PC8REO, LLC v. BLOCK 3031, LOT 1 90-100 INGRAHAM PL CITY OF NEWARK
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-1789-20
PC8REO, LLC,
Plaintiff-Respondent,
v.
BLOCK 3031, LOT 1,
90-100 INGRAHAM PL,
CITY OF NEWARK,
STATE OF NEW JERSEY,
ASSESSED TO: BRR
INGRAHAM PL LLC,
Defendant-Respondent.
________________________
TOORAK CAPITAL
PARTNERS, LLC,
Appellant.
________________________
Argued January 24, 2022 – Decided April 22, 2022
Before Judges Mayer and Natali.
On appeal from the Superior Court of New Jersey,
Chancery Division, Essex County, Docket No. F-
006690-20.
Morgan C. Fiander argued the cause for appellant
(Polsinelli PC, attorneys; Morgan C. Fiander, on the
briefs).
Robin I. London-Zeitz argued the cause for respondent
PC8REO, LLC (Gary C. Zeitz, LLC, attorneys; Robin
I. London-Zeitz, on the brief).
David M. Schlachter argued the cause for respondent
BRR Ingraham PL LLC.
PER CURIAM
In this tax sale certificate foreclosure action, defendant BRR Ingraham
PL, LLC ("BRR") and its lender, appellant Toorak Capital, LLC ("Toorak"), 1
appeal from the Chancery Division's February 8, 2021 order denying their Rule
4:50-1 motion to vacate a default judgment foreclosing on property at 90-100
Ingraham Place in Newark ("Property"), pursuant to the Tax Sale Law, N.J.S.A.
54:5-1 to -137. Before us, Toorak and BRR both argue the court abused its
discretion when it denied their motion to vacate final judgment. For the
foregoing reasons, we vacate the February 8, 2021 order and remand for further
proceedings.
1
Despite Toorak never filing a motion to intervene pursuant to Rule 4:33-1 or
-2, the court characterized it as an "interested party" in its February 8, 2021
order, presumably based on its status as mortgagee for the Property. As neither
plaintiff nor defendant objected to Toorak's participation at the trial court or
before us, we address its arguments on the merits.
A-1789-20
2
I.
We discern the following facts from the motion record. BRR purchased
the Property on June 24, 2019, which was secured by a mortgage and loan issued
by Envision Funded, LLC. The mortgage was thereafter assigned to Toorak,
and after BRR failed to pay municipal liens on the Property, the City of Newark
Tax Collector ("Tax Collector") sold the tax lien certificate at a public sale to
PRO CAP 8, LLC/Procapital MGT II ("Procap"), subject to BRR's right of
redemption. On June 18, 2020, plaintiff2 filed a foreclosure action pursuant to
the In Rem Tax Foreclosure Act, N.J.S.A. 54:5-104.29 to -104.75, specifically,
N.J.S.A. 54:5-86(b), alleging that the tax sale certificate was eligible to be
foreclosed upon immediately, and BRR had failed to exercise its redemption
rights.
Plaintiff later published notice of the in rem foreclosure action on
September 11, 2020 in The Star-Ledger. The notice stated that BRR could
contest the foreclosure by answering the complaint within forty-five days or
redeem the tax lien by paying $13,802.70 prior to the entry of final judgment .
That same day, plaintiff also sent BRR, Envision Funded and Toorak a letter via
2
We refer to Procap and PC8REO, LLC as "plaintiff" interchangeably, because,
as detailed infra at p. 6, the tax lien certificate was later assigned from Procap
to the current plaintiff, PC8REO, LLC.
A-1789-20
3
first class and certified mail notifying them of The Star-Ledger publication and
of the forty-five-day deadline for redeeming the tax lien. The notice specifically
informed BRR and its lenders that plaintiff would move for entry of final
judgment if the tax lien was not timely redeemed, or if they failed to contest the
foreclosure.
Plaintiff also mailed notice of the in rem foreclosure action to BRR,
Envision Funded and Toorak via first class and certified mail, as permitted by
N.J.S.A. 54:5-104.48 and Rule 4:64-7(c). Plaintiff certified that none of the first
class mail was returned and signatures on the return mail receipts indicate BRR
received notice at the Property and at its Brooklyn, New York address. Toorak's
agents similarly signed for the mail at its Summit, New Jersey and Wilmington,
Delaware addresses on September 15, 2020. On September 16, 2020, plaintiff
also posted notice at the Property and in various public locations throughout the
City, as required by Rule 4:64-7(d).
Next, plaintiff retained Dino M. Cavalieri, a licensed building inspector,
to evaluate the Property. Cavalieri's inspection report determined that "at least
one installment of property tax remains unpaid and delinquent" and stated that
various conditions on the Property indicated it was "in need of rehabilitation,"
including "boarded and missing windows" and "graffiti all over [the] building."
