JAMEEL KEARNEY v. BECKER TERRACE, LLC

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SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-1054-20

JAMEEL KEARNEY,

Plaintiff-Respondent,

BECKER TERRACE, LLC,

Defendant-Appellant.
_________________________

Submitted October 4, 2021 – Decided December 9, 2021

Before Judges Sabatino and Natali.

On appeal from the Superior Court of New Jersey,
Chancery Division, Essex County, Docket No.
F-016241-19.

Alsaidi & Chang, LLC, attorneys for appellant (Joseph
A. Chang, of counsel; Jeffrey Zajac, on the briefs).

Taylor and Keyser, LLC, attorneys for respondent
(Robert W. Keyser, of counsel; Jeffrey B. Datz, on the
brief).

PER CURIAM
In this tax sale certificate foreclosure action, we consider defendant

Becker Terrace, LLC's (Becker) argument that the court abused its discretion in

denying a motion to vacate a default judgment under Rule 4:50-1. Because we

conclude Becker's failure to respond to the foreclosure proceedings was

excusable, and there was a genuine factual dispute about whether the residential

property Becker formerly owned was abandoned, we reverse.

In 2018, Levi Rooz and his father, Sam Rooz, 1 formed Becker to purchase

29 Becker Terrace in the Township of Irvington as an investment property.

After Becker failed to pay its fourth quarter property taxes, Irvington held a sale

in December 2018 for those properties with unpaid municipal liens under

N.J.S.A. 54:5-19. Irvington acquired the property subject to Becker's right of

redemption. See N.J.S.A. 54:5-32.

At some point after the sale, Reinhardt Vilson, the Irvington housing

inspector, allegedly viewed the property and determined it was abandoned as

defined by the Abandoned Property Rehabilitation Act, N.J.S.A. 55:19-78 to -

107 (APRA). On March 7, 2019, Irvington published notice of the abandonment

1
We refer to Levi and Sam Rooz by their first names for ease of reference,
intending no disrespect.
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designation in the local newspaper, and Genia C. Philip, Irvington's Director of

the Department of Economic Development and Grants Oversight and its

Designated Abandoned Property Public Officer, sent a certified letter informing

Becker of that finding.

Levi received Philip's letter and further acknowledged he was notified of

the "abandonment issue" on February 22, 2019. Rather than pay Becker's

outstanding tax obligation, he instead applied for a construction permit on March

26, 2019, which Irvington granted on April 10, 2019, despite already having

deemed the property abandoned.

On April 9, 2019, Philip sent Becker notice that the tax lien certificate for

29 Becker Terrace would be sold at auction on May 21, 2019. After receiving

the notice, Becker administratively appealed the abandonment designation under

N.J.S.A. 55:19-55(e), and an Irvington official scheduled a hearing for May 8,

2019. After Becker's representative failed to appear at the hearing, the appeal

was dismissed. Becker also failed to file a summary proceeding in the Law

Division to challenge the adverse determination as permitted by N.J.S.A. 55:19-

55(f).

On May 15, 2019, Levi emailed Vilson and attached photos of a

construction permit and ongoing renovations at the property. He also certified

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that he visited Vilson and informed him of the construction, but Vilson allegedly

told Levi to pay the taxes in order to remove the property from the special tax

sale list for abandoned properties. After Becker failed to pay the outstanding

taxes, Irvington conducted a special tax sale where plaintiff Jameel Kearney was

the successful bidder.

On May 30, 2019, Levi filed a Superior Court action to eject a squatter

living at the property. He certified that at some point, his father permitted an

individual to live "at the property to ensure that [it] was not being broken into."

We discern from the record that the unnamed individual referenced refused to

leave the premises.

In a May 31, 2019 certification, Philip attested based on her "review of

township records" and of "the inspection report and photographs made by

[Vilson] from his visual inspection of the property," that it was abandoned under

the criteria enumerated in N.J.S.A. 55:19-81, including the threshold

requirement that the property "has not been legally occupied for a period of at

least six months prior to [May 31, 2019]."

Philip further stated that "construction was initiated on the property and

was discontinued prior to completion," and "no construction ha[d] taken place

for at least six months." She also certified that "at least one installment of

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property tax remains unpaid and delinquent," and "the property has been

determined to be a nuisance in accordance with section 5 of P.L. 2003, c. 210

(C.55:19-82)." She did not attach any supporting documents to her May 31

certification, however.

On August 29, 2019, plaintiff sent written notice by regular and certifi ed

mail to Becker's registered address in Rahway of his intention to institute a

foreclosure action to bar Becker's right of redemption, but Levi claimed neither

he nor his father received the correspondence. On October 2, 2019, plaintiff

filed a foreclosure complaint.

