CHRISTOPHER WILLIAMS v. MARVIN DANIEL

NOT FOR PUBLICATION WITHOUT THE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-5568-15T3

CHRISTOPHER WILLIAMS,

        Plaintiff-Appellant/
        Cross-Respondent,

v.

MARVIN DANIEL and WENDYANN
DANIEL,

     Defendants-Respondents/
     Cross-Appellants.
_______________________________

              Argued January 10, 2018 – Decided March 9, 2018

              Before Judges Koblitz, Manahan, and Suter.

              On appeal from Superior Court of New Jersey,
              Law Division, Special Civil Part, Essex
              County, Docket No. LT-6039-16.

              Bruce Edward Gudin argued the cause for
              appellant/cross-respondent (Ehrlich,
              Petriello, Gudin & Plaza, PC, attorneys;
              Thomas S. Garlick, on the brief).

              Anthony G. Del Guercio argued the cause for
              respondents/cross-appellants (Gaccione
              Pomaco, PC, attorneys; Anthony G. Del
              Guercio, of counsel and on the brief).

PER CURIAM
     Plaintiff Christopher Williams appeals from a June 7, 2016

order that vacated a judgment of possession entered in a summary

dispossess action and that released funds held on deposit with the

court to defendants Marvin and Wendyann Daniel.      Plaintiff also

appeals from an August 5, 2016 order that denied reconsideration.

Defendants' cross-appeal the same orders "to the extent the court

ruled it had subject matter jurisdiction to dispose of the funds

on deposit."   We affirm the orders.

     Plaintiff met defendants in June 2015, when they signed a

one-year lease of a single-family home in Cedar Grove Township,

effective as of July 1, 2015.   Defendant Wendyann Daniel testified

that plaintiff identified himself as "the owner of the house."

The lease provided that plaintiff was the "fee owner" of the

property although it was titled as a "sublease."         The lease

required defendants to pay rent of $3,000 per month and the utility

charges.

     Defendants paid rent to plaintiff for July, August, September

and October 2015.    In October 2015, defendants received notice

that the house was to be sold at a sheriff's sale.    They were not

aware the property was in foreclosure.     In November 2015, they

received notice from a company named Solutionstar, advising that

the lienholder had acquired the property and now was the owner.



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Beginning in November 2015, defendants escrowed the rent payments

with their attorney.

      Plaintiff first rented a room at the property in 2009 from

its owner, Glenville Field,1 for $650 per month.             Beginning in

April 2010, plaintiff signed a five-year lease with Field to rent

the entire five-bedroom house for $1,000 per month.            By 2010 or

2011, plaintiff was aware the property was pending foreclosure.

      In January 2011, Field and plaintiff executed a quitclaim

deed, which purported to transfer all "right, title and interest"

in the property to plaintiff. Plaintiff acknowledged the quitclaim

deed was signed in order for him to negotiate a short sale of the

property with the bank.        The quitclaim deed was not recorded.

      Although the initial foreclosure case involving this property

was   dismissed   in   2013,   Deutsche   Bank   National   Trust   Company

(Deutsche Bank) filed another foreclosure complaint against Field

in September 2014, and recorded a lis pendens.         Plaintiff learned

about this foreclosure from Field. A final judgment of foreclosure

was entered on April 28, 2015, for $1,564,243.61.

      On June 17, 2015, which was after the final judgment but

before the sheriff's sale, plaintiff and Field signed another

lease. The June 2015 lease provided it was retroactively effective



1
    Field is not a party to this case.

                                     3                              A-5568-15T3
to April 1, 2015.    Under the lease, plaintiff was to pay rent of

$1,500 per month for ten years.   He had an option to purchase the

property for $500,000 within the next three years.    For the first

twelve months, plaintiff's rent payment was abated because the

lease provided a $21,500 credit for repairs at the property. Field

agreed to pay all utility charges.    Plaintiff did not dispute that

the rent payments under this lease were not sufficient to pay the

annual taxes on the property of $23,290 or the debt service on the

mortgage.

     At the same time in June 2015, plaintiff rescinded ownership

of the property under the quitclaim deed.    He executed a power of

attorney with Field, which stated that he was not able to obtain

a short sale of the property as contemplated due to his "financial

situations."

     Following notice in August, the property was sold to Deutsche

Bank at a sheriff's sale on October 27, 2015.      A sheriff's deed

was issued to Deutsche Bank on January 22, 2016, and recorded on

February 18, 2016.     However, just before the sheriff's sale,

plaintiff recorded both the power of attorney and the June 2015

lease on October 22, 2015.