A-1789-20
4
As such, plaintiff submitted that Cavalieri's inspection established the Property
as abandoned under N.J.S.A. 55:19-81.
On October 6, 2020, plaintiff filed a motion to certify the Property as
abandoned. The court later granted plaintiff's application and noted the motion
was unopposed. In its accompanying statement of reasons, the court considered
Cavalieri's report, determined that it was unrefuted, and designated the Property
abandoned in accordance with N.J.S.A. 55:19-81 and N.J.S.A. 54:5-86(b).
Plaintiff certified that it served the complaint on BRR, Envision Funded,
and Toorak via first class and certified mail on October 9, 2020.3 Toorak
maintained it became aware of the foreclosure action in "approximately"
October 2020, and retained Cold River Land, LLC, to redeem the tax certificate.
Cold River is a third-party tax management company located in Georgia and
regularly hired by Toorak for these purposes.
In an effort to redeem BRR's property rights, Cold River claimed it first
faxed an inquiry to the Tax Collector on October 22, 2020, requesting
information as to how to satisfy the tax lien. Cold River thereafter stated it
received payment instructions from the City on December 1, 2020, which it
understood permitted it until December 31, 2020 to redeem the certificate in
3
We note that it took plaintiff nearly four months to serve the complaint.
A-1789-20
5
order to avoid foreclosure. Although these instructions are not contained in the
record, Cold River and Toorak maintain that the thirty-seven-page document
received was "confusing", as it contained information on numerous unrelated
properties, and "it took some time for Cold River to discern what the document
was and the relevant portions therein."
On November 17, 2020, the Tax Collector executed an affidavit of non-
redemption, in which it stated that BRR failed to redeem the tax lien certificate
and further noted that it had received a copy of the notice of foreclosure. On
November 20, 2020, plaintiff's counsel moved to substitute PC8REO, LLC, as
plaintiff. Notice of the motion was sent to all parties that same day via first
class mail. The court later granted the motion, noting that PC8REO, LLC was
the rightful holder of the tax sale certificate.
After successfully moving for entry of default, plaintiff filed an
application for final judgment on November 20, 2020, which the court granted
on December 8, 2020, thereby extinguishing BRR's right of redemption. The
order stated that notice of the foreclosure action had been provided in
accordance with relevant statutes and Rules and was published both at the
Property and in conspicuous places throughout the City as required under Rule
A-1789-20
6
4:64-7(d). The court further noted that BRR failed to file an answer and plaintiff
was therefore vested with an "absolute and indefeasible [fee simple] estate."
Plaintiff served BRR and Toorak with the final judgment on December
11, 2020, via first class mail. That same day, Cold River sent a second request
for payment instructions to the City. For its part, Toorak remitted payment to
the City on December 18, 2020, but the City rejected its payment. Toorak stated
it sent payment "in accordance with the instructions received" and relied upon
the reported "valid through" December 31, 2020 date on the instructions,
believing that "final judgment could not and would not be entered" until th at
day.
On December 23, 2020, two weeks after the entry of final judgment,
Toorak filed a motion to vacate final judgment. The motion was supported by
an "attorney statement" from its counsel, Morgan Fiander, Esq., and a notarized
affidavit from Amber Hedgecock Watts, a Senior Account Manager at Cold
River. Watts attested that "[Toorak] retained Cold River to obtain information
on the tax lien certificate, specifically the amount due and how to redeem the
certificate."4
4
The affidavit incorrectly noted that Cold River was retained by "Normandy
Capital Trust," an unrelated entity. Neither the court nor the parties addressed
this apparent oversight or raised it as a substantive concern.
A-1789-20
7
Watts further stated that Toorak learned of the pending tax foreclosure in
October 2020, and asserted that Toorak retained Cold River to "obtain
information on the tax lien certificate, specifically the amount due and how to
redeem the certificate." She also attested that Toorak, through Cold River, took
steps to attempt to redeem the tax lien "in accordance with the instructions
given" by the City.
BRR joined Toorak's motion and submitted an initial and supplemental
affidavit from Mosche Wachsman, its owner and registered agent, as well as a
certification from its counsel, David Schlachter, Esq. Wachsman stated that he
checked the Property "regularly," and did not see any postings on the Property
notifying him of the pending foreclosure proceeding. He further attested he was
not aware of the action until "late December 2020." Further, Wachsman stated
that he was never served with notice "at the LLC's address (in Lakewood, New
Jersey)," but did not explain how he received notice of the final judgment.
