MACWCP IV, LLC v. MOTIVA ENTERPRISES, LLC
Annotate this CaseNOT 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-3640-15T2
MACWCP IV, LLC,
Plaintiff-Appellant,
v.
MOTIVA ENTERPRISES, LLC,
and STATE OF NEW JERSEY,
Defendants,
and
LIBERTY REALTY AND
MANAGEMENT, LLC,
Defendant/Intervenor-
Respondent.
______________________________
Argued October 23, 2017 – Decided December 8, 2017
Before Judges Ostrer and Rose.
On appeal from Superior Court of New Jersey,
Chancery Division, Essex County, Docket No.
F-019855-12.
Adam D. Greenberg argued the cause for
appellant (Law Offices of Honig & Greenberg,
LLC, attorneys; Adam D. Greenberg, on the
briefs).
Mark A. Wenczel argued the cause for
respondent (Gaccione Pomaco, PC, attorneys;
Mark A. Wenczel, on the brief).
Robert W. Keyser argued the cause for amicus
curiae National Tax Lien Association, Inc.
(Taylor and Keyser, attorneys; Robert W.
Keyser and Jeffrey B. Datz, on the brief).
PER CURIAM
Plaintiff MACWCP IV, LLC, appeals from the General Equity
Part's orders granting the motion of intervenor Liberty Realty &
Management, LLC ("Liberty") to vacate a final default judgment of
foreclosure on a tax sale certificate, and partially denying
attorneys' fees.1 Having reviewed the parties' arguments in light
of the record and applicable principles of law, we reverse.
I.
On August 28, 2008, Liberty purchased commercial property
located at 74 East Passaic Avenue in Nutley from defendant Motiva
Enterprises, LLC ("Motiva"). Liberty intended to convert use of
the property from an abandoned gas station to a two-story building
with stores on the first floor and apartments on the second floor.
1
Plaintiff's notice of appeal generally indicates it is appealing
the January 29, 2016 order. Although plaintiff has a point heading
in its reply brief claiming Liberty's motion to intervene was
untimely, the issue was not substantively briefed by plaintiff on
appeal, and therefore, is waived. See Sklodowsky v. Lushis,
417 N.J. Super. 648, 657 (App. Div. 2011); Pressler & Verniero, Current
N.J. Court Rules, comment 4 on R. 2:6-2 (2017). We also generally
decline to consider an issue raised for the first time in a reply
brief that does not present a matter of great public interest.
Goldsmith v. Camden Cty. Surrogate's Office,
408 N.J. Super. 376,
387 (App. Div.), certif. denied,
200 N.J. 502 (2009).
2 A-3640-15T2
In support of its motions, Liberty's managing member, Navin
H. Darji, certified the deed was not recorded because of an error
by either Liberty's closing attorney or the county registrar.
Darji certified further, a copy of the deed was provided to the
township's tax assessor and tax collector "and [they] were thus
aware of the transaction, [but] they were apparently waiting for
a copy of the recorded [d]eed before updating the tax records."
In December 2009, the municipal tax collector held a sale for
unpaid taxes that accrued on the property in 2008 ("first tax
sale"). In December 2010, the township held a sale for unpaid
taxes that accrued on the property in 2009 and 2010 ("second tax
sale").
Darji certified Liberty did not receive the first tax sale
notice, but received the second tax sale notice from Motiva. On
December 17, 2010, Liberty paid the lien from the second tax sale
in full. Darji believed payment of this lien satisfied the tax
certificate, and that the tax collector's records were revised to
reflect Liberty's ownership of the property.
In June 2011, Liberty received a code enforcement violation,
reflecting Liberty as owner of the property. Darji assumed the
township considered him the record owner of the property. He
later learned, although the township's code enforcement office
3 A-3640-15T2
records were updated to reflect Liberty's ownership, the tax
collector's records were not updated.
Plaintiff acquired the first tax sale certificate by
assignment in September 2011. When redemption was not made,
plaintiff conducted a title search of the property which revealed
a recorded deed held by Motiva. On August 3, 2012, plaintiff sent
pre-foreclosure notices to Motiva at: (1) its address listed on
the deed, which was returned as "undeliverable;" and (2) the
property address, which was returned as "vacant [-] unable to
forward." Because Liberty had not recorded its deed, plaintiff
was not aware of Liberty's ownership. As such, plaintiff did not
send a pre-foreclosure notice to Liberty.
On September 12, 2012, plaintiff filed a foreclosure
complaint against Motiva. On October 3, 2012, plaintiff filed a
notice of lis pendens and served Motiva. On January 4, 2013,
default was entered. Following service of the complaint, an order
was entered setting April 22, 2013 as the deadline to redeem.
Redemption was not made. On January 6, 2015, final judgment was
entered.
