PANASIA ESTATE, INC v. CHANG S. LEE

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

PANASIA ESTATE, INC.,

As Assignee from Bank

of New Jersey,

Plaintiff-Respondent,

v.

CHANG S. LEE, a/k/a MICHAEL C. LEE

and SUK JONG MUN,

Defendants-Appellants,

and

BANK ASIANA NEW YORK

COMMUNITY BANK, SUCCESSOR TO

SYNERGY BANK, STATE OF NEW

JERSEY, NATHAN & NATHAN, INC.,

Defendants.

_______________________________________

August 26, 2016

Argued December 14, 2015 Decided

Before Judges Carroll and Sumners.

On appeal from the Superior Court of New Jersey, Chancery Division, Bergen County, Docket No. F-0851-12.

William Z. Shulman argued the cause for appellants.

Michael S. Zicherman argued the cause for respondent (Peckar & Abramson, P.C., attorneys; Mr. Zicherman, on the brief).

PER CURIAM

In this residential foreclosure action, defendants Chang S. Lee and Suk Jong Mun, husband and wife, appeal from an October 28, 2014 order granting plaintiff Panasia Estate, Inc.'s motion for reconsideration to extinguish defendants' right of redemption and reinstate plaintiff as owner of the property. For the reasons that follow, we affirm.

I.

We discern the following facts from the record. On October 29, 2007, defendants borrowed $1.7 million from the Bank of New Jersey (BNJ) and executed a mortgage securing their single-family residential property (the property). After defendants defaulted on the mortgage, BNJ filed a foreclosure complaint on January 17, 2012.1 BNJ eventually obtained summary judgment after defendants' answer was stricken because they did not deny any of BNJ s allegations or challenge its right to foreclose. On September 26, 2012, BNJ obtained final judgment in the amount of $1,832,241.67, plus fees and costs.

In August 2013, the Chancery Division denied defendants' request to stay the sheriff's sale of the property due to their huge indebtedness. Defendants also failed to forestall foreclosure through the filing of four unsuccessful bankruptcy petitions in 2013 and 2014. In April 2014, plaintiff purchased BNJ's interest in the property and was assigned the final judgment.

On September 12, 2014, plaintiff purchased the property at the sheriff's sale. On September 22, defendant Lee appeared before the court and submitted a hand-written request seeking an extension of defendants' right of redemption. The letter stated, "I[, Lee,] have a buyer who is here in court with certified check in [the] amount due to [p]laintiff[:] $1,981,230.59. All I need is a couple of days to finalize [the] paper." That same day, the court entered an order giving defendants until 10:00 a.m. on September 25, to redeem the property.

On September 25, defendants claimed that the buyers needed additional time to finalize documents2 for an approved loan, and sought a further extension of the period for redemption. The court entered an order that day denying the application, confirming the sheriff's sale, extinguishing defendants' right of redemption, and directing the sheriff to convey the deed to plaintiff. The sheriff conveyed the deed on September 26, and plaintiff recorded it four days later, on September 30.

On October 6, defendants filed an application with the court for plaintiff to show cause why the court should not reconsider its September 25 order denying defendants' redemption request, as well as seeking temporary restraints to prevent plaintiff from selling or transferring the property. Defendants contended they still had a third-party prepared to purchase the property and "all creditors [would] be paid[.]" The court scheduled argument for the next day.

At the hearing on October 7, the court did not address the Crowe v. DeGioia3 analysis for the temporary restraints defendants sought. Instead, the court had the parties address the merits of the dispute in particular, defendants' request to have the court reconsider the denial of its September 25 order. Satisfied with defendants' representations that they had obtained financing to purchase the property, which was not contended on September 25, the court believed plaintiff would be made whole, and applied its equitable powers to grant defendants the opportunity to redeem by paying off the full amount of the judgment, plus fees and costs, in a closing by noon on October 10. In doing so, the judge acknowledged, "I confess that I'm a little concerned that I am disturbing the sanctity of the redemption process because it is beyond ten days."

Before an order had been entered memorializing the court's October 7 decision, plaintiff's counsel faxed a letter to the court on October 9, asserting that the recent hearing did not afford plaintiff the opportunity to fully address its legal rights as title owner to the property and to prevent defendants from "undo[ing]" the sheriff's sale. Plaintiff also requested that the court give it the benefit of another hearing.

In response, the court issued a letter order on October 9, memorializing its October 7 decision, and directing plaintiff's counsel to contact defendants' counsel to schedule a hearing to address plaintiff's concerns. Subsequently, plaintiff filed an order to show cause and reconsideration motion to vacate the October 9 order, reinstate the September 25 order, and extinguish defendants' right of redemption.

On October 28, after considering the parties' written submissions and arguments, the court set forth its oral decision granting plaintiff's request to vacate the October 9 order, and reinstating the September 25 order. The court determined that its October 9 order to vacate the sheriff's sale "on the condition that [] defendant and [a] third party [] close[] by a date certain and that plaintiff get paid its full amount in redemption and that the new owner be held harmless with respect to its owner's fees and costs, . . . was improvidently entered and is incorrect." The court reasoned that it should not have revived defendants' redemption period after extinguishing it in the September 25 order and after the sheriff's deed had been delivered to the new buyer on September 26, and recorded on September 30. The court found that there was no "[f]raud, misapprehension, surprise, [or] defects" in the sheriff's sale which raised due process concerns and would revive defendants' right to redeem. The court also found that defendants had no right to redeem on October 7 by merely claiming they were "almost ready to close" to pay off plaintiff's final judgment because their redemption rights under Rule 4:65-5 had expired. Further, the court recalled that its denial of defendants' request in August 2013, to stay the sheriff's sale due to their huge indebtedness, and defendants' four unsuccessful bankruptcy petitions, were indicative of the many opportunities defendants had to protect their property. This appeal followed.