Wachsman also noted that he understood that tax foreclosures "usually
take two years from the date of default," and was told as much "by [an
unidentified individual] at the Tax Office in Newark." Finally, he disputed that
the Property was abandoned, claiming it was undergoing renovations that had
been delayed because of the COVID-19 pandemic.
A-1789-20
8
Schlachter stated he was "familiar with the facts from a review of the file
and discussions with [his] client," and noted that "[t]he address for the LLC is
in Lakewood, New Jersey." He asserted that the complaint was "never served
on any party [and] was not even mailed to the property." Schlachter further
explained that the Brooklyn address was an "apartment [that] ha[d] been rented
by someone else since July 2020." Finally, Schlachter attested that the Property
was not abandoned because it was under construction.
The court held oral arguments on February 5, 2021. The court first
indicated concern about the affidavits and certifications submitted by the parties
and noted deficiencies with respect to the "factual underpinnings" of those
proofs. With respect to Toorak, the court noted that Watts failed to explain the
source of her personal knowledge. As to BRR, the court similarly stated that
Wachsman's initial affidavit failed to specify that he had personal knowledge of
the matter.
The court also discussed the various subsections of Rule 4:50-1 with the
parties. The court expressed doubt that Toorak or BRR established "excusable
neglect" under subsection (a), noting that Toorak failed to provide any evidence
that it had made "continual" efforts to reach the Tax Collector's office. The
A-1789-20
9
court also reasoned that relief under subsections (e) and (f) was likely not
warranted because it "just [did not] know what anybody did."
The court did express concern, however, that BRR and Toorak had not yet
received notice of final judgment before Toorak sent payment to the Tax
Collector, and final judgment may have been entered "as the check was crossing
in the mail." Further, the court contemplated an equitable result may be
appropriate, because not only would the City be made whole, plaintiff would
also be "reimbursed the tax lien and all the expenses, the attorney's fees and all
the expenses on the property." The court explained that Toorak and BRR would
therefore be left to resolve the matter in foreclosure court.5
Finally, the court considered BRR's argument that it had never received
notice, either at the Property or BRR's new address in Lakewood. The court
noted BRR failed to raise these arguments when the motion to vacate was
initially filed, and never notified the City that its address had changed. The
court appeared to dismiss the issue, noting it was satisfied "there [was] plenty
of notice [and] plenty of service here."
5
At the hearing, Fiander explained that BRR defaulted on its mortgage
payments and Toorak had filed a foreclosure action against it.
A-1789-20
10
After evaluating the parties' submissions and oral arguments, the court
denied defendants' motion to vacate in a February 8, 2021 order and
accompanying statement of reasons. The Court explained that the Watts
affidavit did not comply with the Rule 1:6-6, and "provided no basis [to support
the] conclusion that [s]he was competent to testify as to any of those factual
assertions." The court further found that the Fiander statement was deficient
because it was not based on her personal knowledge, and therefore concluded
that the "submitted statement, affidavits, and certifications ha[d] no evidential
value." The court also concluded that neither the Watts affidavit nor the Fiander
statement satisfied the requirements for certifications in lieu of oaths under Rule
1:4-4(b).
As to BRR, the court similarly found that the Wachsman affidavits and
Schlachter certification failed to satisfy Rules 1:4-4(b) and 1:6-6. The court
explained that neither the Wachsman affidavits nor the Schlachter certification
satisfied the personal knowledge requirement of Rule 1:6-6 because they
contained hearsay statements. The court also concluded that the Schlachter
certification improperly attested to facts within the primary knowledge of BRR,
contrary to our holding in Deutsche Bank Nat. Tr. Co. v. Mitchell, 422 N.J.
Super. 214, 226 (App. Div. 2011).
A-1789-20
11
Only Toorak filed a notice of appeal challenging the court's February 8,
2021 order. After BRR failed to file a notice of appeal or a timely brief, we
entered a suppression order on August 26, 2021, mandating that "no brief or
other papers on behalf of [BRR] will be accepted for filing except a motion
vacate this order." BRR later filed a motion to vacate, and in a January 20, 2022
order, we allowed it to file only a respondent's brief as "it did not file a notice
of appeal and therefore [wa]s not a co-appellant." We also permitted BRR to
participate in oral arguments. 6
II.
Toorak and BRR argue the court committed error when it concluded that
the Watts and Wachsman affidavits, the Fiander statement and the Schlachter
certification submitted in support of their motion failed to comply with Rules
1:4-4(b) and 1:6-6. We agree with the court that the Fiander statement and
Schlachter certification failed to comply with Rules 1:4-4(b) and 1:6-6. We are
satisfied, however, that the court erred when it concluded the Watts and
6
After we entered the January 20, 2022 order, plaintiff filed a motion to
suppress BRR's brief. By way of this opinion, we deny that application and
consider the brief subject to the limitations noted in our January 20, 2022 order.
