CRESTAR CAPITAL, L.L.C. v. MANUEL L RIBEIRO

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R.1:36-3.

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-5624-14T2

CRESTAR CAPITAL, L.L.C.,

Plaintiff-Respondent,

v.

MANUEL L. RIBEIRO and

FLORINDA V. ARAUJO,

Defendants-Appellants.

_______________________________

November 14, 2016

Submitted October 25, 2016 Decided

Before Judges Yannotti, Fasciale and Gilson.

On appeal from Superior Court of New Jersey, Chancery Division, Burlington County, Docket No. F-16986-13.

Corey E. Ahart, attorney for appellants.

Hovatter, Friedman, Saputelli & Levi, P.C., attorneys for respondent (Marc H. Stofman, on the brief).

PER CURIAM

In this tax foreclosure action, Manuel L. Ribeiro and Florinda V. Araujo (defendants) appeal from a July 24, 2015 order denying their motion to vacate default judgment in favor of plaintiff Crestar Capital L.L.C. We affirm.

In May 2013, plaintiff filed a foreclosure complaint because defendants had failed to pay municipal and real estate taxes on the property since 2011. Defendants ignored the complaint, which prompted the entry of default in December 2013. In June 2014, the court entered an order fixing the time and place for redemption of the property. Defendants did not redeem the property or otherwise participate in the foreclosure proceedings. In February 2015, the court entered final judgment, which defendants ignored. Plaintiff then filed an ejectment action in April 2015.

In June 2015, defendants filed a motion to vacate final judgment. Ribeiro submitted a certification, which his son had translated from Spanish to English, certifying that he did not understand the nature of the foreclosure proceedings and his former lawyer did not resolve the dispute. Defendants did not argue that they lacked knowledge of the foreclosure matter. Ribeiro conceded that he was unable to ascertain if he had been served with the complaint.

The judge conducted oral argument and rendered a written decision. In denying the motion, she concluded defendants did not satisfy N.J.S.A. 54:5-87 (establishing deadlines and criterion for re-opening judgments in tax foreclosure cases) and were not entitled to relief pursuant to Rule 4:50-1. The judge offered to adjourn the matter, but defendants were unable to show that they were able to pay the redemption costs.

On appeal, defendants argue that plaintiff failed to properly effect service of process; the court erred in its application of N.J.S.A. 54:5-87; they established excusable neglect and a meritorious defense; and the result of denying their motion to vacate default was harsh.

The decision on whether to grant a motion to vacate a default judgment is "left to the sound discretion of the trial court, and will not be disturbed absent an abuse of discretion." Mancini v. E.D.S. ex rel. N.J. Auto. Full Ins. Underwriting Ass'n, 132 N.J. 330, 334 (1993); see also U.S. Bank Nat'l Ass'n v. Guillaume, 209 N.J. 449, 467 (2012) (stating that a decision on a motion to vacate default judgment "should not be reversed unless it results in a clear abuse of discretion"). A motion to vacate a default judgment involves balancing a "strong interest[] in finality of judgments and judicial efficiency with the equitable notion that courts should have authority to avoid an unjust result in any given case." Manning Eng'g Inc. v. Hudson Cty. Park Comm'n, 74 N.J. 113, 120 (1977). Accordingly, the decision whether to grant or deny a motion to vacate a default judgment must be guided by equitable considerations. Prof'l Stone, Stucco & Siding Applicators, Inc. v. Carter, 409 N.J. Super. 64, 68 (App. Div. 2009) (noting that "Rule 4:50 is instinct with equitable considerations").

We reject defendants' argument that plaintiff failed to properly effect service of process. Plaintiff successfully served the foreclosure complaint pursuant to Rule 4:4-4(a)(1). Plaintiff effectuated service of the complaint by leaving the pleading with defendants' son, who resided with defendants and was a competent member of the household.

The judge properly considered and applied N.J.S.A. 54:5-87, which provides that "no application shall be entertained to reopen the judgment after three months from the date thereof," except for grounds of lack of jurisdiction or fraud in the conduct of the suit. The court had jurisdiction and there are no allegations of fraud. It is undisputed that defendants filed their motion to vacate more than three months after the entry of final judgment.

