Opinion
DOCKET NO. A-2042-14T4
06-06-2016
WELLS FARGO BANK, N.A., Plaintiff-Respondent, v. DAWN RIVERA, his/her heirs, devisees, and personal representatives, and his, her, their successors in right, title and interest; MR. RIVERA, Husband of Dawn Rivera, AFFORDABLE HOUSING ALLIANCE OF NEW JERSEY, MONMOUTH COUNTY HOME FIRST-TIME HOMEBUYERS PROGRAM, STRICKLAND FARM CONDOMINIUM ASSOCIATION, INC., JUMPING BROOK ASSOCIATES LLC, JERSEY SHORE UNIVERSITY MEDICAL CENTER f/k/a JERSY SHORE MEDICAL CENTER, M.K. SPECIAL INPATIENT, MIDLAND FUNDING LLC, STATE OF NEW JERSEY, Defendants, and TOWNSHIP OF FREEHOLD, Defendant-Respondent. ARTEM RYBAKOV, Appellant.
Artem Rybakov, appellant pro se. Zucker, Goldberg & Ackerman, LLC, attorneys for respondent Wells Fargo Bank, N.A. (Douglas J. McDonough, of counsel and on the brief). Davison, Eastman & Munoz, P.A., attorneys for respondent Township of Freehold (Gary P. McLean, of counsel and on the brief).
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION Before Judges Sabatino and Suter. On appeal from the Superior Court of New Jersey, Chancery Division, General Equity, Monmouth County, Docket No. F-027129-12. Artem Rybakov, appellant pro se. Zucker, Goldberg & Ackerman, LLC, attorneys for respondent Wells Fargo Bank, N.A. (Douglas J. McDonough, of counsel and on the brief). Davison, Eastman & Munoz, P.A., attorneys for respondent Township of Freehold (Gary P. McLean, of counsel and on the brief). PER CURIAM
Appellant Artem Rybakov seeks reversal of the trial court's November 21, 2014 order denying his post-judgment motion to intervene in a mortgage foreclosure action. Appellant sought to intervene so that he could challenge a previously-executed consent order that allowed various affordable housing restrictions on the property to remain in place once the mortgage foreclosure was complete.
Appellant claims that he was entitled to intervene in the mortgage case because he had acquired an interest in the subject real estate after successfully bidding for the property at a sheriff's sale in February 2014. That initial sheriff's sale stemmed from a separate foreclosure action arising out of a lien placed on the premises for an unpaid condominium assessment. Following the denial of appellant's request for intervention, the mortgage lender's assignee obtained a final judgment of foreclosure in January 2015, which appellant argues unfairly extinguished his claimed interest in the property. For the reasons that follow, we affirm.
I.
Although the record supplied on appeal is not comprehensive, we glean from it the following pertinent facts and chronology of events.
In 2007, Dawn Rivera purchased a condominium property located in Freehold, which is designated as an affordable housing unit. The purchase was financed by a purchase money mortgage loan assigned to plaintiff Wells Fargo Bank, N.A. ("Wells Fargo"). As part of the transaction, Rivera entered into an affordable housing agreement on July 9, 2007 with the Township of Freehold (the "municipality") and the administrator of its affordable housing program, the Affordable Housing Alliance (the "Authority"). The agreement was recorded in Monmouth County with the deed.
The agreement imposed various restrictions on the sale or transfer of the property intended to maintain the property's status as an affordable housing unit and prevent the homeowner, the mortgagee, or subsequent purchasers from receiving windfall profits by selling the property at full market value. Those restrictions specifically address sales and transfers that result from foreclosure.
According to the plain terms of the agreement, "a [p]urchaser at a [f]oreclosure sale conducted by the holder of the First Purchase Money Mortgage [would] be permanently released from the restrictions and covenants" imposed by the agreement. Those restrictions would "cease to be effective as of the date of transfer of title" pursuant to the sale, and the Authority was required to execute and record evidence that the restrictions were released "[u]pon a judgment of [f]oreclosure[.]"
The agreement further specified that the defaulting mortgagor would "be forever subject to the resale restrictions[.]" If the property was later sold as a result of foreclosure at a price beyond the greater of the maximum affordable housing resale price set by the terms of the agreement or the amount necessary to satisfy the first mortgage, the defaulting mortgagor would be obligated to pay the excess to the Authority. In addition, the agreement provided that the "owner of record" at the time of the foreclosure sale would be personally liable for the defaulting mortgagor's obligation to repay excess funds.