We reach this result to expedite the proceedings and to enable the trial court to
address the Rule 4:50-1 issues on the merits and provide supplemental findings
as we direct in this opinion.
A-1789-20
12
Wachsman affidavits failed to comply either Rule, and conclude these affidavits
should have been considered by the court.
We defer to a trial court's evidentiary ruling absent an abuse of discretion.
State v. Garcia, 245 N.J. 412, 430 (2021). We do so because "the decision to
admit or exclude evidence is one firmly entrusted to the trial court's discretion."
State v. Prall, 231 N.J. 567, 580 (2018) (quoting Est. of Hanges v. Metro. Prop.
& Cas. Ins. Co., 202 N.J. 369, 383-84 (2010)). Under that deferential standard,
we "review a trial court's evidentiary ruling only for a 'clear error in judgment.'"
State v. Medina, 242 N.J. 397, 412 (2020) (quoting State v. Scott, 229 N.J. 469,
479 (2017)).
Rule 1:4-4 governs the form of affidavits. It first requires affidavits to
"run in the first person and be divided into numbered paragraphs as in
pleadings." R. 1:4-4(a). The Rule also provides that:
[i]n lieu of the affidavit, oath or verification required
by these rules, the affiant may submit the following
certification which shall be dated and immediately
precede the affiant's signature: "I certify that the
foregoing statements made by me are true. I am aware
that if any of the foregoing statements made by me are
willfully false, I am subject to punishment."
[R. 1:4-4(b).]
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The Rule 1:4–4(b) verification requirement allows certifications to be
filed in lieu of more formal affidavits. State v. Parmigiani, 65 N.J. 154, 156
(1974); Pressler & Verniero, Current N.J. Court Rules, cmt. 2 on R. 1:4–4(b)
(2015). The "allowance of certification in lieu of oath was admittedly intended
as a convenience[,] but it in nowise reduced the solemnity of the verification or
declaration of truth." Parmigiani, 65 N.J. at 157; see also State v. Angelo's
Motor Sales, Inc., 125 N.J. Super. 200, 207 (App. Div. 1973) ("Certification is
only another way of swearing or affirming.").
Rule 1:6-6 governs the substance of an affidavit. It provides:
If a motion is based on facts not appearing of record, or
not judicially noticeable, the court may hear it on
affidavits made on personal knowledge, setting forth
only facts which are admissible in evidence to which
the affiant is competent to testify and which may have
annexed thereto certified copies of all papers or parts
thereof referred to therein. The court may direct the
affiant to submit to cross-examination or hear the
matter wholly or partly on oral testimony or
depositions.
[R. 1:6-6 (emphasis added).]
Certifications "based upon information provided to [the affiant]" and
those made "to the best of [his or her] knowledge and belief" do not satisfy the
personal knowledge requirement of Rule 1:6-6. Claypotch v. Heller, Inc., 360 N.J. Super. 472, 489 (App. Div. 2003). Moreover, we have previously stated
A-1789-20
14
that "affidavits in which the affiant fails to identify specifically his position, or
explain the source of his personal knowledge of the facts to which he attests, or
attempts to authenticate attached documents without explaining precisely what
each is and how it came into the affiant's hands should be rejected." New
Century Fin. Servs., Inc. v. Oughla, 437 N.J. Super. 299, 332 (App. Div. 2014).
Critical documents which are alleged to support facts upon which a motion is
based must be submitted "to the court by way of affidavit or testimony." Celino
v. Gen. Accident Ins., 211 N.J. Super. 538, 544 (App. Div. 1986); see also Mazur
ex rel. Armstrong v. Crane's Mill Nursing Home, 441 N.J. Super. 168, 180 (App.
Div. 2015) (explaining that Rule 1:6–6 requires documents relied upon to
support a motion be incorporated by reference in an affidavit or certification).
Based on these principles, we disagree with the court's conclusion that the
entirety of the affidavits were deficient. First, we are satisfied that the Watts
affidavit complied with Rules 1:4-4 and 1:6-6. Watts asserted that she was
retained by Toorak to "obtain information on the tax lien certification " in her
position as Senior Account Manager with Cold River, and plaintiff does not
dispute this. These statements are sufficient under the "personal knowledge"
requirement of Rule 1:6-6, as Watts' knowledge was clearly based upon facts
within her knowledge in her capacity as Toorak's agent.
