Winberry Realty P'ship v. Borough of Rutherford

• Decision Date: 28 June 2021
• Docket Number: A-22/53 September Term 2019,083156
• Citation: 247 N.J. 165,253 A.3d 636
• Court: New Jersey Supreme Court
• Parties: WINBERRY REALTY PARTNERSHIP, John Winberry, Mary Lourdes Winberry, Celeste Winberry, and Gregory Winberry, Plaintiffs-Appellants/Cross-Respondents, v. BOROUGH OF RUTHERFORD, and Caryn Miller, in her official and individual capacities, Defendants-Respondents/Cross-Appellants, and Stephen Krisch, in his individual capacity, Defendant.

247 N.J. 165

253 A.3d 636

WINBERRY REALTY PARTNERSHIP, John Winberry, Mary Lourdes Winberry, Celeste Winberry, and Gregory Winberry, Plaintiffs-Appellants/Cross-Respondents,

v.BOROUGH OF RUTHERFORD, and Caryn Miller, in her official and individual capacities, Defendants-Respondents/Cross-Appellants,andStephen Krisch, in his individual capacity, Defendant.

A-22/53 September Term 2019

083156

Supreme Court of New Jersey.

Argued January 19, 2021

Decided June 28, 2021

Lawrence S. Lustberg argued the cause for appellants/cross-respondents (Gibbons and Lite DePalma Greenberg, attorneys; Lawrence S. Lustberg, Sylvia-Rebecca Gutiérrez, and Bruce D. Greenberg, Newark, on the briefs).

Kathy A. Kennedy argued the cause for respondents/cross-appellants (Hanrahan Pack, attorneys; Thomas B. Hanrahan, of counsel and on the briefs, and Kathy A. Kennedy, on the briefs).

Joseph A. Fischetti argued the cause for amicus curiae Consumers League of New Jersey (Lowenstein Sandler, attorneys; Joseph A. Fischetti, on the brief).

Daniel M. Ortner, of the California and Virginia bars, admitted pro hac vice, argued the cause for amicus curiae Pacific Legal Foundation (Pacific Legal Foundation, attorneys; Steven Simpson, of counsel, and Mark Miller, on the brief).

John C. Gillespie, argued the cause for amici curiae New Jersey State League of Municipalities and New Jersey Institute of Local Government Attorneys (Parker McCay, attorneys; John C. Gillespie, Mount Laurel, on the brief).

Keith A. Bonchi argued the cause for amicus curiae Tax Collectors and Treasurers Association of New Jersey (Goldenberg, Mackler, Sayegh, Mintz, Pfeffer, Bonchi & Gill, attorneys; Keith A. Bonchi, Atlantic City, of counsel and on the brief, and Elliott J. Almanza, on the brief).

Adam D. Greenberg argued the cause for amicus curiae National Tax Lien Association, Inc. (Honig & Greenberg, attorneys; Adam D. Greenberg, Voorhees, on the brief).

CHIEF JUSTICE RABNER and JUSTICES LaVECCHIA, PATTERSON, FERNANDEZ-VINA, SOLOMON, and PIERRE-LOUIS join in JUSTICE ALBIN's opinion.

JUSTICE ALBIN delivered the opinion of the Court.

The right to enjoy and possess one's property -- free from arbitrary government interference -- has been deeply embedded in our laws from the beginning of our Republic. That fundamental principle is the subject of this case.

Plaintiffs fell into arrears on the real estate taxes on their home located in the Borough of Rutherford. In accordance with the New Jersey Tax Sale Law (Tax Sale Law), N.J.S.A. 54:5-1 to -137, the Borough sold a tax sale certificate to a purchaser, who paid the arrears. The sale of the certificate entitled the purchaser to charge interest on the outstanding taxes and to foreclose on the property if plaintiffs did not redeem the certificate in the manner provided by the statute. The Tax Sale Law required that, to redeem the certificate, plaintiffs pay the outstanding taxes, accumulated interest, and costs to the Borough's Tax Collector before the entry of a final foreclosure judgment.

Plaintiffs attempted to redeem the tax sale certificate before the entry of the final foreclosure judgment on their property, only to be turned away by the Tax Collector. As a result of the denial of their right of redemption, plaintiffs lost their home. After costly legal proceedings, plaintiffs succeeded in having the foreclosure judgment overturned and reclaimed their property.

In this action brought under the New Jersey Civil Rights Act (CRA), N.J.S.A. 10:6-1 to -2, and the Federal Civil Rights Act, 42 U.S.C. § 1983, plaintiffs allege before this Court that defendants -- the Tax Collector and the Borough -- violated their constitutional right of redemption and their statutory right of redemption under the Tax Sale Law, which in turn protected their right to the enjoyment and possession of their home. The trial court granted summary judgment in favor of defendants, finding that the Tax Collector was entitled to qualified immunity on the ground that she did not violate the clearly established constitutional or statutory rights of plaintiffs.