On January 3, 2020, plaintiff published notice of the foreclosure

proceedings in The Star Ledger and, on January 6, 2020, mailed notice by

certified and regular mail to Sam as Becker's registered agent at his Rahway

address. The certified mail was returned as undeliverable, but the regular mail

was never returned. Plaintiff also posted notice of the proceedings at the

Irvington property, at the Tax Collector's office, and at the Essex County

In April 2020, Sam tragically died from COVID-19.

On June 3, 2020, Irvington's tax collector certified that a redemption of

the special tax sale certificate had not occurred within the required forty-five-

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day period. The trial court granted plaintiff's application for final judgment on

July 14, 2020, barring Becker's right of redemption and vesting plaintiff with

title to the property. Plaintiff mailed a copy of the final judgment to Becker on

July 21, 2020.

After receiving the judgment, Becker served Irvington with an Open

Public Records Act (OPRA) request on July 28, 2020. The request sought

information relating to all violation notices, inspection reports, notice of "any

tax sale or foreclosure" and records relating to the abandoned property

determination. Irvington responded to the OPRA request by informing Levi that

no responsive documents existed.

Less than a month later, on August 13, 2020, Becker filed a motion to

vacate the final judgment under Rule 4:50-1. After considering the parties'

submissions, which included two certifications with supporting documents from

Levi, the court denied Becker's application in a November 13, 2020 order.

In its accompanying oral opinion, the court found Becker clearly had

notice of the proceedings and plaintiff properly served the complaint consistent

with the Rules. The court acknowledged and summarily rejected Becker's

challenge to Irvington's abandonment designation, explaining that such a

determination is made by the municipality and Becker failed to appear at the

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scheduled appeal hearing. The court concluded Becker failed to establish its

right to relief under Rule 4:50-1 as it failed to "take the steps . . . necessary to

protect itself."

Becker raises two points on appeal. 2 First, it argues the court committed

error in failing to vacate the final judgment because plaintiff failed to take the

"additional constitutionally mandated steps to serve the complaint after learning

of the undelivered certified mail," rendering the final judgment void ab initio.

Second, he contends the court misapplied its discretion by failing to vacate the

month-old default judgment under Rule 4:50-1(c) and (f) in the face of its

allegations of excusable neglect and a meritorious defense. 3

With respect to its second argument, Becker maintains that the final

judgment was grounded upon the factually unsupported determination that the

property was abandoned, thereby "creat[ing] a defective foundation for the

subsequent foreclosure action." Becker stresses that Irvington incorrectly

categorized the property as vacant, falsely asserted that construction at the

2
We have reorganized Becker's arguments for purposes of clarity.
3
We consider defendant's arguments under Rule 4:50-1(a) and (f), despite its
reliance on subsection (c), as that provision addresses instances when a final
judgment was improperly entered based on claims of fraud or misrepresentation,
which are neither asserted nor present here. We also consider Becker's
contentions under subsections (a) and (f), as its merits arguments clearly relate
to those two subsections.
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property had been discontinued, and failed to provide any of the inspection

records referenced in the Philip certification.

We have considered Becker's first point concerning service and determine

it is of insufficient merit to warrant discussion in a written opinion. R. 2:11–

3(e)(1)(E). We agree, however, with Becker's second contention and determine

the court erred in failing to vacate the final judgment, considering the factual

disputes in the record regarding Irvington's abandonment designation. Finally,

we conclude Becker's failure to respond to the complaint was excusable under

the circumstances.

II.

We review a court's determination under Rule 4:50-1 for an abuse of

discretion. Hous. Auth. of Morristown v. Little, 135 N.J. 274, 283 (1994). Rule

4:50-1 states "the court may relieve a party . . . from a final judgment . . . for the

following reasons: (a) mistake, inadvertence, surprise, or excusable neglect; . . .

(d) the judgment or order is void; . . . or (f) any other reason justifying relief

from the operation of the judgment or order." "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

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any given case.'" U.S. Nat'l Bank Ass'n v. Guillaume, 209 N.J. 449, 467 (2012)

(citation and internal quotation marks omitted).

In the context of a default judgment "[a] court should view 'the opening

of default judgments . . . with great liberality,' and should tolerate 'every

reasonable ground for indulgence . . . to the end that a just result is reached.'"

Mancini v. EDS ex rel N.J. Auto. Full Ins. Underwriting Ass'n, 132 N.J. 330,

334 (1993) (quoting Marder v. Realty Constr. Co., 84 N.J. Super. 313, 319 (App.