In June 2015, Liberty inadvertently discovered entry of the
final judgment when Darji noticed a fence on the property was
changed without his approval. Liberty's counsel then contacted
the township and obtained the final judgment of foreclosure.
4 A-3640-15T2
With the exception of payment of the tax lien for the 2009 and
2010 taxes, Liberty had not paid any taxes on the property,
including the unpaid 2008 taxes which form the basis of the present
foreclosure action.2
Liberty's attorney then contacted plaintiff in an attempt to
redeem the lien and pay costs incurred in pursuing foreclosure,
totaling more than $111,000. Plaintiff rejected Liberty's offer,
prompting Liberty to file a motion to intervene and vacate final
judgment in August 2015.
On December 4, 2015, the court held oral argument and reserved
decision. On January 29, 2016, the court rendered an oral decision
and entered an order granting Liberty's motions to intervene and
vacate final judgment, finding Liberty had acted in good faith and
was entitled to relief under Rule 4:50-1. Further, by order
entered April 1, 2016, the court awarded plaintiff partial
attorneys' fees and costs incurred for acquisition of the tax sale
certificate and entry of final judgment. This appeal followed.
On appeal, plaintiff contends, in essence, the court erred
in applying equitable principles to usurp the plain application
of the law; Liberty failed to meet the requirements of Rule 4:50-
2
Plaintiff's merits brief was filed on June 27, 2016. As of that
date, Liberty had not paid taxes through 2015.
5 A-3640-15T2
1; and the court failed to make findings of fact and conclusions
of law supporting its decision to reduce fees and costs.
II.
Our standard of review is well-settled. As the Court noted
in US Bank Nat'l Ass'n v. Guillaume,
209 N.J. 449, 467 (2012), a
"party seeking to vacate [a default] judgment" in a foreclosure
action must satisfy Rule 4:50-1, which states in pertinent part
that
[o]n motion, with briefs and upon such terms
as are just, the court may 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; . . . or (f) any other
reason justifying relief from the operation
of the judgment or order.
The determination 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. EDS ex rel. N.J. Auto. Full Ins. Underwriting Ass'n,
132 N.J. 330, 334 (1993). "[A]buse of discretion occurs when a
decision is 'made without a rational explanation, inexplicably
depart[s] from established policies, or rest[s] on an
impermissible basis.'" Deutsch Bank Trust Co. Americas v. Angeles,
428 N.J. Super. 315, 319 (App. Div. 2012) (quoting Guillaume,
supra,
209 N.J. at 467-68). Further, "[a] 'trial court's
6 A-3640-15T2
interpretation of the law and the legal consequences that flow
from established facts are not entitled to any special deference.'"
Town of Kearny v. Brandt,
214 N.J. 76, 92 (2013) (quoting Manalapan
Realty, L.P. v. Twp. Comm. of Manalapan,
140 N.J. 366, 378 (1995)).
A motion to vacate a default judgment implicates two often
competing goals: the desire to resolve disputes on the merits,
and the need to efficiently resolve cases and provide finality and
stability to judgments. "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." Manning Eng'g, Inc.
v. Hudson Cty. Park Comm'n,
74 N.J. 113, 120 (1977). The movant
bears the burden of demonstrating its entitlement to relief.
Jameson v. Great Atl. & Pac. Tea Co.,
363 N.J. Super. 419, 425-26
(App. Div. 2003), certif. denied,
179 N.J. 309 (2004).
A court must read together the four grounds for relief under
Rule 4:50-1(a) — mistake, inadvertence, surprise, or excusable
neglect. DEG, LLC v. Twp. of Fairfield,
198 N.J. 242, 262 (2009).
"[W]hen read together . . . [they] reveal an intent by the drafters
to encompass situations in which a party, through no fault of its
own, has engaged in erroneous conduct or reached a mistaken
judgment on a material point at issue in the litigation." Ibid.