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In addition, we disagree with the court's conclusion that Watts' affidavit
failed to satisfy the formalities required by Rule 1:4-4(b). The affidavit ran in
the first person, was divided into numbered paragraphs, and was notarized, and
therefore satisfied the conditions for affidavits under Rule 1:4-4(a). Thus, it did
not fall within the purview of Rule 1:4-4(b).
We are further satisfied that the Wachsman affidavits contained
competent evidence under Rules 1:4-4 and 1:6-6. Wachsman attested that he is
the owner both BRR and the Property. He further stated that he personally went
to the Tax Collector's office on December 2, 2020 based on his understanding
that he had to pay the lien in person, but found the office to be closed.
Wachsman also attested that he checked the Property regularly but as noted, had
not seen any postings related to the foreclosure. He also stated that the Brooklyn
address was a rented apartment, where someone with "no connection" to him
was living.
Further, Wachsman disputed that the Property was abandoned, and
explained that it was under construction with a property manager living on the
premises. Similar to the Watts affidavit, Wachsman's affidavit was written the
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16
first person, divided into numbered paragraphs, and notarized, thereby satisfying
the conditions for affidavits under Rule 1:4-4(a).7
We discern no error, however, in the court's conclusion that the Fiander
statement and the Schlachter certification failed to comply with Rules 1:4-4(b)
and 1:6-6. First, the Fiander document, titled as a "statement," was not an
affidavit, nor did it include the required language for attorney certifications
under Rule 1:4-4(b). We also note that the statement failed to satisfy the
"personal knowledge" requirement of Rule 1:6-6, as Fiander did not attest to any
communication with Cold River regarding its redemption efforts. Rather, she
explained only that she was an associate with the firm hired by Toorak and failed
to specify the source of her knowledge. See Claypotch, 360 N.J. Super at 489;
Wells Fargo Bank v. Ford, 418 N.J. Super 592, 599-600 (App. Div. 2011)
(finding a certification that plaintiff relied upon in support of its motion for
summary judgment was not properly authenticated because it did not allege that
the affiant had personal knowledge, did not give any indication how he obtained
the alleged knowledge, and did not indicate the source of his knowledge).
7
We note, however, that certain portions of Wachsman's January 12, 2021
affidavit contained inadmissible hearsay statements, which the court properly
excluded from consideration, such as his reference to statements made by an
unspecified person in the Tax Collector's office.
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Further, Fiander improperly certified to facts within the primary
knowledge of Cold River, such as its "multiple attempts to obtain the payoff
information." As we stated in Mitchell, 422 N.J. Super. at 226, "[a]ttorneys in
particular should not certify to facts within the primary knowledge of their
clients."
Similarly, we are satisfied that the court did not abuse its discretion when
it concluded the Schlachter certification failed to comply with Rules 1:4-4 and
1:6-6. While Schlachter stated he was "familiar with the facts from a review of
the file and discussions with [his] client," he failed to include the certification
language required by Rule 1:4-4(b), and attested to facts within the primary
knowledge of BRR, also contrary to our holding in Mitchell, 422 N.J. Super. at
226.
Because the court concluded that these submissions did not constitute
competent evidence, it denied the motion to vacate without addressing the merits
of the Rule 4:50-1 motion. As we have discussed, and as detailed infra, at Part
III, the Watts and Wachsman affidavits contained competent evidence that
should have been considered by the court. These submissions detailed critical
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information relevant to a Rule 4:50-1 analysis, such as issues related to Toorak's
redemption efforts, and the abandoned status of the Property. 8
III.
As noted, Toorak and BRR argue the court erred in denying their
application for relief under Rule 4:50-1. Toorak insists the "understaffed,
unresponsive office" of the Tax Collector "thwarted" its redemption efforts and
ignored Cold River's original request for payoff instructions. For its part, BRR
maintains the sale of the tax lien was improper in the first instance, as the
Property was never abandoned and it never received notice of the foreclosure
action. Both parties further emphasize that vacating the final judgment promotes
an equitable result, as plaintiff would be made whole, Toorak's mortgage would
be restored, and defendant would retake ownership of the Property.
8
We note that according to Toorak, plaintiff, in opposing the motion to vacate,
did not challenge the sufficiency of the Watts and Wachsman affidavits, the
Fiander statement or the Schlachter certification. Rather, the court raised these
issues sua sponte at oral argument. To the extent the court had questions regarding
the factual support for these submissions, the better course would have been for the
court to exercise its discretion under Rule 1:6-6 and require the witnesses to testify,
subject themselves cross examination, or submit supplemental materials. See R. 1:6-
6; State of Maine v. SeKap, S.A. Greek Co-op. Cigarette Mfg. Co., S.A., 392 N.J.
Super. 227, 243 (App. Div. 2007) ("While determination of the issue may be made
upon affidavits, our Court Rules specifically allow for oral testimony, depositions
and cross-examination when affidavits do not suffice.").
