UNITED STATES OF AMERICA v. BARBARA SCURRY

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-4105-05T54105-05T5

UNITED STATES OF AMERICA, acting

through the United States

Department of Agriculture

(hereinafter referred to as "USDA")

formerly known as Farmers Home

Administration,

Plaintiff-Respondent,

v.

BARBARA SCURRY,

Defendant-Appellant.

________________________________________________________________

 

Argued March 6, 2007 - Decided

Before Judges Lisa and Holston, Jr.

On appeal from the Superior Court of New Jersey, Chancery Division, General Equity, Cumberland County, F-2366-01.

Sven E. Pfahlert argued the cause for appellant (Honig & Greenberg, attorneys; Robert N. Wright, Jr., on the brief).

Michael D. Bonfrisco argued the cause for respondent (The Bonfrisco Law Firm, attorneys; Mr. Bonfrisco and Kimberly A. Ruggieri, on the brief).

PER CURIAM

Defendant, Barbara Scurry, appeals from a Chancery Division order denying her motion to vacate a sheriff's sale of her property, and denial of her reconsideration motion. She argues that the trial judge erred because the sheriff's sale was not conducted in accordance with the applicable court rules and statutes, which require ten days advance notice of the sale by certified mail, thus depriving her of her constitutional right to due process of law. She further argues that the judge erred in denying her relief by applying the equitable remedy of laches. We reject these arguments and affirm.

Plaintiff and her husband were the record owners of their residence in Fairfield Township, encumbered by a mortgage in favor of plaintiff, United States of America, acting through the United States Department of Agriculture (USDA), formerly known as the Farmers Home Administration. Because of defaults in payment obligations, the USDA commenced a mortgage foreclosure action in 2001. Judgment of foreclosure was entered in favor of the USDA on August 11, 2003. On April 1, 2004, defendant filed a Chapter 13 bankruptcy proceeding. On March 28, 2005, the USDA obtained relief from the automatic stay of the bankruptcy proceeding. The sheriff's sale was conducted on April 19, 2005. The USDA was the successful bidder for the nominal consideration of $100. A sheriff's deed was executed on May 2, 2005 and recorded. A writ of possession was served on defendant on July 25, 2005.

Based upon her unrefuted certification, defendant did not receive actual notice of the sheriff's sale. The USDA concedes that, although it produced a copy of a letter dated April 5, 2005 addressed to defendant and her husband at their correct address notifying them of the sale scheduled for April 19, 2005, they could not prove that the letter was mailed by regular or certified mail. Therefore, without dispute, the notice required by Rule 4:65-2 was not provided to defendant in advance of the sale.

By letter of August 5, 2005, the attorney who had apparently been representing defendant in her bankruptcy proceedings, wrote to the USDA's attorney advising that his client had received the writ of possession and had previously been unaware that a sheriff's sale occurred. Counsel further stated that "on July 25, 2005 [defendant] came into my office and brought in Ten Thousand ($10,000.00) Dollars to be applied toward curing post-petition arrears and reinstating her Chapter 13 bankruptcy." Counsel expressed the presence of an "opportunity for a resolution that might benefit both parties." He invited the prospect of a mutually agreeable resolution: "Is your client interested in entering into a new transaction with [defendant] to either reinstate the Chapter 13 plan or effect some sort of a[n] occupancy agreement with her? I have substantial funds to work with and I would like to explore this promptly to perhaps achieve a resolution which would be satisfactory to all."

The USDA's attorney replied by sending a copy of the April 5, 2005 letter that was believed to have been sent to defendant. Neither attorney reached out to the other to further communicate or attempt to reach any resolution. Not hearing further from defendant's attorney, the USDA's attorney proceeded to schedule a removal and lock out of defendant, which occurred on September 19, 2005. The USDA incurred expenses for moving, storage of defendant's personal property, and related costs of $3,132.50. The USDA incurred additional costs by paying escrows for real estate taxes and insurance and for maintenance of the property. The USDA did not sell or contract to sell the property nor did it acquire any tenants. At oral argument, we were informed by both parties that the home remains vacant.

On December 13, 2005, defendant filed a motion to vacate the sheriff's sale. The USDA opposed the motion and, after hearing oral argument on February 17, 2006, Judge Rafferty denied the motion. The judge rejected the USDA's contention that it had substantially complied with the notice requirement of R. 4:65-2. However, he found that defendant did not seek the relief she requested in a timely manner, to the USDA's prejudice, and he denied defendant's motion under the doctrine of laches. Defendant moved for reconsideration. The USDA's attorney certified additional costs incurred and interest accrued in the intervening period. The unrefuted certification established a total amount due of more than $119,000 at that time, as compared to an appraisal of the property setting its value as of April 15, 2005 at $95,000. Therefore, at the time of the reconsideration motion in March 2006, assuming that the value of the property had not changed significantly either upward or downward, there was a negative equity of about $24,000.

