Opinion
Civil Action No. 97-1449 (JBS).
March 17, 1999
Robert E. Rochford, Esq., Winne, Banta, Rizzi, Hetherington Basralian, P.C., Hackensack, New Jersey, Attorney for Plaintiff.
Faith S. Hochberg, United States Attorney, By: Dorothy Donnelly, Assistant United States Attorney, Trenton, New Jersey, Attorney for Defendant.
OPINION
This case involves a tenant ejectment action brought by plaintiff, Roberta Weissman, against defendant United States Postal Service ("USPS"), which alleges that defendant failed to pay rent pursuant to a written lease agreement between the parties. Now before the Court is plaintiff's motion for reconsideration of the portion of this Court's August 26, 1998 Opinion and Order that granted defendant's motion for summary judgment. For the reasons stated herein, though I reconsider the evidence in light of additional evidence presented by the plaintiff, I find that such evidence does not change the result, and I therefore affirm my earlier Opinion and Order.
I. BACKGROUND
The relevant facts as set out in my August 26, 1998 Opinion are as follows. The property in question, which at all times pertinent has been leased to the defendant, was owned first by Bernard Weissman and his wife Roberta Weissman, as well as by Bernard's parents, together known as Frelin Company. The lessors upon this lease have always been Bernard Weissman and his wife, Roberta Weissman, together with Bernard's parents, Charles and Pauline Weissman, trading as Frelin Company. In 1976, Frelin conveyed ownership to Bernard Weissman, who then, in 1980, conveyed ownership to both himself and his wife. In August 1991, Tobar Construction Co, Inc. recovered a judgment against Bernard Weissman. That judgment was assigned to Donald Zucker, who executed the judgment on Bernard Weissman's property, causing the Sheriff of Monmouth County to conduct a public execution sale of Bernard Weissman's interest in the premises. At the sale, Zucker bid successfully for Mr. Weissman's interest, and it was conveyed to him by deed, which was recorded on July 1, 1995.
Zucker transferred his interest back to Bernard Weissman in a May 2, 1996 deed, but he never delivered that deed. Instead, he conveyed the same interest to Roberta Weissman by deed dated August 21, 1996. Neither the Zucker-Bernard Weissman deed, nor the Zucker-Roberta Weissman deed was recorded. Moreover, the names of lessors on the defendant's lease of the premises have never been changed, although defendant once did change payees for the rental payments, when in 1994 it forwarded payments to a receivership for Bernard Weissman. Otherwise, the USPS had always sent its rental payments to Bernard Weissman.
In a July 29, 1996 letter, plaintiff's counsel asked that payments instead be sent to plaintiff. Defendant asked for information and documentation because it still believed that Bernard Weissman was the lessor. Meanwhile, defendant received a notice of levy from the IRS, dated September 13, 1996, stating that Bernard Weissman owed money and requiring the defendant to turn over to the IRS the property that defendant was obligated to pay. Believing Bernard Weissman to have an interest in the premises and rents, defendant began to pay rent to the IRS. Defendant was still trying to receive actual documents evidencing transfer of the premises' title in October.
On October 9, 1996, plaintiff's attorney wrote another letter indicating that plaintiff was the owner of the premises, and attached to the letter the unrecorded Zucker-Roberta Weissman deed, along with a mortgage between S.B. Konner and plaintiff secured by a promissory note from both plaintiff and Bernard Weissman. Defendant's Facilities Contract Specialist determined that the Zucker-Roberta Weissman deed was insufficient to cure its confusion about ownership because it did not know that Zucker ever had the power to convey. Defendant's Senior Attorney sent a November 1, 1996 letter asking for an explanation of Zucker's role, noting that the July 29, 1996 letter was the first indication at all that Roberta Weissman was anything more than a joint owner. It was not until March 7, 1997 that plaintiff provided documentation that she was the sole owner. She simultaneously filed the present lawsuit seeking payment of rent due, termination of the lease, and ejectment of the property. Since that time, the IRS has returned all past due rent to the plaintiff, and all other rent payments by USPS were current.