The Appellate Division reversed and reinstated the case against the Tax Collector. It concluded that, viewing the evidence in the light most favorable to plaintiffs, the Tax Collector did not act in an objectively reasonable manner and therefore was not entitled to qualified immunity. The Appellate Division, however, dismissed the Borough from the case because plaintiffs failed to establish municipal liability under the civil rights laws -- that is, failed to establish that the Tax Collector's policy was endorsed or adopted by the Borough. See Monell v. Dep't of Soc. Servs., 436 U.S. 658, 690-94, 98 S.Ct. 2018, 56 L.Ed.2d 611 (1978). In short, the Appellate Division held that the "[Tax Collector's] policy was not the Borough's policy."

We affirm the Appellate Division's decision to deny the Tax Collector qualified immunity. Based on the summary judgment record, the Tax Collector's refusal to provide the redemption amount to plaintiffs because the request was not in writing or timely made was not objectively reasonable. We disagree, however, that plaintiffs have not established the basis for municipal liability. The Tax Collector is the final policymaker on matters related to the redemption of tax sale certificates in the Borough, and therefore, under Monell, the Borough is liable if the Tax Collector violated the constitutional or statutory rights of plaintiffs in this case.

We thus affirm in part and reverse in part the judgment of the Appellate Division and remand to the Law Division for proceedings consistent with this opinion.

I.

A short primer on tax sale certificates will be helpful to understand the procedural and factual history of this case.

When real estate taxes fall into arrears, the municipality receives "a continuous lien on the land" for the delinquent taxes as well as for "all subsequent taxes, interest, penalties and costs of collection." N.J.S.A. 54:5-6 (eff. May 12, 1994);¹ see also N.J.S.A. 54:5-7 to -8; accord Simon v. Cronecker, 189 N.J. 304, 318, 915 A.2d 489 (2007). To collect the unpaid taxes, the municipality may sell at public auction a tax sale certificate. N.J.S.A. 54:5-31. "The successful bidder on a tax sale certificate agrees to pay to the municipality the taxes or assessments due on the property, as advertised ...." Simon, 189 N.J. at 319, 915 A.2d 489 (citing N.J.S.A. 54:5-31 to -32, -46). The issuance of the tax sale certificate functions as "a conditional conveyance of the property to the purchaser, subject to a person with an interest in the property having the right to redeem the certificate, as prescribed by [ N.J.S.A. 54:5-54 ]." Id. at 318, 915 A.2d 489 (citing N.J.S.A. 54:5-31 to -32, -46). "[I]f the property owner does not redeem the tax certificate within two years of the auction, the holder may acquire title to the property free and clear by ‘institut[ing] an action to foreclose the right of redemption’ against anyone with an interest in the land." Id. at 319, 915 A.2d 489 (second alteration in original) (citing N.J.S.A. 54:5-86 to -87).

However, if the property owner redeems the certificate, the tax sale certificate holder "is entitled to reimbursement for all taxes and assessments paid on the property, as well as accrued interest and related costs." Ibid. (citing N.J.S.A. 54:5-58 to -60). The tax sale certificate holder has the opportunity to file an affidavit with the tax collector setting forth the amount due for redemption. See N.J.S.A. 54:5-60 to -62. The property owner has "the right to redeem the tax sale certificate ... ‘until barred by the judgment of the Superior Court.’ " Simon, 189 N.J. at 319, 915 A.2d 489 (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 ....").

II.

A.

The following factual and procedural history is not in dispute.

Winberry Realty Partnership was formed by siblings John, Celeste, Gregory, and Mary Lourdes Winberry. The Partnership owned a single-family home in Rutherford, New Jersey, which was held for the benefit of the Winberrys’ sister who is cognitively impaired. In 2001, the Partnership failed to make property tax payments on the home. As a result, in October 2002, the Tax Collector for the Borough of Rutherford, Caryn Miller, sold a tax sale certificate on the Winberry property to American Tax Funding, LLC (American Tax).

Almost four years later, with the tax sale certificate unredeemed, American Tax notified the Partnership of its intent to foreclose on the property. American Tax also requested that, before accepting a redemption check, the Tax Collector contact it and verify the amount due on the tax sale certificate as well as the allowable expenses.

In November 2006, American Tax filed an action in the Chancery Division to foreclose on the Winberry property. John Winberry (Winberry), acting pro se, filed an answer to the foreclosure complaint for the Partnership. The chancery court, however, struck the answer because Winberry failed to attend case management conferences, and therefore the matter proceeded uncontested.

On May 5, 2008, the court entered an order setting the amount to redeem the tax sale certificate at "$78,352.74, which amount includes subsequent taxes, interest, together with lawful interest on said sum from January 31, 2008, together with costs of suit to be taxed in the sum of $1,157.50, which sum includes a counsel fee of $500.00."² The court set the date of redemption as June 19, 2008, and the place of redemption as the Rutherford Tax Collector's Office. Additionally, the court ordered that "redemption shall be permitted up until entry of final judgment, including the whole of the last day upon which judgment is entered." (emphasis added); see N.J.S.A. 54:5-54, - 86. On June 19, 2008, the Tax Collector executed a Certification of Non-Redemption affirming that the Partnership had not redeemed the tax sale certificate as of that date.

On the afternoon of ...