HUMMINGBIRD INVESTMENTS, LLC v. DANIEL J. WALSH

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

HUMMINGBIRD INVESTMENTS, LLC

Plaintiff-Respondent,

v.

DANIEL J. WALSH,

Defendant-Appellant.

___________________________________________________________

June 17, 2015

Submitted March 24, 2015 Decided

Before Judges Messano and Hayden.

On appeal from Superior Court of New Jersey, ChanceryDivision, OceanCounty, DocketNo F-009185-11.

Daniel J. Walsh, appellant pro se.

Reuel E. Topas, attorney for respondent.

PER CURIAM

Defendant Daniel J. Walsh appeals from the October 11, 2013 Chancery Division orders granting plaintiff Hummingbird Investments' motion to discharge and reinstate a cancelled tax sale certificate, and denying defendant's motion to vacate a judgment of foreclosure. For the reasons that follow, we affirm.

The record reveals the following facts. In June 2009, FNA Jersey Lien Services, LLC (FNA), plaintiff's predecessor, purchased tax sale certificate number 09-00294 from the Township of Toms River for unpaid taxes and sewer charges on property owned by defendant. Two years later, FNA moved to foreclose on the certificate. Defendant filed an answer, but did not raise as a defense that the certificate had been redeemed. Pursuant to plaintiff's motion, the answer was stricken as non-contesting. Thereafter, the court entered a default and issued an order setting the time, place, and amount of redemption for September 13, 2012. The municipal tax collector, Kathleen Adams, issued a certification of non-redemption on September 20, 2012, attesting that defendant did not redeem the certificate, and the court entered final judgment of foreclosure on October 10, 2012.1

On January 4, 2013, defendant, for the first time, produced a cancelled tax certificate, which had been signed by FNA's principal. Defendant claimed that it had been misplaced and recently discovered. Defendant informed plaintiff that the tax collector had sent him the cancelled tax certificate in March 2011 and demanded that plaintiff vacate the judgment of foreclosure. Defendant subsequently recorded the cancelled certificate in May 2013.

As a result, plaintiff filed a motion to discharge the cancelled certificate and reinstate the original tax sale certificate. In support, plaintiff filed certifications from Ms. Adams and Ike Schwab, president of FNA, claiming that no money was paid to the municipality, the certificate was never redeemed, and it was mistakenly cancelled and sent to defendant. Ms. Adams explained that in 2011, defendant asked for a redemption amount and represented that he was going to pay off the certificate. When she received the signed tax certificate from FNA, Ms. Adams stated that she erroneously sent it on to defendant. Nonetheless, Ms. Adams was certain that she had not received the money to redeem the tax lien. Defendant filed a cross-motion to vacate the final judgment based on the 2011 cancellation of the tax certificate.

After a hearing on August 30, 2013, the court reserved making a decision and gave each party the opportunity to furnish further information to demonstrate whether the lien had been paid. Defendant acknowledged that he had not paid, and failed to produce proof that anyone on his behalf paid, the tax collector to redeem the tax certificate. At the later hearing on October 11, 2013, the court granted plaintiff's motion and denied defendant's motion. The court determined that defendant's proof, based solely on the cancelled tax certification, was insufficient "in face of the tax collector's certifications" that she had never received payment and defendant's acknowledgement that he had not paid the tax collector. Consequently, the court concluded that the tax certificate was mistakenly cancelled and sent to defendant. The October 11, 2013 order provided that the "erroneously issued cancelled Tax Sale Certificate . . . is hereby [v]acated and [d]ischarged of [r]ecord[.]" Additionally, the order reinstated the original tax sale certificate "[n]unc [p]ro [t]unc, to the effect that no cancellation of the said certificate has ever been recorded and restoring the said Tax Sale Certificate and all rights and obligations[.]" The court also denied defendant's motion to vacate. This appeal followed.

On appeal, defendant argues that the trial court abused its discretion in granting plaintiff's motion and denying his motion. Specifically, defendant contends that the court should have denied plaintiff's motion because plaintiff acknowledged that the lien was fully paid when it signed the cancelled tax certificate, and he relied on the redemption. Further, he asserts that the court should have vacated the final judgment of foreclosure because plaintiff fraudulently misled the court in obtaining the judgment by falsely claiming that it was the holder of a valid unredeemed tax certificate. We are not persuaded.

We begin by recognizing that "a judge siting in a court of equity has a broad range of discretion to fashion the appropriate remedy in order to vindicate a wrong consistent with the principles of fairness[.]" Graziano v. Grant, 326 N.J. Super. 328, 342 (App. Div. 1999). When a matter involves the application of equitable principles, a reviewing court "should not substitute its judgment for that of the trial judge," in the absence of an abuse of discretion. Kurzke v. Nissan Motor Corp. U.S.A., 164 N.J. 159, 165 (2000).