In my August 26, 1998 Opinion and Order dealing with the parties' cross-motions for summary judgment, I granted the defendants' motion for summary judgment on two grounds. First, I determined that defendant is immune from suit for its surrender of rental payments to the IRS pursuant to the levy because 26 U.S.C. § 6332(e) and 26 C.F.R. § 301.6332-1(c)(2) protect those who pay the IRS in good faith when the IRS levies on the property of one who has an apparent interest in the property or rights to the property. (Opinion at 12-15.) I found that Bernard Weissman, to the defendant, had an apparent interest in the premises because defendant "held a lease, which had never been reformed, naming Bernard Weissman as a lessor, and a 1976 deed by which Frelin Company had conveyed its interest in the premises to Mr. Weissman." (Id. at 15.) I also found that defendant was in good faith confused about ownership because the lease had not been changed, because it did not know about Zucker's involvement with the premises and lease, and because "[i]mportantly, Bernard Weissman never communicated to defendant the need to forward rent to his wife in light of the change of ownership." (Id.) Though defendant continued to seek information regarding the chain of title from plaintiff while paying the IRS as it apparently had to, plaintiff did not respond with documentation until March 1997, when she simultaneously filed suit. Defendant acted in good faith and is entitled to immunity. Summary judgment was thus appropriate for the defendant.
Second, and in the alternative, I held that summary judgment would be granted for the defendant because plaintiff had no remedies left as a matter of law. It was an undisputed fact that all past-due rent had been paid and defendant agreed to pay plaintiff in the future, so entitlement to rent was not at issue. (Id. at 18.) Moreover, termination of lease and ejectment were not available to the plaintiff because, under federal common law, "in the absence of a provision of the lease providing otherwise, nonpayment of rent does not operate as forfeiture." (Id. at 19.) Even where the lease does provide for forfeiture, forfeiture will not be granted if "the equities weigh in favor of the lessee and the lessor can be made whole by payment of the delinquent rent." (Id. at 20.) Here, there was no provision in the lease for forfeiture, and the equities fell in defendant's favor, so plaintiff would not be entitled to termination of the lease and ejectment. As no remedy remained, summary judgment was appropriate for the defendant.
I also denied the plaintiff's motion for summary judgment, but plaintiff has not challenged that ruling.
II. DISCUSSION
Plaintiff now asks this Court to reconsider its decision to grant summary judgment to the defendant on the basis of documents which it received from the defendant in discovery after the defendant moved for summary judgment, on the eve of this Court's ruling in August, in a voluminous document production. (Pl.'s Ltr. Br. at 2-3 n. 1.) Defendant argues that reconsideration is inappropriate under Local Civil Rule 7.1(g) and Fed.R.Civ.P. 59(e) because: 1) there has not been an intervening change of law, 2) the evidence presented in this motion was previously available to the plaintiff through due diligence, and 3) it is not necessary to correct a clear error of law or prevent manifest injustice. (Def.'s Ltr. Br. at 2.) According to defendant, because plaintiff asked for discovery to be stayed pending the outcome of the summary judgment motions (including plaintiff's own cross-motion for summary judgment), though defendant wanted to continue with discovery; had discovery not been stayed due to plaintiff's own litigation choice, plaintiff would have been able to produce such evidence earlier. (Id. at 3.) While plaintiff should be bound by her litigation choice, it is not clear here whether the information now presented by the plaintiff should have been produced by the defendant earlier despite the stay, and I do not want to foreclose consideration of it. In any case, reconsideration in light of this evidence will not change my earlier ruling, for the evidence does not raise a material issue of disputed fact.Plaintiff now presents several pieces of evidence purporting to show that defendant was in fact aware of Mr. Zucker's interest in the property, such that it should have accepted plaintiff's attorney's representation in the July 26, 1996 letter that money was owed to plaintiff, and certainly such that defendant should have stopped paying the IRS in October when the Zucker-Roberta Weissman deed was given to defendant. Plaintiff points to a letter written by Daniel Curts, Senior Attorney for the USPS in Philadelphia on February 23, 1995, which said:
I spoke with attorney David Kessler about the Sheriff's sale. He was aware of the Bank's interest in the matter and I it is quite possible that the Bank might try to buy Bernard Weissman's interest in the property. In any case, the net result of such a sale, no matter who buys his interest, would be to leave the property in limbo. The property would be owned by Weissman's wife the buyer jointly subject to our lease and the bank's interest. Of course, if the bank were the buyer, it would simply made them a joint owner as well as the holder of a secured interest.
(Rochford Certif. Ex. B.) Other documents attached by plaintiff indicate that the USPS knew that David Kessler was Mr. Zucker's attorney (id. Ex. A), and that defendant continued to seek information as to the pending sheriff's sale (id. Ex. C.) Plaintiff additionally attached letters documenting previous disagreements between Mr. Weissman and the defendant (id. Ex. E), apparently in an effort to show that the defendant acted in bad faith.