     Defendants began escrowing their rent payments in November

2015 when they learned of the foreclosure sale.   In December 2015,

Field and plaintiff executed and recorded a "Durable Power of

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Attorney," that appointed plaintiff to act as attorney-in-fact for

Field.    The durable power of attorney granted plaintiff the power

to "deal with any interest [Field] may have in this real property

and   sign    all   documents   on   [Field's]      behalf    concerning     [his]

interest."

      On February 22, 2016, plaintiff filed a verified complaint

against      defendants,   seeking    a       judgment   of   possession     under


N.J.S.A. 2A:18-61.1(a) for unpaid rent.              That pleading described

plaintiff's interest in the property as an "equitable owner" based

on an unrecorded deed, that he held a durable power of attorney

from the legal title owner (Field) and that he also held a "prime

lease" that enabled him to sublet the property.                    Plaintiff's

verified complaint did not say that the property had been sold on

October 27, 2015, to Deutsche Bank or that the sheriff's deed had

been recorded on February 18, 2016.

      At the hearing in the summary dispossess action, defendants

were not able to provide proof of the sheriff's sale.                The court

found plaintiff was entitled to rent under the lease.               A judgment

of possession was entered on March 29, 2016, with an amount of

rent due and owing of $15,375.            A warrant of removal was issued.

      Defendants filed an order to show cause, seeking to vacate

the judgment of possession.           The court required defendants to



                                          5                                A-5568-15T3
deposit $18,000 with the court for the disputed rent and stayed

the eviction.

       On the return date of the order to show cause, plaintiff's

counsel advised the court that plaintiff was not,

              even looking to remove the tenants at this
              point, we're just looking to have the money
              released.   That's -- that's why we're here
              . . . . We're not even looking for possession
              of the property at this point.     We're just
              looking for a release of the rent that was due
              to my client under the sublease.

       Following testimony of the parties and witnesses, the court

vacated the judgment of possession.        In its written decision of

June 7, 2016, the court found that the "transactions between Field

and [p]laintiff were not arms-length business transactions," nor

were   they    "legitimate   business   transactions."   Rather,    the

transactions "were to avoid or delay the foreclosure in some

manner, or gain some advantage in the foreclosure action."

       The court found that      plaintiff had no standing to seek

eviction of defendants because any interest he claimed through the

unrecorded quitclaim deed was extinguished by the foreclosure

under 
N.J.S.A. 2A:50-30.       The court found plaintiff did not own

the property when it was subleased.        Plaintiff was bound by the

outcome of the foreclosure action because he had actual notice of

the foreclosure and constructive notice through the recording of

the lis pendens.      The court held that plaintiff was not legally

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able to collect rents from defendants after the sheriff's sale

because he had no right to the property.

     The   court   found   it   had   jurisdiction   to   determine   the

disposition of the rent money that was deposited with the court,

and that issue was not moot.          All of the rent that plaintiff

claimed was due and owing accrued after the sheriff's sale.

Although the court could not enter a money judgment for damages,

it ordered the $18,000 on deposit with the court to be returned

to defendants, vacated the judgment of possession, and dismissed

plaintiff's   verified     complaint.       Plaintiff's     motion    for

reconsideration also was denied.

     On appeal, plaintiff does not dispute the dismissal of his

complaint for possession because funds were deposited with the

court.   His claim is for the funds on deposit.       He asserts he has

a contractual and statutory right to the funds that was not voided

by the lis pendens or sheriff's deed.         Plaintiff disputes that

there was fraud or any intention to delay or avoid the foreclosure.

     Defendants' cross-appeal, contending that the court had no

jurisdiction to decide who is entitled to the monies on deposit

with the court.    They contend plaintiff had no right to possession

of the property because the quitclaim deed and June 2015 lease

were "instruments of fraud" and were discharged in the foreclosure

by the lis pendens.

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     We afford a deferential standard of review to the factual

findings of the trial court on appeal from a bench trial.             Rova

Farms Resort, Inc. v. Inv'rs Ins. Co., 
65 N.J. 474, 483-84 (1974).

These findings will not be disturbed unless they are "so manifestly

unsupported by or inconsistent with the competent, relevant and

reasonably   credible   evidence   as   to   offend   the   interests    of

justice."    Id. at 484 (quoting Fagliarone v. Twp. of N. Bergen,


78 N.J. Super. 154, 155 (App. Div. 1963).       However, our review of

a trial court's legal determinations is plenary.            D'Agostino v.

Maldonado, 
216 N.J. 168, 182 (2013) (citing Manalapan Realty, L.P.

v. Twp. Comm. of Manalapan, 
140 N.J. 366, 378 (1995)).

     In a summary dispossess action, "[p]ossession of the premises

is the only available remedy for nonpayment of rent."           Hodges v.

