US Bank Cust v. Block 5.04
| Docket Number | A-2384-21 |
| Decision Date | 15 December 2023 |
| Parties | US BANK CUST FOR PC7 FIRSTRUST BANK, and PC7REO LLC, Plaintiffs-Respondents, v. BLOCK 5.04, LOT 16 336 WHITE HORSE PK, BOROUGH OF MAGNOLIA, ASSESSED TO SAM'S ROUTE 73, LLC, Defendant-Appellant. |
| Court | New Jersey Superior Court — Appellate Division |
1
US BANK CUST FOR PC7 FIRSTRUST BANK, and PC7REO LLC, Plaintiffs-Respondents,
v.
BLOCK 5.04, LOT 16 336 WHITE HORSE PK, BOROUGH OF MAGNOLIA, ASSESSED TO SAM'S ROUTE 73, LLC, Defendant-Appellant.
No. A-2384-21
Superior Court of New Jersey, Appellate Division
December 15, 2023
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.
Argued November 9, 2023
On appeal from the Superior Court of New Jersey, Chancery Division, Camden County, Docket No. F-010707-18.
William C. MacMillan argued the cause for appellant (Law Offices of Igor Sturm, attorneys; William C. MacMillan, on the briefs).
Robin I. London-Zeitz argued the cause for respondent PC7REO LLC (Gary C. Zeitz, LLC, attorneys; Robin I. London-Zeitz, on the brief).
Before Judges Accurso and Gummer.
PER CURIAM
This tax sale matter returns to us following our vacation of the tax sale judgment, reversal of the abandonment order on which it was premised and remand for an evidentiary hearing on whether the property could be properly determined abandoned in accordance with the Abandoned Properties Rehabilitation Act, N.J.S.A. 55:19-81. US Bank Cust v. Block 5.04, Lot 16 336 White Horse Pike, Borough of Magnolia, No. A-2362-18 (App. Div. July 22, 2020) (slip op. at 1).
As noted in our prior opinion, plaintiff U.S. Bank Cust for PC7 Firstrust Bank[1] purchased tax sale certificates in December 2017 on two properties assessed to defendant Sam's Route 73, LLC, one in Oaklyn and the other in Magnolia, over which Sam's was embroiled in litigation in Pennsylvania, resulting in its failure to pay the property taxes on the parcels.[2] Ibid. Instead
of waiting two years from the sale date to file actions to foreclose the certificates, plaintiff filed only five months after the sale, contending the properties had been abandoned. Ibid. See N.J.S.A. 54:5-86(b).
Although Sam's opposed plaintiff's application for a declaration of abandonment as to the Oaklyn parcel, putting the condition of the property in issue, the Chancery judge failed to conduct an evidentiary hearing applying the statutory criteria. Block 5.04, Lot 16, slip op. at 8-9. Because the judge summarily declared the property abandoned without a hearing despite the contested record, a "determination . . . pivotal to whether plaintiff was entitled to seek foreclosure when it did," we deemed "all that followed must be vacated." Id. at 10. And while Sam's hadn't opposed plaintiff's abandonment motion in the tax foreclosure on the Magnolia property, we reversed the abandonment order and vacated the judgment in that case as well, finding "the judge's abandonment ruling in the Oaklyn matter demonstrated the futility of
any opposition." Id. at 10 n.5. We issued our opinion addressing both appeals on July 22, 2020.
The following day, the Chancery judge entered an order for the exchange of reports and scheduled an evidentiary hearing for December 17 in both matters. A little over two weeks before the hearing, counsel for Sam's wrote to the court advising Sam's no longer contested plaintiff's right to foreclose the tax certificate on the Oaklyn property, and that plaintiff's undisclosed sale of the Magnolia property to a third-party, Avi Financial, LLC, while the appeal was pending "rendered an evidentiary hearing in [that] . . . matter entirely moot."[3]
Specifically, counsel contended that plaintiff's sale of the Magnolia property to Avi, over the lis pendens Sam's had filed against the property, had "nullified and extinguished" Sam's right to redeem the tax sale certificate on the Magnolia property, which otherwise "would have existed from the issuance" of our opinion "up until a time that any final judgment [on remand] would have been entered, irrespective of whatever the outcome of the evidentiary hearing." Counsel advised the court the Pennsylvania litigation
had been settled "and there no longer exist[ed] any impediment to the redemption of the tax sale certificate, aside from the fact that plaintiff has sold the property and the underlying tax sale certificate debt no longer exists."
According to defendant's counsel, Sam's was "no longer a 'person' entitled to redeem the tax sale certificate "pursuant to N.J.S.A. 54:5-54, "because it [was] no longer the owner of the property." Counsel advised the Chancery judge that Sam's had already filed a complaint in the Law Division for damages in response to plaintiff's "tortious actions," and "submitted that [this foreclosure] matter should be dismissed as moot."