In 2011, Rivera defaulted on her mortgage with Wells Fargo. She had also fallen behind with condominium association fees payable to one of the named defendants, Strickland Farm Condominium Association, Inc. (the "condominium association"). The condominium association obtained a judgment against Rivera for the delinquent fees in October 2012. The following month, Wells Fargo filed a foreclosure complaint in the Chancery Division in November 2012. The bank recorded a notice of lis pendens shortly thereafter on November 26, 2012 in Monmouth County. Rivera did not file an answer in the foreclosure action, and the matter was deemed uncontested.
In 2013 Wells Fargo entered into a settlement agreement with the municipality and the Authority, whereby the parties agreed that the affordable housing restrictions on the property would not be lifted in the event of a foreclosure sale. A consent order memorializing that settlement was filed on June 10, 2013. Meanwhile, the condominium association executed its judgment, and the property was exposed to a sheriff's sale in February 2014. Appellant purchased the property at that sale with a bid of $5,100. He received a sheriff's deed to the property, which noted that the property was still subject to Wells Fargo's mortgage lien.
According to appellant's pro se reply brief on appeal, he had admittedly conducted a title search prior to bidding, and discovered the affordable housing agreement and the notice of lis pendens. He claims he was unaware of the consent order because it was not recorded and did not appear in the title search. Based upon his review of the language of the agreement, appellant claims he believed he could circumvent the various affordable housing restrictions on resale by purchasing the property at the sheriff's sale, and then wait for the restrictions to be somehow lifted through the mortgage foreclosure action. Appellant then planned to redeem the property to avoid losing it, leaving him with what he thought would be a condominium unit free of the affordable housing restrictions.
Several months after the February 2014 sheriff's sale, the mortgage foreclosure action concluded, and a judgment of foreclosure in favor of Wells Fargo was entered on July 1, 2014. Evidently realizing that the affordable housing restrictions were still in place, appellant moved on an emergent basis on November 14, 2014 to intervene in the mortgage foreclosure action post-judgment, seeking to have the consent order vacated. The trial court denied that motion, reasoning that appellant lacked standing to contest the consent order since he was not a party to the litigation at the time it was entered.
The property was subsequently sold at a second sheriff's sale in January 2015 to Wells Fargo for $100. Apparently, Wells Fargo was the only participant at that sale, consistent with the terms of the consent order.
II.
Before addressing the substance of appellant's contentions, we first briefly address Wells Fargo's argument that his appeal should be dismissed as moot because the bank has already obtained a final judgment of foreclosure and acquired title to the property at the January 2015 sheriff's sale. We decline this invitation to rest our decision on mootness grounds. Although courts generally will refrain from adjudicating issues or reviewing prior determinations where the decision sought will have "no practical effect," see, e.g., N.Y. Susquehanna & W. Ry. Corp. v. State, Dept. of Treasury, Div. of Taxation, 6 N.J. Tax 575, 582 (Tax Ct. 1984), aff'd, 204 N.J. Super. 630 (App. Div. 1985), in certain instances we nonetheless elect to reach the merits of a case in our discretion where there is sufficient justification for doing do. See, e.g., Guttenberg S. & L. Ass'n v. Rivera, 85 N.J. 617, 622-23 (1981); Finkel v. Twp. Comm. of Twp. of Hopewell, 434 N.J. Super. 303, 314-17 (App. Div. 2013). We choose to address the merits here because the circumstances — involving a condominium lien foreclosure action that resulted in a sheriff's sale that preceded the conclusion of a then-pending mortgage foreclosure action — are not commonplace and raise several legal issues that warrant comment. In addition, we are mindful that appellant promptly sought emergent relief from this court in November 2014 after his intervention motion was denied at the trial level and the order rejecting that emergent application did not specifically detail why appellant's claims were unavailing. Consequently, we take this opportunity to address the merits even though we are not obligated to do so.
Fundamentally, appellant's contentions asserting a right to intervene in the mortgage foreclosure case to challenge the consent order are based upon a misapprehension of the applicable law. Although we recognize that appellant paid $5,100 at the first sheriff's sale in February 2014, with an apparent hope that the affordable housing restrictions would be lifted in the mortgage foreclosure action and he would be thereafter permitted to redeem the property, that hope or perception was unfortunately mistaken.
A party seeking to intervene in a pending action as of right under Rule 4:33-1 must satisfy four criteria:
The applicant must (1) claim "an interest relating to the property or transaction
which is the subject of the transaction," (2) show he is "so situated that the disposition of the action may as a practical matter impair or impede his ability to protect that interest," (3) demonstrate that the "applicant's interest" is not "adequately represented by existing parties," and (4) make a "timely" application to intervene.Appellant has failed to establish the second and fourth of these criteria for intervention.
[Meehan v. K.D. Partners, L.P., 317 N.J. Super. 563, 568 (App. Div. 1998) (quoting Chesterbrooke Ltd. Partnership v. Planning Bd., 237 N.J. Super. 118, 124 (App. Div.), certif. denied, 118 N.J. 234 (1989)).]