Div. 1964)). "In the tax sale certificate foreclosure context considerations of

public policy and equity are also taken into account." M&D Assocs. v. Mandara,

366 N.J. Super. 341, 350 (App. Div. 2004).

Rule 4:50-1(a) requires a showing of excusable neglect and a meritorious

defense. Guillaume, 209 N.J. at 468. "'Excusable neglect' may be found when

the default was 'attributable to an honest mistake that is compatible with due

diligence or reasonable prudence.'" Ibid. (quoting Mancini, 132 N.J. at 335).

With respect to Rule 4:50-1(f), the Supreme Court stated: "'No

categorization can be made of the situations which would warrant redress under

[that subsection]. [T]he very essence of [subsection] (f) is its capacity for relief

in exceptional situations. And in such exceptional cases its boundaries are as

expansive as the need to achieve equity and justice.'" DEG, LLC v. Twp. of

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Fairfield, 198 N.J. 242, 269-70 (2009) (quoting Court Inv. Co. v. Perillo, 48 N.J.
334, 341 (1966)) (second alteration in original). We have stated that "general

equitable principles . . . apply to the remedy of foreclosure. Foreclosure is a

harsh remedy and equity abhors a forfeiture. A court of equity may invoke its

inherent equitable powers to avoid a forfeiture and deny the remedy of

foreclosure." Sovereign Bank v. Kuelzow, 297 N.J. Super. 187, 198 (App. Div.

1997) (citation omitted).

APRA is intended as a tool for local governments to rehabilitate

abandoned properties, avoid blight and declining property values, see N.J.S.A.

55:19-79, and designate properties as abandoned and set them aside for special

tax sales. N.J.S.A. 55:19-101. Under APRA, successful bidders of property

sold at a special tax sale must immediately move to foreclose on the property in

order to bar the owner's statutory right of redemption. N.J.S.A. 55:19-86(a)-(b).

The Act also requires notice to the property owner "[a]t least 30 days before

filing the complaint" that "inform[s] the owner and interested parties . . . of those

criteria that led to a determination of abandonment." Ibid.

APRA also sets forth the criteria for an "abandoned" designation. "[A]ny

property that has not been legally occupied for a period of six months" will be

deemed abandoned if it meets at least one of four additional criteria. N.J.S.A.

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55:19-81. A squatter or trespasser, however, will not qualify as a "legal

occupier" of the property. See State v. Linton, 356 N.J. Super. 255, 259 (App.

Div. 2002) (finding that a squatter had no constitutionally reasonable

expectation of privacy where they had no legal right to occupy abandoned

property). If the threshold occupancy requirement is met, the municipality must

also show one of four elements:

a. [t]he property is in need of rehabilitation in the
reasonable judgment of the public officer, and no
rehabilitation has taken place during that six-month
period; b. [c]onstruction was initiated on the property
and was discontinued . . . ; c. [a]t least one installment
of property tax remains unpaid and delinquent . . . ; or
d. The property has been determined to be a nuisance.

[N.J.S.A. 55:19-81(a)-(d) (emphasis added).]

Once an abandoned designation has been made, the purchaser of the tax

sale certificate may commence a foreclosure proceeding, but the abandoned

property owner may redeem his rights at any time, subject to court order.

N.J.S.A. 54:19–58 ("After the foreclosure action is instituted, the right to

redeem shall exist and continue to exist until barred by the judgment of the

Superior Court."). A tax sale certificate "creates only a lien on the premises"

and it is "not an outright conveyance;" it conveys the lien interest of the taxing

authority. Town of Phillipsburg v. Block 1508, Lot 12, 380 N.J. Super. 159,

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163 (App. Div. 2005). Additionally, the "interest of the holder of the tax sale

certificate is entirely subordinate to the statutory right of redemption of the

property owner." Id. at 164 (citing Manning v. Kasdin, 97 N.J. Super. 406, 417,

(App. Div. 1967)).

Applying these principles, we conclude the court misapplied its discretion

in denying Becker's motion. The propriety of Irvington's abandonment

designation was a critical and necessary determination for the court to make as

it necessarily informs whether vacating the default judgment was appropriate

under Rule 4:50-1. This is so because the holder of a tax sale certificate—like

plaintiff—has no right to foreclose sooner than two years from the certificate's

acquisition unless the property is abandoned within the meaning of APRA, in

which case the foreclosure action may be commenced "any time" after the

certificate's acquisition. See N.J.S.A. 54:5-86(a)-(b). As plaintiff commenced

this action sooner than two years based on Irvington's abandonment designation,

that finding was of critical import.

Here, Philip possessed no firsthand knowledge of the condition of the

property, nor whether any individual legally occupied the premises in the six

months preceding the abandonment designation or the foreclosure proceedings.