The judge also correctly reviewed whether defendants were entitled to relief under Rule 4:50-1. It is well-recognized that this rule governs a motion for relief from a tax sale foreclosure judgment, notwithstanding N.J.S.A. 54:5-87. See M & D Assocs. v. Mandara, 366 N.J. Super. 341, 351 (App. Div.) (finding that Rule 4:50-1 is paramount), certif. denied, 180 N.J. 151 (2004); see also Town of Phillipsburg v. Block 1508, Lot 12, 380 N.J. Super. 159, 166 (App. Div. 2005) (interpreting the three-month deadline). The guiding principles are that the statutory limitation, and the underlying policy to grant stability of foreclosure judgment, informs a court's exercise of its discretion under the rule. Phillipsburg, supra, 380 N.J. Super. at 166-67; Bergen-Eastern Corp. v. Koss, 178 N.J. Super. 42 (App. Div.), certif. granted, 87 N.J. 351, and appeal dismissed, 88 N.J. 499 (1981). Rule 4:50-1 authorizes a court to

relieve a party or the party's legal representative from a final judgment or order for the following reasons: (a) mistake, inadvertence, surprise, or excusable neglect; (b) newly discovered evidence which would probably alter the judgment or order and which by due diligence could not have been discovered in time to move for a new trial under [R.] 4:49; (c) fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party; (d) the judgment or order is void; (e) the judgment or order has been satisfied, released or discharged, or a prior judgment or order upon which it is based has been reversed or otherwise vacated, or it is no longer equitable that the judgment or order should have prospective application; or (f) any other reason justifying relief from the operation of the judgment or order.

"The rule is 'designed to reconcile the strong interests in finality of judgments and judicial efficiency with the equitable notion that courts should have authority to avoid an unjust result in any given case.'" Guillaume, supra, 209 N.J. at 467 (quoting Mancini, supra, 132 N.J. at 334).

We review a trial court's grant or denial of a Rule 4:50-1 motion with substantial deference and will not reverse it "unless it results in a clear abuse of discretion." Ibid. "[A]n abuse of discretion occurs when a decision is made without a rational explanation, 'inexplicably departed from established policies, or rested on an impermissible basis.'" Deutsche Bank Trust Co. Ams. v. Angeles, 428 N.J. Super. 315, 319 (App. Div. 2012) (alteration in original) (quoting Guillaume, supra, 209 N.J. at 467-68).

Defendants rely primarily on Rule 4:50-1(a). It is well settled that, under Section (a), a default judgment will not be disturbed unless the failure to appear or otherwise defend was excusable under the circumstances and unless the defendant has a meritorious defense. Guillaume, supra, 209 N.J. at 468-69. Defendants ignored the foreclosure proceedings, and they offered no meritorious defense. We see no abuse of discretion.

We note that vacation of the judgment is also unwarranted under Rule 4:50-1(f), which permits a judge to vacate a default judgment for "any other reason justifying relief from the operation of the judgment or order," and "'is available only when truly exceptional circumstances are present.'" Guillaume, supra, 209 N.J. at 484 (quoting Hous. Auth. of Morristown v. Little, 135 N.J. 274, 286 (1994)). The applicability of this subsection is limited to "situations in which, were it not applied, a grave injustice would occur." Ibid. (quoting Little, supra, 135 N.J. at 289). Such circumstances do not exist here.

Finally, we reject defendants' argument that equity requires a vacation of the judgment because the result is harsh. The judge fully weighed the equities of our Tax Sale Law, N.J.S.A. 54:5-1 to -137, which serves "as a framework to facilitate the collection of property taxes," In re Princeton Office Park L.P. v. Plymouth Park Tax Servs., L.L.C., 218 N.J. 52, 61 (2014) (quoting Varsolona v. Breen Capital Servs. Corp., 180 N.J. 605, 620 (2004)), against the need for finality of foreclosure judgments. "Although the primary purpose of the Tax Sale Law is to encourage the purchase of tax certificates, another important purpose is to give the property owner the opportunity to redeem the certificate and reclaim his [or her] land." Simon v. Cronecker, 189 N.J. 304, 319 (2007).

Affirmed.