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We consider these arguments against the backdrop of the Tax Sale Law,
N.J.S.A. 54:5-1 to -137. The Tax Sale Law is "liberally construed as remedial
legislation to encourage the barring of the right of redemption." Town of
Phillipsburg v. Block 1508, Lot 12, 380 N.J. Super. 159, 162 (App. Div. 2005);
cf. Bron v. Weintraub, 42 N.J. 87, 91 (1964) (determining it "understandable
that the Legislature found it fair to bar the right to redeem by a strict
foreclosure"). It "evidences an intention to impose stricter limits upon the time
and the grounds for vacating a judgment of foreclosure than would apply
generally under Rule 4:50." Block 1508, 380 N.J. Super. at 166. Nevertheless,
while "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." Simon v. Cronecker,
189 N.J. 304, 319 (2007).
"By delaying redemption until after the filing of a foreclosure action, the
property owner must accept responsibility for the costs that will be incurred."
Id. at 337 (citing N.J.S.A. 54:5-86). In addition, a property owner has "the right
to redeem the tax sale certificate at anytime before the final date for redemption
set by the court and 'until barred by the judgment of the Superior Court.'" Id. at
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20
319 (internal citation omitted) (quoting N.J.S.A. 54:5-86); see also R. 4:64-6(b)
("Redemption may be made at any time until the entry of final judgment . . . .").
Under N.J.S.A. 54:5-86(b), a plaintiff holding a tax sale certificate for a
property that meets the Abandoned Property Rehabilitation Act (APRA),
N.J.S.A. 55:19-78 to -107, definition of "abandoned" may bring an action under
the In Rem Tax Foreclosure Act. Specifically, the Act allows "any municipality
or abandoned property certificate holder" to bring an action in rem "to bar rights
of redemption." N.J.S.A. 54:5-104.32. The filing must include a certification
by the public officer or the tax collector that the property is abandoned. N.J.S.A.
54:5-86(b). The Legislature added Section 86 to allow any tax lien holders,
other than just municipalities, to institute such actions, "but only with respect to
abandoned properties." L. 2015, c. 16 (Oct. 2, 2014). It was also written to
allow these actions "in a more streamlined manner . . . by subjecting tax lien
holders to less stringent notice requirements." Id.
Rule 4:50-1 provides six grounds that warrant relief from a final
judgment:
(a) mistake, inadvertence, surprise, or excusable
neglect; (b) newly discovered evidence which would
probably alter the judgment or order and which by due
diligence could not have been discovered in time to
move for a new trial under [Rule] 4:49; (c) fraud
(whether heretofore denominated intrinsic or extrinsic),
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21
misrepresentation, or other misconduct of an adverse
party; (d) the judgment or order is void; (e) the
judgment or order has been satisfied, released or
discharged, or a prior judgment or order upon which it
is based has been reversed or otherwise vacated, or it is
no longer equitable that the judgment or order should
have prospective application; or (f) any other reason
justifying relief from the operation of the judgment or
order.
[R. 4:50–1.]
A party seeking to vacate a final judgment in a foreclosure action must
satisfy one of the aforementioned grounds for relief set forth in Rule 4:50-1. US
Bank Nat'l Ass'n v. Guillaume, 209 N.J. 449, 467 (2012). "The decision whether
to vacate a judgment under Rule 4:50-1 is a determination left to the sound
discretion of the trial court, guided by principles of equity." F.B. v. A.L.G., 176 N.J. 201, 207 (2003). "The trial court's determination under the rule warrants
substantial deference, and should not be reversed unless it results in a clear abuse
of discretion," meaning the lower court's decision was "made without a rational
explanation, inexplicably departed from established policies, or rested on an
impermissible basis." Guillaume, 209 N.J. at 467; see also BV001 REO
Blocker, LLC v. 53 W. Somerset St. Props., LLC, 467 N.J. Super. 117, 124
(App. Div. 2021).
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The Rule "is designed to reconcile the strong interests in finality of
judgments and judicial efficiency with the equitable notion that courts should
have the 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 rule is limited
to "situations in which, were it not applied, a grave injustice would occur."
Hous. Auth. of Morristown v. Little, 135 N.J. 274, 289 (1994). Under the Rule,
the movant bears the burden of demonstrating his or her entitlement to relief.
See Jameson v. Great Atl. & Pac. Tea Co., 363 N.J. Super 419, 425-26 (App.
Div. 2003).
