WEBSTER BANK, N.A. v. HECTOR & MARTHA ACEBEDO

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

WEBSTER BANK, N.A.,

Plaintiff-Respondent,

v.

HECTOR & MARTHA ACEBEDO,

Defendants-Appellants.

_______________________________________

March 3, 2015

Submitted February 11, 2015 - Decided

Before Judges Waugh and Carroll.

On appeal from the Superior Court of New Jersey, Chancery Division, General Equity Part, Hudson County, Docket No. F-48279-08.

Tomas Espinosa, attorney for appellants.

Ralph F. Casale & Associates, LLC, attorneys for respondent (Patrick O. Lacsina, on the brief).

PER CURIAM

Defendants Hector and Martha Acebedo appeal from an order entered by the Chancery Division on August 19, 2013, denying their order to show cause that sought to vacate the sheriff's sale of their foreclosed property and to extend the period of redemption. We affirm.

The record before us reveals the following. On December 22, 2006, defendants borrowed $603,000 from plaintiff Webster Bank, N.A. (Webster), to finance construction of a residential property in Jersey City. The loan was secured by a mortgage executed by defendants. Defendants entered into a loan modification agreement with Webster on September 17, 2007, but failed to make the required payments. Webster filed its foreclosure complaint on December 9, 2008. Default was entered against defendants in March 2009, after they failed to answer. The court entered a final judgment of foreclosure on December 22, 2010, along with a writ of execution directing that the property be sold by sheriff's sale.

Following entry of judgment, defendants filed bankruptcy petitions in the District Court of New Jersey in November 2011, March 2012, and October 2012, triggering an automatic stay of any proceedings against defendants. 11 U.S.C.A. 362(a). On April 9, 2013, the Bankruptcy Court granted relief from the automatic stay, allowing the foreclosure proceeding to continue. In its April 9 order, the Bankruptcy Court found that the bankruptcy filing was "'part of a scheme to delay, hinder, and defraud creditors' involving 'multiple bankruptcy filings affect[ing] the [] property.'"

On April 17, 2013, Webster moved for the appointment of a rent receiver after it became aware that defendants were collecting rental income from multiple tenants of the property. The court granted the motion on May 3. On July 10, the rent receiver moved to enforce the order, certifying that on five occasions he was denied access to the property by defendants' son, Alexander Acebedo,1 who claimed to be the owner. On July 29, the court ordered the Hudson County Sheriff "to perform all necessary and proper acts required for the [rent r]eceiver to effectuate" the prior order.

On May 1, 2013, Alexander entered into a contract to purchase the property from defendants for $732,300. The contract was subject to a $450,000 mortgage contingency, and specified a May 30 closing date.

On May 9, 2013, defendants filed an order to show cause to stay the sheriff's sale, which was scheduled to occur the same day. Defendants further sought to adjourn the sheriff's sale for thirty days to allow them to consummate the sale to Alexander, and to compel plaintiff to provide a statement of "the full amount of redemption immediately." The court heard argument on defendants' application that day, during which their attorney represented that the money was available to satisfy the amount due Webster. The judge expressed skepticism, noting "Well, that is the problem . . . You haven't confirmed the availability of the money. You have a letter from a company that says that they are willing to provide a loan. There is no mortgage commitment." Nonetheless, over Webster's objection, the judge agreed to adjourn the sheriff's sale to June 20, 2013. As conditions of the adjournment, defendants were required to present confirmation, within seven days, that Alexander had deposited $282,000 in his counsel's trust account, and that the lender's attorney was holding the mortgage funds. The court also permitted plaintiff to move on short notice to vacate the order if defendants failed to provide confirmation that these conditions were met.

On May 16, 2013, defendants' attorney wrote to the court, requesting to substitute a commitment letter from the lender in lieu of having the loan amount deposited into the lender's attorney trust account. Webster objected, and on June 20, the scheduled date of the sheriff's sale, defendants moved for a further extension of time to close on the property. Defendants also requested that Webster provide the payoff amount and that it accept a commitment letter from the lender as proof of the required funds. After hearing argument, the judge expressed concern over the source of the funds that defendants proposed to utilize to satisfy Webster's mortgage. Webster also apprised the court of Alexander's interference with the court-appointed rent receiver's efforts to access the property. The judge then denied defendants' request for a further extension.

The sheriff's sale took place on August 8, 2013, at which Webster was the successful bidder. On August 19, defendants filed an order to show cause to vacate the sale and extend the period of redemption. In a supporting certification, Alexander averred

I have in my possession deposited in the bank [] the amount of $150,000[], and have Sanaa Sadek2 that is giving me a loan in the amount of $220,000 and Lawrence and Irene Friedman is also provide [sic] me with $400,000. This is $770,000[,] which is $20,000[] more than the redemption on behalf of my parents to redeem the property.

At a hearing that day on defendants' application, no proof of available funds was presented. Rather, Alexander advised the court that "The other individuals do have the funds, and we will deposit in[] a trust account." The judge denied the request unless Alexander "c[a]me back with a certified check for $750,000 to be deposited with the [c]ourt," in which event he would reconsider defendants' application. Defendants did not return, and the court entered a memorializing order denying their request to vacate the sheriff's sale and extend the period for redemption.

This appeal ensued, in which defendants present the following arguments for our consideration

POINT I: THE COURT BELOW AND APPELLEE VIOLATED THE RIGHT OF REDEMPTION OF THE APPELLANTS.

POINT II: THE SHERIFF SALE WAS EFFECTED IN VIOLATION OF THE ACTUAL NOTICE REQUIREMENT AND SHOULD BE VACATED . . . .