Counsel for plaintiff immediately wrote to the court in response, explaining our decision vacating the judgments in both matters revested title in Sam's, reviving its right to redeem the certificates until entry of final judgment on remand in accordance with N.J.S.A. 54:5-86(a). Counsel also noted there was no stay preventing plaintiff's sale of the Magnolia property to Avi, which took title over the lis pendens with full knowledge it could be divested of title were plaintiff successful on appeal.
Plaintiff's counsel pointed out that we'd ordered the trial court to conduct an evidentiary hearing on remand, and that plaintiff was ready to go forward on the scheduled date. If, however, Sam's had no interest in participating in
the evidentiary hearing as to the abandonment of the Magnolia property, counsel asked that the court enter an order again declaring it abandoned. Finally, counsel asked the court to disregard defendant's "misguided attempt "to cancel the evidentiary hearing with respect to the Magnolia property.
Counsel for Sam's replied, expressing Sam's position that as to the Oaklyn property, "a determination of abandonment by an evidentiary hearing" would be "of no moment "as "[t]wo years from the tax sale date "had long since passed, meaning "plaintiff can now foreclose as of right as to the Oaklyn property. "As to the Magnolia property, counsel asserted plaintiff sold it for $150,000.00 in May 2019, when only $25,791.78 was due on the tax lien when final judgment was entered in September 2018. Counsel again insisted Sam's was "no longer the owner of the Magnolia property, and as such, has no statutory right to redeem the tax sale certificate, even if it was still viable, which it is not." Counsel maintained Sam's position that plaintiff's sale of the Magnolia property to Avi rendered an evidentiary hearing "entirely moot" and that the foreclosure action should be dismissed.
The Chancery judge responded to that exchange of letters by cancelling the evidentiary hearing and signing an "unopposed" order on December 14, 2020, declaring the property abandoned, and that Sam's "right to redeem shall
exist until barred by a final judgment of foreclosure pursuant to N.J.S.A. 54:5-86(a) and N.J.S.A. 54:5-104.64(a)."
Plaintiff moved for entry of final judgment four days later. Sam's opposed the motion. Sam's contended final judgment should be denied because the tax sale certificate had been cancelled, as a matter of law, on "plaintiff's filing of the judgment of January 9, 2019 with the Camden County Clerk; that as a result of plaintiff's sale of the property on May 23, 2019, and receipt of payment, the opinion and order of the Appellate Division of July 22, 2020, could not result in a reinstatement of the tax sale certificate"; that plaintiff, "having received the redemption amount, now lacks standing to bring [a] motion for final judgment"; and defendant's "statutory right to redeem prior to the entry of any final judgment has been nullified by plaintiff's sale" of the property, as defendant no longer qualified as "a 'person' entitled to redeem under N.J.S.A. 54:5-54." Sam's did not file a cross-motion to vacate or have the court reconsider the court's abandonment order on remand.
In its reply papers, plaintiff explained the prior judgment only foreclosed Sam's right of redemption of the tax sale certificate, see N.J.S.A. 54:5-104.64(a); Varsolona v. Breen Capital Servs. Corp., 180 N.J. 605, 618 (2004), and that the certificate did not merge into the final judgment, as in a mortgage
foreclosure, see Realty Asset Props., Ltd. v. Oldham, 356 N.J.Super. 16, 25 (App. Div. 2002) ("Although applicable in traditional mortgage foreclosure proceedings, the doctrine of merger has never been applied to the foreclosure of tax sale certificates."). Plaintiff also explained the certificate was not redeemed on plaintiff's sale of the property to Avi, and it remained in existence. Plaintiff reiterated that our opinion reversing the final judgment of foreclosure revested title in Sam's, and the abandonment order the court entered on remand made clear Sam's had a continued right of redemption until entry of a new final judgment.
The court heard argument on the motion in January 2021. Plaintiff's counsel again explained that our vacatur of plaintiff's judgment restored the matter to the status quo ante - plaintiff held a tax sale certificate on the Magnolia property, which Sam's had not redeemed and appeared not inclined to do so. Counsel contended the court's entry of the abandonment order on remand thus left nothing to do but enter final judgment barring Sam's right of redemption.
Counsel for Sam's did not argue about the entry of the July 2018 abandonment order entered two-and-a-half years earlier or the one the court had entered the month before on remand. He contended the only point to an
abandonment finding is to allow the plaintiff to shorten the time it must wait to file to foreclose its tax sale certificate, stating: "that's all . . . past. It's all - it's all gone." He asserted the matter was moot because plaintiff sold the property to Avi, that there was no point to the entry of final judgment, and plaintiff's motion was only "some type of...
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