(emphasis added). "'Excusable neglect' may be found when the
7 A-3640-15T2
default was 'attributable to an honest mistake that is compatible
with due diligence or reasonable prudence.'" Guillaume, supra,
209 N.J. at 468 (quoting Mancini, supra,
132 N.J. at 335).
"Mistakes" under Rule 4:50-1(a) are "litigation errors that a
party could not have protected against." DEG, LLC, supra,
198 N.J. at 263 (internal quotation marks and citation omitted). An
applicant claiming excusable neglect must also demonstrate a
meritorious defense. Marder v. Realty Constr. Co.,
84 N.J. Super.
313, 318 (App. Div.), aff'd,
43 N.J. 508 (1964).
Furthermore, courts have the authority to grant relief under
subsection (f), that is, "any other reason justifying relief from
operation of the judgment or order," where it "is necessary to
achieve a fair and just result." In re R.D.,
384 N.J. Super. 61,
66 (App. Div. 2006) (citing Manning Eng'g, Inc., supra,
74 N.J.
at 122). However, "because of the importance of the finality of
judgments, relief under subsection (f) is available only when
'truly exceptional circumstances are present.'" In re
Guardianship of J.N.H.,
172 N.J. 440, 473 (2002) (quoting Hous.
Auth. of Morristown v. Little,
135 N.J. 274, 286 (1993)). To
obtain relief under Rule 4:50-1(f), an applicant must show that
enforcement of the order would be "unjust, oppressive or
inequitable." Johnson v. Johnson,
320 N.J. Super. 371, 378 (1999).
8 A-3640-15T2
Moreover, New Jersey has a strong public policy underlying
the sale of tax certificates because government is partially funded
through the collection of real estate taxes, and the sale of
certificates advances those payments. Municipal governments
depend on real estate taxes as a primary source of revenue. The
Tax Sale Law3 aids in converting liens "into a stream of revenue
by encouraging the purchase of tax certificates on tax-dormant
properties." Simon v. Cronecker,
189 N.J. 314, 318 (2007); see
also
N.J.S.A. 54:5-19, -31 to -32; Varsolona v. Breen Capital,
180 N.J. 605, 620 (2004) ("The Legislature created the [Tax Sale Law]
as a framework to facilitate the collection of property taxes.").
The Tax Sale Law also furthers other policy goals, including
the creation of marketable titles and the availability of
redemption opportunities to owners. As a remedial statute, it
should "be liberally construed to effectuate [its] remedial
objects."
N.J.S.A. 54:5-3. First and foremost, "[t]he Tax Sale
Law serves as a framework to facilitate the collection of property
taxes." In re Princeton Office Park L.P. v. Plymouth Park Tax
Servs., LLC,
218 N.J. 52, 61 (2014) (internal quotation marks and
citation omitted). One of its "essential objectives" is "to
quickly return to the tax rolls . . . property on which [unpaid
3 N.J.S.A. 54:5-1 to -137.
9 A-3640-15T2
property taxes] have remained in default." Navillus Grp. v.
Accutherm Inc.,
422 N.J. Super. 169, 182 (App. Div. 2011)
(alteration in original)(internal quotation marks and citation
omitted), certif. denied,
209 N.J. 232 (2012).
Another of the Tax Sale Law's goals is "to expedite and
encourage the conclusion of [foreclosure] proceedings." Town of
Phillipsburg v. Block 1508, Lot 12,
380 N.J. Super. 159, 171 (App.
Div. 2005). For this reason, its provisions permitting equitable
suits to foreclose the right of redemption "shall be liberally
construed as remedial legislation" to promote the securing of
marketable titles.
N.J.S.A. 54:5-85. At the same time,
"[a]lthough 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 land." Cronecker, supra,
189 N.J. at 319.
However, under the Tax Sale Law, "[i]n any action to foreclose
the right of redemption in any property sold for unpaid taxes or
other municipal liens, all persons claiming an interest in . . .
[the] property, by or through any conveyance," which could be
recorded but is not recorded "at the time of the filing of the
complaint in such action shall be bound by the proceedings in
[foreclosure] actions so far as the property is concerned, in the
10 A-3640-15T2
same manner as if he had been made a party to and appeared in such
action."
N.J.S.A. 54:5-89.1.
Applying these principles, we are constrained to reverse the
trial court's application of equitable principles granting Liberty
the opportunity to redeem the property. While the court correctly
found Liberty was under the mistaken impression that: the deed
was recorded; payment of its 2009 and 2010 taxes satisfied the tax
lien; and the township had updated the property's ownership
records, those mistakes do not obviate Liberty's statutory
obligations to record the deed and pay real estate taxes. Equity
cannot "create a remedy that is in violation of [the] law." IMO
Estate of Shinn,
394 N.J. Super. 55, 67 (App. Div.), certif.
denied,
192 N.J. 595 (2007). Rather, a decision is incorrect when
the court overlooks "the maxim that 'equity follows the law.'"
Id. at 67. "Although it is true that equity abhors a forfeiture,
equity’s jurisdiction in relieving against a forfeiture is to be
exercised with caution lest it be extended to the point of ignoring
legal rights." Dunkin’ Donuts of America v. Middletown Donut
Corp.,
100 N.J. 166, 182 (1985).
Moreover, in matters concerning real property, "where a loss
must be borne by one of two innocent parties[,] equity will impose
the loss on that party whose act first could have prevented the
loss." Monsanto Emps. Fed. Credit Union v. Harbison, 209 N.J.
11 A-3640-15T
2 Super. 539, 542 (App. Div. 1986). Here, to the extent plaintiff
and Liberty can both be viewed as innocent parties, the loss could
have been prevented first by Liberty, had it properly recorded its
deed any time between 2008 and 2015, or requested its tax bills
and paid its taxes. Its failure to do so is not an "honest
mistake" where, as here, Liberty is a corporate entity whose
property was not exempt from real estate taxes.