In our analysis of the appeal arguments, we need not address the deficiency of notice issue raised by defendant. Judge Rafferty was clear in his determination that there was a failure of notice prior to the sale, and he was correct. Thus, the sole basis upon which defendant's motion to vacate the sale was denied was laches. We confine our analysis to that issue.

Under the doctrine of laches, a party will be denied enforcement of a known right where the party engages in an inexcusable and unexplained delay in exercising that right to the prejudice of the other party. Knorr v. Smeal, 178 N.J. 169, 180-81 (2003). What constitutes an unreasonable delay is fact sensitive and requires a consideration of all of the attendant circumstances. Ibid.

Defendant correctly argues that vacation of a sheriff's sale may constitute appropriate relief where there was no ten-day notice and the owner was not actually aware of the sale before it occurred, where there are no intervening equities in favor of innocent third parties, where the owner promptly seeks such relief, and there is no undue prejudice to the purchaser at the sheriff's sale. See Orange Land Co. v. Bender, 96 N.J. Super. 158, 162-65 (App. Div. 1967); see also Assoulin v. Sugarman, 159 N.J. Super. 393, 398 (App. Div. 1978) (agreeing with comment 2 to Rule 4:65-2, stating that noncompliance with the notice rule "warrants setting the sale aside, 'provided the party entitled thereto has no knowledge of the pendency of the sale, seeks relief promptly upon learning thereof, and no intervening equities in favor of innocent parties have been created in the interim,' Pressler, Current New Jersey Court Rules, Comment to R. 4:65-2.")

The issue turns upon whether or not Judge Rafferty mistakenly exercised his discretion in finding that under all of the pertinent circumstances that a four-and-one-half month delay between the time defendant learned of the sheriff's sale on July 25, 2005 and the time when she filed her motion to vacate on December 13, 2005 was unreasonable and whether the prejudice asserted by the USDA was of a nature and magnitude that, combined with the delay, warranted application of the doctrine of laches. We find no mistaken exercise of discretion under all of the circumstances.

This mortgage foreclosure action began in 2001. It was delayed by the filing of a Chapter 13 bankruptcy proceeding. Defendant continued to be noncompliant with her payment obligations, and the USDA was successful in obtaining relief from the automatic stay resulting from the bankruptcy proceedings. The indebtedness continued to grow with the accrual of additional interest. The total indebtedness substantially exceeded the value of the property. When defendant became aware of the sheriff's sale, she was represented by counsel, who, acting on her behalf, represented that he had received $10,000 from defendant and planned to move in the bankruptcy court for reinstatement of defendant's Chapter 13 proceeding. However, no such motion was ever made. Nor was the $10,000 or any other amount ever tendered to the USDA to be credited towards moving costs, costs of foreclosure, and arrearages, in an effort to reinstate the mortgage. Nor did defendant ever represent that she was making efforts to obtain new financing in an effort to buy back her property or make some other financial settlement with the USDA. Meanwhile, knowing that a writ of possession had been served upon her, defendant and her attorney did not move in the Chancery Division to stay its execution or to vacate the sheriff's sale. Instead, they allowed the USDA to continue to incur additional costs, which were not protected by any equity in the property, but which continued to cause the negative equity to escalate.

We note that in Orange Land Co., supra, 96 N.J. Super. at 162, the property owner, who had not been served with a ten-day notice prior to the sheriff's sale, moved to vacate the sale three days after receiving actual notice. In the course of the motion proceedings, the owner demonstrated substantial efforts to obtain new financing. Id. at 162-64. At oral argument on appeal, the property owner represented that he was then in possession of sufficient funds to redeem in full. Id. at 165. We determined that under those circumstances, the appropriate remedy was to remand and direct that within thirty days the property owner should be required to deposit with the court the full amount due on the first and second mortgages, including all interest and costs up to the date of deposit, in default of which the sale would not be set aside. Ibid.

The circumstances here are quite different. There is no evidence that defendant is in a position to pay off the mortgage debt or even to pay all costs incurred by the USDA because of defendant's delay in moving to vacate before the lock out occurred, together with additional accrued interest, and arrears on the mortgage. The $10,000, assuming it is still available, would not be sufficient.

Considering the age of this foreclosure action, the delays in its completion occasioned by defendant's bankruptcy proceeding, the additional delay after defendant became aware of the sheriff's sale, and the absence of evidence of financial ability by defendant to rectify the situation, we find no impropriety in the denial of defendant's motion to vacate the sheriff's sale because of laches.

Affirmed.

 

In colloquy during oral argument on the reconsideration motion, the USDA's attorney stated that defendant had filed three bankruptcy proceedings during the pendency of the foreclosure action. Defendant's attorney did not refute the contention. However, the record before us documents only the bankruptcy proceeding that was filed on April 1, 2004.

(continued)

(continued)

9

A-4105-05T5

 

March 21, 2007