Mmu Of N.Y. Inc v. Grieser

Citation999 A.2d 1204,415 N.J.Super. 37
PartiesMMU OF NEW YORK, INC., as Assignee of 200 Ocean Boulevard Associates, L.P., Plaintiff-Appellant,v.Gary GRIESER, a/k/a Gary Greiser, a/k/a Gary Griser, a/k/a Gary D. Grieser, Jr., Defendant-Respondent.
Decision Date04 August 2010
CourtNew Jersey Superior Court

COPYRIGHT MATERIAL OMITTED

Porzio, Bromberg & Newman, attorneys for appellant (Michael L. Rich, Morristown, of counsel and on the briefs; Josh M. Mann, Short Hills, on the briefs).

Jules L. Rossi, Manasquan, attorney for respondent.

Before Judges SKILLMAN, FUENTES and SIMONELLI.

The opinion of the court was delivered by

SKILLMAN, P.J.A.D.

The primary issue presented by this appeal is whether a judgment debtor is entitled to a fair market value credit for property that is executed upon and then purchased by a judgment creditor at a sheriff's sale for a nominal amount. We conclude that, even in the absence of express statutory authorization, a court has inherent equitable authority to allow a fair market value credit in order to prevent a double recovery by a judgment creditor against a judgment debtor. We also conclude that this inherent authority was properly exercised in the present case.

In October 1990, defendant Gary Grieser entered into a ten-year commercial lease for the second floor of a building in Long Branch with 200 Ocean Boulevard Associates (200 Ocean). In April 1991 defendant filed a bankruptcy petition but failed to list 200 Ocean as a creditor or to identify the lease as an asset or liability. Following the filing of the bankruptcy petition, defendant discontinued paying rent but continued to occupy the leased premises until October 1991.

After defendant vacated the premises, 200 Ocean brought this action in the Law Division seeking past due rent as well as rent for the approximately nine years remaining on the term of the lease. 200 Ocean served defendant by publication and, after he failed to answer, obtained a default judgment against him for $1,630,481.69, representing unpaid rent for the entire ten-year term of the lease.

200 Ocean subsequently assigned the default judgment to MMU of New York (MMU), which was substituted as plaintiff in the action. Defendant filed numerous motions to vacate the default judgment, which were apparently based on his discharge in the bankruptcy proceeding, all of which were denied.

In 1996, defendant obtained title to a property in Monmouth Beach. In 2000, MMU levied an execution on the property to satisfy the default judgment and scheduled a sheriff's sale. Defendant filed an order to show cause to stay the sale and vacate the default judgment. The trial court denied defendant any relief and the sheriff's sale was allowed to proceed. On appeal, we affirmed the order memorializing this ruling in an unpublished opinion. MMU of N.Y. v. Grieser, No. A-4441-00T1 (May 3, 2002).

In September 2001, MMU purchased the Monmouth Beach property at the sheriff's sale for $100. The following month, MMU entered into a contract to sell the property to a third party for $1,200,500. MMU collected an additional $188,944 by executing upon six other properties owned by defendant. Thus, MMU eventually realized a total of $1,389,444 through its collection activities.

In April 2007, defendant filed a motion challenging the validity of the default judgment. The trial court denied this motion on the ground that defendant's failure to pay the rent on the leased premises and various conduct related to this litigation demonstrated “unclean hands” that precluded him from challenging the default judgment.

On appeal, we reversed this denial in an unpublished opinion. MMU of N.Y., Inc. v. Grieser, No. A-5904-06T3, 2008 WL 2122404 (May 21, 2008). Our opinion stated in part:

Defendant makes a reasonable argument that the landlord was not entitled to rent for the balance of the lease term because the landlord subsequently re-rented the premises and then sold it within two years. Defendant also asserts that the sums plaintiff has collected to date should have significantly reduced, if not satisfied, the balance due on the judgment, even if the judgment amount was proper in the first instance. Neither of these arguments should be precluded simply because defendant remained in the property for six months in 1991 without paying rent. Defendant's failure to pay rent in the first instance gave the landlord grounds for eviction and a money judgment, but has no bearing on defendant's claim that the landlord failed to mitigate its damages, and failed to properly account for the amounts already collected against the default judgment.
[Slip op. at 7.]

Accordingly, we remanded the case to the trial court to address these issues.

On remand, the trial court ruled that defendant was entitled to a reduction in the amount of the judgment based on 200 Ocean's re-leasing and then selling the premises after defendant vacated. Consequently, the court entered an order on July 18, 2008, which reduced the principal amount of the judgment to $384,759.60 “less rents received [from the] new tenant prior to December 10, 1993.” The court further determined that MMU was entitled to $258,375 in interest on this amount, which resulted in an amended judgment for $643,134.60.