"[A]n application to open, vacate, or otherwise set aside a foreclosure judgment or proceedings subsequent thereto is subject to an abuse of discretion standard." United States v. Scurry, 193 N.J. 492, 502-03 (2008) (citing Wiktorowicz v. Stesko, 134 N.J. Eq. 383, 386 (E. & A. 1944)). Foreclosure proceedings seek relief which is primarily equitable in nature. Scurry, supra, 193 N.J. at 502. A trial judge's application or denial of equitable remedies 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 of the mark that a manifest denial of justice resulted." Green v. N.J. Mfrs. Ins. Co., 160 N.J. 480, 492 (1999) (internal quotation marks omitted).

A motion to vacate a sheriff's sale is governed by Rule 4:65-5, which states that any objection to the sale must be served within the ten days following the sale or before delivery of the deed, whichever is later. "Examples of valid grounds for objection include fraud, accident, surprise, irregularity, or impropriety in the sheriff's sale." Brookshire Equities v. Montaquiza, 346 N.J. Super. 310, 317 (App. Div.) (citing Orange Land Co. v. Bender, 96 N.J. Super. 158, 164 (App. Div. 1967)), certif. denied, 172 N.J. 179 (2002).

Additionally, "[q]uite independent of statute or rule of court, the Court of Chancery has inherent power to order a sale of mortgaged premises and to control its process directed to that end, and this inherent power of the court has never been doubted." Crane v. Bielski, 15 N.J. 342, 346 (1954) (citing Fed. Title & Mortg. Guar. Co. v. Lowenstein, 113 N.J. Eq. 200 (Ch. 1933)). Despite the court's broad discretion to employ equitable remedies, this power should be "sparingly exercised" and "a sale so conducted shall be vacated only when necessary to correct a plain injustice." First Trust Nat'l Ass'n v. Merola, 319 N.J. Super. 44, 52 (App. Div. 1999) (quoting Karel v. Davis, 122 N.J. Eq. 526, 529 (E. & A. 1937)) (internal quotation marks omitted).

Until the foreclosure is completed, a mortgagor retains an equitable right to redeem the mortgaged property.

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.

[Borough of Merchantville v. Malik & Son, LLC, 218 N.J. 556, 566-67 (2014).]

In New Jersey, a mortgagor may redeem property following a sheriff's sale "by the payment in full of the mortgage indebtedness, costs of foreclosure, and costs of sale." Id. at 567 (citing Hardyston Nat'l Bank v. Tartamella, 56 N.J. 508, 513 (1970)).

With these principles in mind, we examine defendants' contentions that their right of redemption was violated. Specifically, defendants fault the conditions that the court imposed when it agreed to adjourn the sheriff's sale from May 9, 2013, to June 20, 2013. They argue that the court erred in requiring Alexander and the lender to deposit their respective contributions to the purchase price in trust prior to June 20. We disagree.

Defendants' argument glosses over the fact that their ability to redeem Webster's mortgage was exclusively dependent on Alexander's ability to purchase the property from them. The judge was intimately familiar with the long history of the case, which was pending for more than four years and included three bankruptcy filings which the Bankruptcy Court concluded "were part of a scheme to delay, hinder and defraud creditors." Accordingly, it was within the judge's discretion to require proof of Alexander's ability to fund the proposed purchase. Further, the judge properly expressed concern when apprised of the source of Alexander's proposed funding.

Notwithstanding Webster's objection to any further delay, the court adjourned the sheriff's sale to allow defendants to complete the sale of the property to Alexander. However, defendants failed to comply with the reasonable conditions imposed by the court. Even after the sheriff's sale, Alexander appeared before the court requesting an additional extension of the redemption period. His continued inability to tender payment of the full mortgage indebtedness, although afforded a final opportunity by the court to do so, correctly led to the denial of the redemption application. See Hardyston Nat'l Bank, supra, 56 N.J. at 513; First Nat'l Bank & Trust Co. v. MacGarvie, 41 N.J. Super. 151, 157 (Ch. Div.), affirmed as modified, 22 N.J. 539 (1956).

Defendants also fault Webster's failure to provide a statement of the amount required to redeem the mortgage. We find this argument unpersuasive, as Alexander in his certification expressly states that he learned the redemption amount when he attended a sheriff's sale on behalf of his parents, which sale was then adjourned.

For largely the same reason we reject defendants' belated argument that they lacked proper notice of the sheriff's sale. In the same certification, Alexander avers that, following its adjournment, the sheriff's sale was rescheduled for August 8, 2013, and he describes the bidding that went on at the sale. Moreover, we note that defendants' prior applications to stay the sheriff's sale were filed on May 9, 2013, and June 13, 2013, the very dates those sales were scheduled to occur. The record clearly establishes defendants' awareness of the impending sheriff's sale.

In summary, this case involves a long-standing foreclosure action, punctuated by three bankruptcy filings and defendants' last-ditch effort to sell the mortgaged property to their son. "In foreclosure matters, equity must be applied to plaintiffs as well as defendants." Deutsche Bank Trust Co. Americas v. Angeles, 428 N.J. Super. 315, 320 (App. Div. 2012). Notwithstanding the court's indulgence, in the end defendants failed to demonstrate an ability to redeem the mortgage. We find no abuse in the court's determination not to vacate the sheriff's sale or extend the redemption period.

Affirmed.

1 Since Alexander shares a common surname with defendants, we refer to him by his first name in this opinion for purposes of clarity and ease of reference. In doing so, we intend no disrespect.

2 The record reflects that Sadek was also a client of defendants' attorney.