See, e.g., Wells Fargo Bank, N.A. v. Ford, 418 N.J. Super. 592, 599 (App. Div.

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2011) ("A certification will support the grant of summary judgment only if the

material facts alleged therein are based, as required by Rule 1:6–6, on 'personal

knowledge.'") (quoting Claypotch v. Hesller, Inc., 360 N.J. Super. 472, 289

(App. Div. 2003)). Her conclusion that the property was abandoned was based

entirely on certain unidentified records, and those prepared by Vilson. Further,

she never appended to her certification the referenced and unauthenticated

documents that supported those conclusions, nor were they submitted to the

court for its consideration.

These deficiencies were not inconsequential. Indeed, while Becker's

failure to pay its taxes was conceded, the remaining facts supporting the

abandonment designation were not. For example, as noted, a threshold

requirement before a property is deemed abandoned under N.J.S.A. 55:19-81 is

the absence of proof that it was lawfully occupied for six months. Although

Philip so certified, again without appending any supporting records or firsthand

knowledge, Levi attested that before commencing the ejectment proceeding, his

father had "someone living at the property" to ensure it was not vandalized.

While he later successfully ejected the individual as an unauthorized "squatter,"

his certification can fairly be read to support the conclusion that the squatter, or

another unidentified individual, was lawfully residing in the residence at some

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period during the relevant six-month period before Philip certified the property

as abandoned.

Second, contrary to Philip's attestations that construction at the property

was "discontinued" and "no construction has taken place for at least six months,"

Levi presented competent proofs that a construction permit was issued by

Irvington on April 10, 2019, less than two months prior to Philip's certification.

Levi also submitted additional proofs showing extensive work at the residence.

Further, without appending supporting documentation to her certification,

and specifically those which memorialized Vilson's observations from his

inspection, we cannot discern how Philip or Vilson knew the property had not

been legally occupied for the six months prior to the certification, or any other

fact that would support the abandonment determination except for Becker's

failure to pay the required taxes.

We also cannot determine if the materials relied upon by Philip were

appropriate business records under N.J.R.E. 803(c)(6), and particularly if they

were made "at or near the time of the observation by a person with actual

knowledge or from information supplied by such a person," or if the referenced

documents were "made in the regular course of business." That, of course, was

not the fault of Becker, as it disputed critical factual statements regarding

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Irvington's abandonment designation made in Philip's certification after making

timely OPRA requests and being informed that no such documents existed

related to that finding.

We, of course, draw no conclusions on the abandonment issue except to

observe the presence of genuine factual disputes that should be litigated and

adjudicated. Becker has demonstrated a meritorious defense under Rule 4:50-

1(a) and (f), not only because of Levi's own affirmative allegations about the

property but also because of the inadequacies in the Philip certification.

We are also satisfied that Levi provided sufficient reasons for failing to

file a timely answer or otherwise participate in the foreclosure proceedings.

Approximately three months after service of the complaint, his father and

partner in Becker, died from COVID-19 after being sick for "some time" prior.

Levi also verified that his mother cared for Sam at their residence in Brooklyn

before his death, and out of caution during the pandemic, he did not return to

New Jersey. Levi stated that Sam's illness meant "normal business practices"

were not followed and the "office was not being visited normally" during this

time period.

While Becker could, and should have, participated in the permissive

proceeding spelled out in N.J.S.A. 55:19-55(e)-(f), which likely would have

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avoided the default judgment in the first instance, we do not consider that failure

to be a dispositive jurisdictional defect as plaintiff argues, and are satisfied that

Becker's failure to answer the complaint, or otherwise respond, was excusable.

That conclusion is supported by the unique circumstances presented which

include Sam's death, Becker's filing of a motion to vacate less than a month after

the entry of judgment, and, as noted, the absence of a competent certification

supporting the abandonment determination, coupled with Irvington's subsequent

denial that any documents related to that designation existed. See, e.g., BV001

Reo Blocker, LLC v. 53 W. Somerset St. Props., LLC, 467 N.J. Super. 117, 128-

30 (App. Div. 2021).

In sum, we conclude the court mistakenly failed to "view with great

liberality," see Mancini, 132 N.J. at 334, Becker's reasonable arguments

regarding both its claim of excusable neglect and its meritorious defense. We

accordingly reverse the court's decision to deny the motion to vacate the default

judgment and remand the matter for entry of an order granting Becker leave to

file a pleading responsive to the complaint and for necessary proceedings to

resolve this foreclosure action. The final judgment is consequently vacated,

effective immediately, without prejudice to the outcome of the remanded

proceedings.

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Reversed and remanded. We do not retain jurisdiction.

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