Sasil Corp., 
189 N.J. 210, 221 (2007).         "[N]o money damages may

be awarded."   Housing Auth. of Morristown v. Little, 
135 N.J. 274,

280 (1994); see Daoud v. Mohammad, 
402 N.J. Super. 57, 61 (App.

Div. 2008) (holding that in a summary dispossess action, the

"court's jurisdiction is limited to determining the issue of the

landlord's right to possession of the premises"); see also 
N.J.S.A.

2A:18-52 (providing for dismissal of an action if plaintiff cannot

prove "his right to possession of the premises claimed").

     A judgment of possession may be entered if a landlord can

prove "one of the statutorily enumerated 'good cause' grounds for

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eviction."    Sudersan v. Royal, 
386 N.J. Super. 246, 251 (App. Div.

2005) (citing 
N.J.S.A. 2A:18-61.1).           The nonpayment of rent that

is "due and owing under the lease" is good cause for eviction.


N.J.S.A. 2A:18-61.1(a).

      Here, plaintiff did not contend at the trial that he was

seeking possession of the premises from defendants.             Rather, based

on the June 2015 lease, he claimed an entitlement to the $18,000

on deposit with the court.      Plaintiff's concession that possession

of the premises was not sought in the summary dispossess action

served as a basis to vacate the judgment of possession. Possession

was   the   only   available   remedy   for    plaintiff   in    the   summary

dispossess action.       Because he did not seek that remedy, the

judgment of possession was properly vacated.

      Plaintiff's reliance on 
N.J.S.A. 2A:18-55 for his claim to

the funds on deposit is misplaced.        That statute provides that in

actions instituted under 
N.J.S.A. 2A:18-53, a tenant can pay to

the clerk of the court "on or before entry of a final judgment"

the amount of rent claimed to be in default and "all proceedings

shall be stopped."     
N.J.S.A. 2A:18-55.       The clerk then "shall . .

. pay all moneys so received to the landlord, his agent or

assigns."    Ibid.    The statute only applies to payments made into

court before entry of the final judgment.              Here, because the

payment was ordered by the court after entry of the judgment of

                                    9                                  A-5568-15T3
possession, the statute does not provide a basis for paying those

funds to plaintiff.

     We would reach the same result even without plaintiff's

acknowledgement that he is not seeking possession of the premises.

Under the common law, a "foreclosing mortgagee obtains an ownership

interest in the property only when the mortgagee purchases the

property at the foreclosure sale."          Chase Manhattan Bank v.

Josephson, 
135 N.J. 209, 218 (1994).     Prior to that, the mortgagee

has a lien on the property.   Id.      Here, the property was sold to

Deutsche Bank on October 27, 2015, making it the owner.              If

plaintiff claimed an ownership interest in the property under the

quitclaim deed, it was extinguished by the sale.

     At best, plaintiff is a non-resident tenant.        He cites no

authority to support possession in this post-sale context.     "[T]he

intent of the Anti-Eviction Act is to protect (1) blameless tenants

(2) from pretextual evictions."    Sec. Pac. Nat. Bank v. Masterson,


283 N.J. Super. 462, 468-69 (Ch. Div. 1994).         "[A] person who

enters into a lease agreement in other than an arm's length

transaction does not qualify as 'blameless' and will not be

afforded shelter under the Anti-Eviction Act."      Id. at 469.

     Masterson involved a back-dated sham lease.      The defendants

there were unable to provide canceled checks indicating that rent

was being paid, the rent was far below what would be expected for

                                  10                          A-5568-15T3
such a property, and the lease was for a ten-year term.               Id. at

466.

       Here, there was substantial evidence to support the court's

finding that the transactions between plaintiff and Field were not

arms-length.    Plaintiff did not contend he paid rent to Field.

The payments under the lease would not have paid the taxes on the

property and contained favorable terms extending for ten years.

It was backdated to appear as if it were entered before entry of

the final judgment of foreclosure.        We agree with the trial court

on these facts that there was substantial evidence that the lease

with Field was not arms-length and that the judgment of possession

should be vacated.

       We also agree that the trial court had authority to order the

return of the funds on deposit to defendants once the judgment of

possession was vacated.     The court's order was not a determination

on the merits of plaintiff's claim to entitlement to those funds;

it simply was based on the lack of a judgment of possession.

       After carefully reviewing the record and the applicable legal

principles, we conclude that the parties' further arguments are

without    sufficient   merit   to   warrant   discussion   in   a   written

opinion.    R. 2:11-3(e)(1)(E).      We affirm the trial court's orders

that vacated the judgment of possession, denied reconsideration

and dismissed plaintiff's verified complaint.

                                     11                              A-5568-15T3
Affirmed.




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