The court also ruled that defendant was entitled to a credit against this reduced judgment for the full amount MMU realized from its executions upon properties owned by defendant, including the $1,200,500 MMU realized from its sale of the Monmouth Beach property, which the court apparently determined was an accurate reflection of fair market value. The parties stipulated that the total amount of these credits was $1,389,444. Because these credits exceeded the amount of the amended judgment by $746,309.40, in addition to discharging the judgment in MMU's favor, the court entered judgment in defendant's favor in that amount.

MMU filed a motion for reconsideration. The trial court granted reconsideration but reaffirmed the judgment in defendant's favor.

MMU appeals both from the judgment and the order on its motion for reconsideration. We affirm.

Initially, we note that MMU does not challenge the reduction in the amount of the judgment against defendant to $643,134.60. MMU also does not challenge defendant's entitlement to credits for the $188,944 it collected by executing upon the six other properties owned by defendant. All of MMU's arguments are directed solely at the part of the judgment that allowed defendant a fair market value credit of $1,200,500 based on the sale of the Monmouth Beach property to a third party.

MMU presents three arguments for reversal of this fair market value credit: (1) defendant's application for that credit was barred by laches; (2) a judgment debtor is not entitled to a fair market value credit for property that is executed upon and then purchased by a judgment creditor at a sheriff's sale for a nominal amount; and (3) even if defendant was entitled to a fair market value credit for the Monmouth Beach property, which would result in a discharge of the judgment entered against him, the trial court erred in entering an “affirmative money judgment” against MMU.

I.

Laches may be “invoked to deny a party enforcement of a known right when the party engages in an inexcusable and unexplained delay in exercising that right to the prejudice of the other party.” Knorr v. Smeal, 178 N.J. 169, 180-81, 836 A.2d 794 (2003). “Laches may only be enforced when the delaying party had sufficient opportunity to assert the right in the proper forum and the prejudiced party acted in good faith believing that the right had been abandoned.” Id. at 181, 836 A.2d 794. Thus, the determination whether a claim or defense should be barred by laches requires a close examination of the facts pertinent to application of this doctrine.

MMU did not raise laches as a defense to defendant's claim to a fair market value credit for the amount MMU realized from the sale of the Monmouth Beach property until it filed a motion for reconsideration of the judgment in defendant's favor. A motion for reconsideration is not an appropriate vehicle for assertion of new defenses. Lahue v. Pio Costa, 263 N.J.Super. 575, 598, 623 A.2d 775 (App.Div.) certif. denied, 134 N.J. 477, 634 A.2d 524 (1993). Moreover, because laches was raised for the first time by a motion for reconsideration, the record relevant to this defense is incomplete. We note, however, that defendant alleges without contradiction that the accounting MMU provided in 2007 indicated that defendant was entitled to a credit for the $1,200,500 realized from that sale. In addition, MMU's counsel seemed to indicate at the October 31, 2008 oral argument that defendant was entitled to this credit. Under all these circumstances, we conclude that MMU is not entitled to assert the defense of laches at this late date.

II.

We turn next to MMU's argument that defendant is not entitled to a credit for the fair market value of the Monmouth Beach property MMU executed upon and then purchased for a nominal amount at a sheriff's sale. MMU argues that the right to a fair market value credit must be established by statute and that the statutory provisions governing executions do not authorize such a credit. See N.J.S.A. 2A:17-1 to -83. MMU contrasts the statutory provisions governing mortgage foreclosures, which specifically allow a fair market value credit if a mortgagee seeks a deficiency judgment, and the statutory provisions governing execution sales which do not include express authorization for a fair market value credit.

However, we have previously recognized that, even in the absence of express statutory authorization, a court has inherent equitable authority to allow a fair market value credit in order to prevent a double recovery by a creditor against a debtor.

In Morsemere Federal Savings & Loan Association v. Nicolaou, 206 N.J.Super. 637, 503 A.2d 392 (App.Div.1986), a non-mortgage judgment...

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  • In re Karagiannis
    • United States
    • U.S. Bankruptcy Court — District of New Jersey
    • May 5, 2011
    ...sale deficiency claims both in terms of substance and procedure. That influence is evidenced in MMU of New York, Inc. v. Grieser, 415 N.J.Super. 37, 999 A.2d 1204 (App.Div.2010), decided four months after Borden. This opinion succinctly states the issue to be decided and its conclusion as f......
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    • July 8, 2020
    ...(2) the mortgagee seeks a deficiency judgment" (emphasis added)). The Appellate Division's decision in MMU of N.Y., Inc. v. Grieser, 415 N.J. Super. 37, 999 A.2d 1204 (App. Div. 2010), on which West Pleasant relies, is distinguishable. The creditor in Grieser had sold the property to a thir......
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    ...sale deficiency claims both in terms of substance and procedure. That influence is evidenced in MMU of New York, Inc. v. Grieser, 415 N.J. Super. 37 (App. Div. 2010), decided four months after Borden. This opinion succinctly states the issue to be decided and its conclusion as follows: The ......
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