However, this new evidence, even taken in the light most favorable to the plaintiff and with all reasonable inferences for the plaintiff, as required for a Rule 56(c) motion for summary judgment, does not raise a genuine dispute of material fact. It does not change the fact that plaintiff never, in any of the relevant transactions here, changed the name of the lessor on the lease or otherwise provided defendant with information that its lessor had changed. Mr. Weissman (and, for a time, his receivership) continued to accept the defendant's rent checks and simply hand them over to Mr. Zucker or Mrs. Weissman, the apparent true owners in interest at the time. Given that no information was given to defendant regarding the change of lessor, it is not surprising that defendant would be confused when it received a letter asking money to be sent to Roberta Weissman and when it received a levy on Mr. Weissman's interest.
That plaintiff sent defendant the Zucker-Roberta Weissman deed in October, after the defendant had already begun to pay the rent to the IRS, does not change this, for though the evidence does show that the defendant was at one point aware that Mr. Zucker's judgment against Mr. Weissman led to the sheriff's sale, there is no evidence that defendant was then aware that Mr. Zucker actually purchased Mr. Weissman's interest. Plaintiff has presented letters sent by the defendant requesting information, but there is no evidence that those letters were ever answered or that defendant otherwise had that knowledge. There is thus no evidence that defendant was anything but confused or that Bernard Weissman did not have an apparent interest in the premises — especially because the mortgage attached the deed sent to defendant in October contained a promissory note on the mortgage on the premises signed by both Roberta and Bernard Weissman.
Therefore, this new evidence does not raise a genuine dispute over material facts. It was still not defendant's responsibility to perform a title search on the property (Opinion at 18), and the information which plaintiff gave to the defendant over time puts defendant within the good faith safe harbor. My decision that defendant is immune under 26 U.S.C. § 6332 is unchanged.
Additionally, this Court's ruling that no remedy remains available to plaintiff, and thus that summary judgment is appropriate for the defendant, is a wholly independent and sufficient basis for summary judgment. Plaintiff herself originally raised this issue by presenting argument as to why she should be granted summary judgment, including judgment for her sought relief of possession. Though defendant did not specifically cite cases as to why termination of the lease was inappropriate, this Court, upon its own review of the cases and arguments cited by plaintiff, determined that ejectment could not be possible under these circumstances. Given that the claim for past due rents was already fulfilled, no remedies remained, and summary judgment was appropriate.
Though plaintiff argues that this new evidence shows that the equities fall in plaintiff's favor, and thus that forfeiture could be appropriate and summary judgment inappropriate, my earlier ruling in this regard remains unchanged. In the first instance, federal law generally does not make forfeiture an available remedy for nonpayment of rent. (Opinion at 19.) My reference in the August 26, 1998 Opinion to a balancing of the equities was to note that a court may permit relief from contract-granted forfeiture rights when the equities fall in the lessee's favor and the lessor can be made whole by payment of delinquent rent. (Id. at 20.) Here, there is no lease provision providing for forfeiture for non-payment of rent, and so the balancing of the equities really need not come into play at all. Even if the equities are to be balanced, this new evidence, which shows only that the defendant was aware that Mr. Zucker's execution of the Tomar judgment was causing a sheriff's sale of the property which it leased, does not change the fact that there is no evidence that defendant acted in anything other than good faith. The USPS, as a tenant, pays rent to the lessor, who may or may not even be the owner. Bernard Weissman was at all times a lessor; Roberta Weissman never suggested that the operative lease should be amended to delete Bernard Weissman's status as a lessor. At the same time, plaintiff and her husband were shifting around ownership of this property, without informing their lessee about changes of ownership as they proceeded over the years. The equities indeed fall in favor of the defendant. All confusion was caused by Roberta Weissman herself, and the defendant should not pay the price of lease forfeiture by not determining on its own the true identity of the lessor. For that alternative reason, then, defendant would still be entitled to summary judgment.
III. CONCLUSION
For all the foregoing reasons, I have reconsidered my August 28, 1998 Opinion and Order, but, even in light of new evidence which plaintiff has presented, summary judgment for the defendant is appropriate. The accompanying Order reaffirming my August 26, 1998 Opinion and Order is entered.
ORDER
This matter having come before the Court upon plaintiff's motion for reconsideration of this Court's August 26, 1998 Order and Opinion granting summary judgment to the defendant; and the Court having considered the submissions of the parties; and for the reasons stated in the Opinion of today's date;
IT IS this day of March 1999 hereby
ORDERED that plaintiff's motion for reconsideration of this Court's August 26, 1998 Opinion and Order be, and hereby is,GRANTED, and it is further
ORDERED that, upon reconsideration, this Court's August 26, 1998 Opinion and Order be, and hereby are, AFFIRMED, granting summary judgment to defendant on all claims.