by the judge because he found that there was no evidence to support it. Rather, the evidence demonstrated that the transaction between Priority One and Keeney was an arms-length business transaction, that Priority One conducted a title search before it took a mortgage and note to secure its earlier loans to Keeney, that upon default it demanded payment, and when it was not forthcoming, it took a deed in lieu of foreclosure. The judge found that there was no evidence of any wrongdoing on the part of Priority One nor was there any evidence from which a reasonable inference of wrongdoing could be drawn as to Priority One. We have searched the record and find no error in these conclusions. The motion for reconsideration was properly denied.

V.

Next we consider the dismissal of the third-party claims in the eviction action against Left Field. As the trial court correctly concluded, the final judgment in the foreclosure action precluded the third-party claim against Left Field in this action. All of the issues raised by the Manieris in opposition to the foreclosure action were decided on the merits against them. Those issues are identical to the third-party claims in the eviction action against Left Field.

A cause of action "that has been finally determined on the merits by a tribunal having jurisdiction cannot be relitigated by those parties or their privies in a new proceeding." Velasquez v. Pranz, 123 N.J. 498, 505 (1991). Because the claims were presented in the foreclosure action and decided on the merits, they were properly precluded in the eviction action. Watkins v. Resorts Int'l Hotel and Casino, Inc., 124 N.J. 398, 412 (1991).

VI.

After the action against Left field was dismissed, the chancery judge granted summary judgment to Priority One. In the eviction action, the Manieris counterclaimed against Priority One seeking a judgment awarding them title to the premises and fixing the amount due on the alleged equitable mortgage held by Keeney and other relief. They also alleged an illegal redemption of tax sale certificates, consumer fraud and racketeering. All claims against Priority One were dismissed by the chancery judge.

In reviewing the grant of summary judgment, we must decide whether

the competent evidential materials presented, when viewed in the light most favorable to the non-moving party, are sufficient to permit a rational factfinder to resolve the alleged disputed issue in favor of the non-moving party. . . . If there exists a single unavoidable resolution of the alleged disputed issue of fact, that issue should be considered insufficient to constitute a "genuine" issue of material fact for purposes of R. 4:46-2.

[Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995).]

Thus, "the essence of the inquiry" is "'whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.'" Id. at 536 (quoting Anderson v. Liberty Lobby, Inc. 477 U.S. 242, 251-52, 106 S. Ct. 2505, 2512, 91 L. Ed. 2d 202, 214 (1986)).

The Manieris contend that Priority One and Keeney were involved in an agency relationship or a joint venture. We have held that, pursuant to N.J.S.A. 54:5-86, upon entry of a final judgment foreclosing the right of redemption, "the certificate holder is vested with an estate of inheritance in fee simple, free and clear of all liens." Caput Mortuum, L.L.C. v. S & S Crown Serv. Ltd., 366 N.J. Super. 323, 337 (App. Div. 2004). Barr was entitled to rely upon this principle when he examined title to the property in connection with the loan and mortgage and later when he took the deed in lieu of foreclosure. We note, however, that despite all the allegations made by the Manieris, there is not one shred of admissible evidence in the record that would support a reasonable inference of any agency relationship or joint venture between Priority One and Keeney. Absent such a relationship, the claims made by the Manieris all fail. Thus, we affirm the dismissal of the counterclaims against Priority One.

VII.

Finally, we address the summary judgment in favor of the Ingenitos. In their third-party complaint, the Manieris alleged that the Ingenitos entered into a private installment payment agreement with the Manieris to redeem tax sale certificates in violation of the tax sale law, N.J.S.A. 54:5-1 and -63.1. They alleged that the Ingenitos charged them interest and fees in excess of that allowed under the tax sale law and thus violated the Consumer Fraud Act, N.J.S.A. 56:8-1. They also alleged that the agreement between Keeney and the Ingenitos, in combination with the tax sale violations, constituted a pattern of racketeering activity prohibited by N.J.S.A. 2C:41-2.

In dismissing these claims, the trial court concluded that there was no viable cause of action against the Ingenitos. He concluded that the evidence demonstrated that a nephew and his wife borrowed money on their own home to help out his aunt. There was never a discussion about the Ingenitos getting a mortgage, or buying the tax sale certificates, or getting a lien on the property, or taking title to it. In short, the court held that no reasonable inferences of wrongdoing could be drawn from this simple familial transaction.

The Manieris urge that the trial court erred in dismissing the tax sale law violations. They acknowledge that we ruled in Varsolona v. Breen Capital Serv. Corp., 360 N.J. Super. 292, 304-312 (App. Div. 2003), aff'd and modified on other grounds, 180 N.J. 605 (2004), that Installment Payment Plans (IPPs) do not violate the tax sale law. However, they assert that the arrangement between the Ingenitos and the Manieris is not the type of IPP that we found to be legal.

The Manieris do not understand the import of Varsolona. We held there that voluntary IPPs were "neither illegal under the Act, nor violative of public policy." Id. at 298. We reasoned that "[t]he right to enter into enforceable private contracts is protected as a matter of constitutional law" absent a legislative limitation on that right. Id. at 304-05. We pointed out that under prior versions of the tax sale law our courts had "recognized the right of TSC [tax sale certificate] holders and owners to engage in private agreements respecting the lien." Id. at 306. Yet in amending the law, the Legislature did not limit that right. Ibid. We also held that enforcement of such agreements was not violative of public policy. Ibid. This was so because the tax sale law provided remedies to aggrieved taxpayers vis- -vis tax lien holders, and thus recognized that tax sale certificates could be satisfied by direct dealings between the parties. Id. at 307. None of these rulings was predicated upon the particular type of written IPP. The only proviso was that an IPP must be supported by adequate consideration. Id. at 311.

There is no evidence before the court that the Ingenitos and the Manieris even entered into an IPP. The Ingenitos never held the tax sale certificate. The transaction was nothing more than a familial loan. Even if the transaction had been an IPP, the fact that it was not written does not render it in violation of the tax sale law, although it must comply with the requirements imposed on municipalities with respect to a municipal IPP. There is no evidence here that it did not. This being the linchpin of the consumer fraud and racketeering claims, they were properly dismissed as well.

Affirmed.

 

Once the judgment of foreclosure was entered, the affirmative claims of Priority One in the eviction action became moot, although it is not clear whether an order was entered dismissing them.

The Manieris were awarded a judgment against James Keeney and James Keeney L.L.C. for damages in connection with the loss of their property.

Michael Ingenito testified in deposition that the interest on his home equity line of credit was about 10% per annum and from that he arrived at the $1,200 monthly payment.

It has been claimed, although not proven, that the Manieris' purpose in engaging in these transactions was to cut off all other liens by a "friendly foreclosure."

Left Field was not added to the third-party complaint until March 19, 2004, after the final judgment of foreclosure was entered.

This repealed provision may be found in Newark v. Block 86, Lot 30, 94 N.J. Super. 468, 478 (Ch. Div. 1967).

The Supreme Court affirmed our conclusion that private IPPs are not prohibited by the tax sale law. However, the Court held that private IPPs must comply with limitations on municipal installment payment plans, such as the calculation of interest and the recovery of costs and fees. Varsolona, 180 N.J. at 628-29. "[T]he powers delegated to private investors may not be inconsistent with the limits imposed on a municipality issuing an IPP." Id. at 630.

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March 15, 2006