The four categories under subsection (a) "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." DEG, LLC v. Twp. of Fairfield, 198 N.J. 242,
262 (2009). This part of the Rule is intended to provide relief from litigation
errors "that a party could not have protected against." Id. at 263 (quoting
Cashner v. Freedom Stores, Inc., 98 F.3d 572, 577 (10th Cir. 1996)).
"To prevail under Rule 4:50-1(a), the [movants] are further compelled to
prove the existence of a 'meritorious defense.'" Guillaume, 209 N.J. at 469. As
we held in Schulwitz v. Shuster, "[i]t would create a rather anomalous situation
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if a judgment were to be vacated on the ground of mistake, accident, surprise or
excusable neglect, only to discover later that the defendant had no meritorious
defense." 27 N.J. Super. 554, 561 (App. Div. 1953).
Rule 4:50-1(f), the so-called catchall provision, "is available only when
'truly exceptional circumstances are present.'" Little, 135 N.J. at 286 (quoting
Baumann v. Marinaro, 95 N.J. 380, 395 (1984)). "[T]he very essence of (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." Court
Inv. Co. v. Perillo, 48 N.J. 334, 341 (1966). We have further recognized
"important factors" to be considered in deciding whether relief in such
circumstances should be granted, including "(1) the extent of the delay in
making the application; (2) the underlying reason or cause; (3) the fault or
blamelessness of the litigant; and (4) the prejudice that would accrue to the other
party." Parker v. Marcus, 281 N.J. Super. 589, 593 (App. Div. 1995).
As noted, the court based its decision on the inadequacies in the parties'
submissions and did not address relief under Rule 4:50-1. While we
acknowledge the court did engage in a colloquy with counsel at oral argument,
such comments do not satisfy Rule 1:7-4(a). See Pardo v. Dominquez, 382 N.J.
Super. 489, 492 (App. Div. 2006) (rejecting "the suggestion that a judge's
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comment or question in a colloquy can provide the reasoning for an opinion
which requires findings of fact and conclusions of law"). We accordingly
remand for the court to address the Rule 4:50-1 arguments on the merits. In
order to assist the court on remand, we briefly address the parties' arguments
under Rule 4:50-1.
First, the court should consider whether BRR and Toorak's efforts to
redeem the tax lien are "compatible with due diligence or reasonable prudence"
under Rule 4:50-1(a), Mancini v. EDS on Behalf of New Jersey Auto. Full Ins.
Underwriting Ass'n, 132 N.J. 330, 335 (1993), and make factual findings with
respect to Toorak and BRR's efforts to "protect[] against" final judgment. DEG,
LLC, 198 N.J. at 263 (quoting Cashner, 98 F.3d at 577). As noted, the Watts
affidavit detailed Cold River's efforts to redeem the lien beginning in October
2020, including its first request sent to the City on October 22, 2022, only
thirteen days after Toorak had been served with the complaint.
In her affidavit, Watts further stated that the instructions received from
the City on December 1, 2020, nearly five weeks after Cold River sent the
original request, did not clearly delineate how to redeem the tax lien on the
Property. Watts further asserted that payment was attempted only seventeen
days later, on December 18, 2020, because Cold River and Toorak believed the
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instructions indicated the redemption deadline as December 31, 2020. For his
part, Wachsman also attested to his efforts to obtain information from the Tax
Collector's office.
The court should also address whether relief under Rule 4:50-1 was
appropriate based upon the determination that the Property was abandoned. As
noted, the court entered an order certifying the Property as abandoned after
Cavalieri's inspection report noted various conditions on the Property indicated
it was "in need of rehabilitation." Wachsman's affidavit, however, explained
that these conditions were the result of ongoing renovations, and the boarded
windows noted in the inspection report were an incomplete representation of the
state of the Property.
In addition, 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. Wachsman attested, however, that BRR had a property
manager living on the premises in one of the apartments. This affidavit can
fairly be read to support the conclusion that this individual was lawfully residing
in the residence at some period during the relevant six-month period before the
court designated the Property as abandoned.
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These factual questions are not inconsequential. The propriety of the
court's abandonment designation was a critical determination in the foreclosure
proceedings, as it necessarily informs whether vacating the default judgment
was appropriate under Rule 4:50-1. This is so because a private tax lien holder—
like plaintiff—must wait two years from the certificate's acquisition to file a
foreclosure complaint, N.J.S.A. 54:5-86(a), unless the property is certified as
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(b).
Further, the court should consider Toorak's prompt filing of the
application, only fifteen days after final judgment was entered. Parker, 281 N.J.
Super. at 593. This "promptness in moving for relief" may support relief from
judgment under Rule 4:50-1(f). See Reg'l Constr. Corp. v. Ray, 364 N.J. Super.