The tax sale process, set forth in the Tax Sale Law, N.J.S.A. 54:5-1 to -137, "is designed to enhance the collection of taxes." Savage v. Weissman, 355 N.J. Super. 429, 435-36 (App. Div. 2002). The Tax Sale Law is remedial legislation aimed at protecting municipalities by "maximiz[ing] the recovery of unpaid property taxes (and other municipal charges)" and by "quickly return[ing] to the tax rolls the property on which such charges have remained in default." Town of Phillipsburg v. Block 1508, Lot 12, 380 N.J. Super. 159, 162 (App. Div. 2005); see also Lonsk v. Pennefather, 168 N.J. Super. 178, 182 (App. Div. 1979) ("[T]he public policy in this State is to encourage tax sale foreclosure so as to assist municipalities in the collection of delinquent taxes."), certif. denied, 82 N.J. 285 (1980).

In addressing redemption of tax sale certificates, N.J.S.A. 54:5-54 states

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 . . . by paying to the collector, or to the collector of delinquent taxes . . . the amount required for redemption[.]

N.J.S.A. 54:5-54.1 mandates that "[a]ll redemptions [must] be made through the tax collector's office[.]" Upon receiving payment of the full amount of the lien, the collecting officer will "execute and deliver to the person redeeming a certificate of redemption which may be recorded[.]" N.J.S.A. 54:5-55. The certificate of redemption is an "alternative means" by which the collecting officer can demonstrate "that payment in full has been made[.]" Petak v. City of Paterson, 291 N.J. Super. 234, 239 (App. Div.), certif. denied, 146 N.J. 566 (1996). That said, the certificate itself states, "[s]aid sale is subject to redemption on repayment of the amount of sale[.]"

Here, it is undisputed that defendant never complied with N.J.S.A. 54:5-54 by "paying to the collector . . . the amount required for redemption[.]" Defendant has failed to produce any evidence whatsoever demonstrating that someone else acting on his behalf paid the redemption amount. The fact that the certificate was erroneously signed does not constitute redemption. The cancelled certificate may serve as evidence that the certificate was redeemed, that is, the landowner paid the tax collector the requisite amount, but does not constitute redemption itself. Defendant appears to argue that a signed cancelled tax certificate, even if done mistakenly, amounts to redemption and relieves him of his duty to pay the money owed to the municipality. Such a flawed interpretation is contrary to the purpose of the tax sale legislative scheme, which, as stated above, is to "maximize the recovery of unpaid property taxes[.]" Phillipsburg, supra, 380 N.J. Super. at 162.

We are convinced that the trial court properly discharged and reinstated the tax certificate as the record contains no evidence that the lien was paid. The record supports the court's finding that the tax certificate was cancelled in error as a certificate of redemption may only be issued once a lien has been fully paid to the tax collector. Petak, supra, 291 N.J. Super. at 239; N.J.S.A. 54:5-55. Consequently, we are satisfied that the court appropriately exercised its discretion to fashion an appropriate remedy to vindicate the erroneous cancellation. See Graziano, supra, 326 N.J. Super. at 342.

Defendant also contends that the court abused its discretion by not vacating the judgment, essentially because plaintiff fraudulently stated that the tax sale certificate had not been redeemed in light of the fact that the certificate had been cancelled and sent to defendant in 2011. We do not agree.

We discern that defendant is requesting vacation under Rule 4:50-1(c), fraud, and 4:50-1(f), other circumstances.2 We review a trial court's decision to grant or deny a Rule 4:50 motion on an abuse of discretion standard. See DEG, LLC v. Twp. of Fairfield, 198 N.J. 242, 261 (2009). A trial judge abuses its discretion when denying relief under the Rule without rational explanation, in departure from established policy, or upon an impermissible basis. US Bank Nat'l Ass'n v. Guillaume, 209 N.J. 449, 467 (2012) (quoting Iliadis v. Wal-Mart Stores, Inc., 191 N.J. 88, 123 (2007)). Nevertheless, a motion to vacate a judgment "should be granted sparingly, and is addressed to the sound discretion of the trial court, whose determination will be left undisturbed unless it results from a clear abuse of discretion." Phillipsburg, supra, 380 N.J. Super. at 173.

We perceive no abuse of discretion in the court's finding, fully supported by the record, that plaintiff did not act fraudulently in seeking to redeem the tax sale certificate here as defendant did not demonstrate that the certificate had been redeemed. As defendant failed to demonstrate fraud under Rule 4:50, the court's decision not to reopen the judgment was a reasonable exercise of discretion and will not be disturbed.

Affirmed.

1 By order dated October 9, 2012, the court granted FNA's motion to substitute Hummingbird Investments, LLC, as plaintiff since FNA had assigned it the tax certificate.

2 We note that a motion to vacate a final judgment under the Tax Sale Law may not be made more than three months from the date of its entry except for lack of jurisdiction or fraud. N.J.S.A. 54:5-87.