II.

We begin by addressing our standard of review. When reviewing a party's challenge of a trial court's decision on a motion for reconsideration, we have determined that

[r]econsideration itself is a matter within the sound discretion of the [c]ourt, to be exercised in the interest of justice[.] It is not appropriate merely because a litigant is dissatisfied with a decision of the court or wishes to reargue a motion, but should be utilized only for those cases which fall into that narrow corridor in which either 1) the [c]ourt has expressed its decision based upon a palpably incorrect or irrational basis, or 2) it is obvious that the [c]ourt either did not consider, or failed to appreciate the significance of probative, competent evidence.

[Palombi v. Palombi, 414 N.J. Super. 274, 288 (App. Div. 2010) (citation omitted).]

We will not disturb a trial judge's denial of a motion for reconsideration absent an abuse of discretion. Fusco v. Bd. of Educ. of City of Newark, 349 N.J. Super. 455, 462 (App. Div.), certif. denied, 174 N.J. 544 (2002).

In this case, we are asked to review the Chancery Court's October 28 reconsideration order, denying defendants right to redeem the property from foreclosure. Until the foreclosure is completed, a mortgagor retains an equitable right to redeem the mortgaged property. See Borough of Merchantville v. Malik & Son, LLC, 218 N.J. 556, 567 (2014) ("[I]t has been the settled law in this State that an owner-mortgagor has a right to redeem the mortgaged property following foreclosure and [s]heriff's [s]ale, by the payment in full of the mortgage indebtedness, costs of foreclosure, and costs of sale." (citing Hardyston Nat'l Bank v. Tartamella, 56 N.J. 508, 513 (1970))).

The initiation of foreclosure proceedings does not extinguish the mortgagor's interest in the encumbered property. [A] mortgagor has the right to satisfy the debt at any time before entry of judgment and thereafter under certain circumstances. This right is referred to as the right to redeem or the right of redemption.

[Id. at 566-67.]

The purpose of foreclosure itself is to end the equity of redemption, so the successful bidder at the foreclosure sale can take clear title to the property. See Chase Manhattan Bank v. Josephson, 135 N.J. 209, 218 (1994). Thus, the trial court's decision to allow redemption rights should not be disturbed "unless it can be shown that the trial court palpably abused its discretion, that is, that its finding was so wide off the mark that a manifest denial of justice resulted." Green v. N.J. Mfrs. Ins. Co., 160 N.J. 480, 492 (1999) (quoting
State v. Carter, 91 N.J. 86, 106 (1982)).

Pursuant to Rule 4:65-5, a mortgagor can object to the sheriff's sale "within [ten] days after the sale or at any time thereafter before the delivery of the conveyance." Once this period has expired, and no objection has been filed, "[a] sheriff's sale is automatically confirmed[.]" Brookshire Equities, LLC v. Montaquiza, 346 N.J. Super. 310, 316 (App. Div.), certif. denied, 172 N.J. 179 (2002). "Examples of valid grounds for objection include fraud, accident, surprise, irregularity, or impropriety in the sheriff's sale." Id. at 317 (citing Orange Land Co. v. Bender, 96 N.J. Super. 158, 164, (App. Div. 1967)). If a mortgagor is able to and wishes to exercise his or her right of redemption, within the timeframe set forth in the rule, he or she must tender[] the full amount of the judgment due. Id. at 315. The ability to redeem must not be qualified. See Kaplan v. Sleep E Hollow Motel Co., 112 N.J. Super. 296, 304-05 (App. Div. 1970), certif. denied, 57 N.J. 435 (1971) (holding that defendants did not make an unqualified tender of the amount due by way of redemption, and that their belated demand for an accounting by the receiver would not have changed their redemption offer into a fully qualified one).

Applying these principles, we disagree with defendants' contentions that the court abused its discretion on October 28 by not extending the time to redeem despite representations that they had the certified funds to satisfy plaintiff's judgment. Defendants' argument fails to recognize that its redemption rights did not extend beyond the ten-day period of redemption afforded by Rule 4:65-5 absent a valid objection to the sheriff's sale. After the sheriff's sale of the property to plaintiff on September 12, defendants' ten-day redemption period expired on September 22, and before the property was conveyed on September 26. On September 25, when defendants appeared before the court, their request to redeem was denied and the deed conveyance was authorized because they were not in a position to satisfy the final judgment. The court's action was consistent with the law.

We also conclude that the court's reconsideration decision on October 28 to reinstate the September 25 order and vacate the October 9 order was not an abuse of discretion. At that time, the court had the benefit of the parties' briefs and argument regarding the merits of reconsidering the September 25 order. As the court noted, there was no defect in the sheriff's sale, and the period of redemption had expired. In fact, defendants were not in a position to redeem on October 9 when the court decided to give them more time. We are satisfied with the court's recognition that its equitable powers should not have been exercised to grant extension. Accordingly, defendants have not shown that the court failed to consider competent evidence and applicable law when making its decision.

Affirmed.

1 The other defendants named in the complaint are lien holders with interests in the property but are not involved in this appeal.

2 Defendants were attempting to get a junior lienholder to compromise its $300,000 lien on the property.

3 90 N.J. 126, 133 (1982).