534, 541 (App. Div. 2003) (affirming relief from judgment "when examined
against the very short time period between the entry of default judgment and the
motion to vacate"); Morales v. Santiago, 217 N.J. Super. 496, 504-05 (App. Div.
1987) (reversing the denial of a motion to vacate because, among other factors,
"[s]ellers moved to vacate the judgment soon after it was entered").
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Finally, we address and reject BRR's contention that it is entitled to Rule
4:50-1 relief because it allegedly never received notice of the foreclosure action
until the entry of final judgment. Specifically, BRR maintains that various
notices sent to the Property were returned undelivered and the Brooklyn address
was incorrect, as it had been "rented by someone else since July 2020." BRR
further argues it did not receive posted notice at the Property because there is
"no way for a mail carrier to knock on [the property manager's] door as it
requires inside access, which at the time, the mail-carrier did not try to access
because of the look of the building, or could not, because [BRR] secured the
building."
Rule 4:64-7(b) governs notice for in rem tax foreclosure matters. That
Rule requires, in relevant part, that a plaintiff "publish once a notice of
foreclosure in a newspaper generally circulated in the municipality where the
lands affected are located . . . ." R. 4:64-7(b). Service by publication is "hardly
favored," however, as it is the "method of service that is least likely to give
notice." M & D Assocs. v. Mandara, 366 N.J. Super. 341, 353 (App. Div. 2004)
(citing Modan v. Modan, 327 N.J. Super. 44, 48 (App. Div. 2000)).
Rule 4:64-7(c) also governs service for in rem tax foreclosure matters. It
requires a plaintiff to serve a copy of the foreclosure notice "on each person
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whose name appears as an owner in the tax foreclosure list at his or her last
known address as it appears on the last municipal tax duplicate" within seven
days of the date of publication of the notice of foreclosure. R. 4:64-7(c). The
Rule specifies that such service must be made "in the manner provided by R.
4:4-4(a)(1) or (c) or by simultaneously mailing to the last known address by
registered or certified mail, return receipt requested, and by ordinary mail."
Ibid.
Under Rule 4:64-7(d), "within [fifteen] days after the date of the
publication of the notice," a plaintiff must also post a copy "in the office of the
tax collector of the plaintiff municipality and in the office of the county
recording officer of the county in which the land to be affected by the action is,
and in [three] other conspicuous places within the taxing district in which the
land is located." The Rule also requires plaintiff to mail a copy of the notice of
foreclosure "by ordinary mail, to the Attorney General." R. 4:64-7(d).
Here, we are satisfied that the dictates of due process were met consistent
with Rule 4:64-7(b), (c) and (d). Under subsection (b), notice of the in rem tax
foreclosure complaint was published in The Star-Ledger. Under subsection (c),
plaintiff mailed notices of foreclosure to both BRR and Wachsman, by certified
and regular mail. Signed mail receipts indicate notice of the foreclosure action
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was delivered to the Brooklyn address on September 14, 2020. These notices
were sent to the LLC's address and the address for Wachsman on Spencer Street,
in Brooklyn, New York. BRR contends the Brooklyn address was incorrect, and
notice should have been sent to an indeterminate address in Lakewood, New
Jersey, without providing any explanation or documentary support that this
address is the LLC's mailing address, or a proper address for service.
We note that the Spencer Street address is listed on the tax lien certificate,
signed by the Tax Collector, as the address of the last tax duplicate for BRR. In
addition, the promissory note and mortgage security agreement with Envision
Funded, both signed by Wachsman and later transferred to Toorak, identify
Spencer Street as BRR's office address as of June 24, 2019, only six months
before default. Further, Toorak, BRR's own lender, sent notice of its motion to
vacate to the Spencer Street address. Accordingly, there is nothing in the record
to suggest Wachsman's correct address was in Lakewood, and BRR has provided
no proofs to establish a change in address for purposes of notice under N.J.S.A.
14A:4-3.
Notice was also posted in accordance with Rule 4:64–7(d) in at least three
conspicuous locations in the taxing district where the land is located , including
the Essex County Clerk's Office, the Tax Collector's Office, the John F. Kennedy
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Recreation Center, the Newark Post Office, and Washington Park Station.
Further, plaintiff posted notice at both the Tax Collector's office and the Essex
County Register's Office in accordance with Rule 4:64-6(d).
In sum, on remand, the court should issue findings of fact and conclusions
of law with respect to the propriety of vacating the December 8, 2020 order
under Rule 4:50-1, with the exception of any issues related to the sufficiency of
service. To the extent we have not specifically addressed any of the parties'
arguments, it is because we conclude they are of insufficient merit to warrant
discussion in a written opinion. R. 2:11-3(e)(1)(E).
Reversed and remanded. We do not retain jurisdiction.
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