Indeed, it is axiomatic "[e]verybody knows that taxes must
be paid." Bron v. Weintraub,
42 N.J. 87, 91 (1964). Yet, Liberty
did not pay taxes on the property until it received notice of the
second tax lien for 2009 and 2010, and Liberty failed to pay taxes
on the property for any other years. Thus, Darji's contention
that he thought the township had updated its tax records to reflect
Liberty as the record owner lacks merit and does not provide a
compelling basis for relief.
Nor did Liberty do anything to ascertain that its deed was
recorded. As a direct result of Liberty's inaction, plaintiff's
title search did not, because it could not, reveal Liberty's
unrecorded deed. Compare M&D Assocs. v. Mandara,
366 N.J. Super.
341 (App. Div.) (requiring additional diligent inquiry to serve
one of the owners whose name appeared on the recorded deed),
certif. denied,
180 N.J. 151 (2004). A deed "shall be of no effect
against . . . subsequent bona fide purchasers . . . for valuable
12 A-3640-15T2
consideration without notice and whose conveyance . . . is
recorded, unless that conveyance is evidenced by a document that
is first recorded."
N.J.S.A. 46:26A-12(c). A principal purpose
of the recording statute is to protect bona fide purchasers
"against the assertion of prior claims to the land based upon any
recordable, but unrecorded instrument." Cox v. RKA Corp.,
164 N.J. 487, 507 (2000) (internal quotation marks and citation
omitted). Thus, "subsequent purchaser[s are] bound only by those
instruments which can be discovered by a 'reasonable' search of
the particular chain of title." Palamarg Realty Co. v. Rehac,
80 N.J. 446, 456 (1979).
Under these circumstances, Liberty's inactions disfavor
relief. "Obviously the greater the negligence involved, or the
more willful the conduct, the less 'excusable' it is." Manning
Eng'g, Inc., supra,
74 N.J. at 125 n.5 (internal quotation marks
and citation omitted). Liberty's failure to pay taxes on the
property is not "an honest mistake that is compatible with due
diligence or reasonable prudence." Mancini, supra,
132 N.J. at
335. Nor is the failure to record the deed by Liberty's real
estate attorney or the county registrar a "litigation error” as
contemplated by Rule 4:50-1(a). See DEG, LLC, supra,
198 N.J. at
263 (recognizing that Rule 4:50-1(a) “is intended to provide relief
13 A-3640-15T2
from litigation errors that a party could not have protected
against.”) (internal quotation marks and citation omitted).
Underscoring Liberty's inexcusable mistakes is its
sophistication. Unlike the applicant in Bergen-Eastern Corp. v.
Koss,
178 N.J. Super. 42 (App. Div.), certif. granted,
87 N.J.
351, appeal dismissed as improvidently granted,
88 N.J. 499 (1981),
cited by the trial court, Liberty is a corporate entity and not
an elderly applicant with a history of psychiatric
hospitalizations. Further, Liberty purchased the property for
investment purposes. Indeed, Darji certified that after
purchasing the property, Liberty retained land use counsel to seek
approval from the township to construct a two-story, residential
and commercial building to replace the long-abandoned gas station
use.
Finally, Liberty failed to demonstrate "truly exceptional
circumstances" entitling it to relief pursuant to Rule 4:50-1(f).
Hous. Auth., supra,
135 N.J. at 286. Although the court relied
on M&D Assocs., supra,
366 N.J. Super. at 341 for its rationale
that chancery courts "in such foreclosure cases should be alerted
. . . that a significant windfall might result if adequate scrutiny
. . . is not undertaken[,]" we are satisfied there is ample support
in the record that Liberty's own inactions prevented it from
receiving timely notice of the foreclosure action.
14 A-3640-15T2
The trial court's January 29, 2016 order granting Liberty's
motion to intervene and vacate final judgment "departed from
established" principles. Deutsch Bank Trust, supra,
428 N.J.
Super. at 319. Because "relief under subsection (f) is available
only when 'truly exceptional circumstances are present[,]'" we
must find the trial court abused its discretion in vacating the
entry of final judgment. J.N.H., supra,
172 N.J. at 473.
In view of our disposition of this appeal, we need not address
plaintiff's remaining argument concerning fees. In so doing, we
note the April 1, 2016 order incorporated by reference the January
29, 2016 order that provided for attorneys' fees and costs "as a
condition to the redemption of the [t]ax [s]ale [c]ertificate."
Because we reverse the trial court's January 29, 2016 order
vacating entry of final judgment, Liberty cannot redeem the
property. Thus, Liberty is not liable for fees and costs in this
action.
We reverse the trial court's January 29, 2016 order vacating
the entry of final judgment, and vacate the April 1, 2016 order
awarding fees to plaintiff.
15 A-3640-15T2
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