With respect to the second criterion, we agree with the trial court that appellant lacked standing to contest the consent order and, therefore, did not have an interest in the matter that would permit appellant to intervene. Appellant's sole and admitted reason for seeking intervention in the mortgage foreclosure action was to challenge the consent order that resulted in the continuation of the affordable housing restrictions. He did not seek to contest the bank's foreclosure itself. Appellant acquired his ownership interest in February 2014, eight months after the consent order already had been entered. Thus, appellant's ownership interest could not be impaired or impeded by the foreclosure action at the time he acquired it, because as a matter of law he took his ownership interest subject to the consent order.
As to the fourth criterion, appellant's application was manifestly untimely. The operative date against which the timeliness of appellant's motion is to be evaluated is June 10, 2013, the date of the consent order. Although appellant was aware of the mortgage foreclosure litigation much earlier when he discovered the notice of lis pendens before his participation in the first sheriff sale, his perceived interest in the foreclosure action was arguably "adequately represented" by Wells Fargo at that time since he was relying on the bank to successfully foreclose on the property and hoping that it would extinguish the affordable housing restrictions.
It was not until the consent order was entered that appellant's "interests" diverged from those of Wells Fargo such that he was no longer adequately represented in the suit. See Meehan, supra, 317 N.J. Super. at 570 (holding that the date a consent order is filed is the date to be considered when judging the timeliness of intervention in a situation where the interests of one of the parties to the suit align with those of the prospective intervenor early in the litigation, but later diverge due to a settlement). Nonetheless, appellant still delayed in moving to intervene until November 14, 2014, eighteen months from the date of the consent order and nine months after he acquired his ownership interest in the property. This delay was clearly unreasonable and further supports the court's denial of appellant's belated motion.
We also reject appellant's related argument that he "step[ped] into the shoes" of the condominium association, and therefore acquired that entity's rights in the litigation when he purchased his ownership interest at the first sheriff's sale. Appellant did not acquire the condominium association's judgment lien in the first sheriff's sale, but rather what, if anything, remained of Rivera's ownership interest in the underlying property. Appellant merely acquired the position of Rivera, who had defaulted in the litigation by failing to file an answer.
Although it is not necessary to our disposition of this appeal, we briefly address for sake of completeness appellant's argument that the notice of lis pendens should have prevented the named parties to the foreclosure action from entering into a settlement that he believes was contrary to the affordable housing agreement. Appellant contends that lis pendens served to "preserve the quality of title" for the benefit of those outside the litigation. This contention is inaccurate and unavailing.
Under N.J.S.A. 2A:15-6, in any action seeking to "enforce a lien upon real estate or to affect the title to real estate," a notice of lis pendens must be filed "in the office of the county clerk or register of deeds . . . of the county in which the affected real estate is situate[ed.]" The purpose of this requirement is to prevent the parties to the suit from alienating or encumbering the property at issue during the litigation, see Trus Joist Corp. v. Treetop Assocs., 97 N.J. 22, 31-32 (1984), by providing notice to "any person claiming title to, interest in or lien upon the real estate described in" the notice of lis pendens that he or she will be "bound by any judgment entered [in the action] as though he had been made a party thereto and duly served with process therein," N.J.S.A. 2A:15-7(a).
The effect of the filing of a notice of lis pendens is constructive notice of a pending action . . . and a purchaser or mortgagee takes subject to the outcome of the lawsuit. It is not correct to state that the purpose of the lis pendens statute is to provide any other notice.Lis pendens does no more than provide notice "that a suit is pending against a certain party, affecting certain lands in a certain way," and does not provide the underlying facts of the case. Id. at 32 (emphasis in original) (quoting Turner v. Houpt, 53 N.J. Eq. 526, 556 (Ch. 1895)).
[Trus Joist Corp., supra, 97 N.J. at 30-31.]
In the circumstances of this case, the notice of lis pendens served as a warning to appellant that any interest he chose to take in the property would be bound by the outcome of the foreclosure action. The warning did not serve to protect the quality of title for his benefit, and did not prevent the parties to the suit from resolving an aspect of the case in a manner that appellant apparently did not expect.
This is not to say that we are totally unsympathetic to appellant's position. We understand that he has expended $5,100 in acquiring property, which he then lost in the mortgage foreclosure action against Rivera less than a year later. We also understand that appellant's title search did not reveal the consent order. However, appellant, who had no interest in the property that existed prior to the order, simply has no legal basis upon which to contest that order, even if he had been allowed by the trial court to intervene.
For these reasons, we affirm the trial court's order denying intervention. The final judgment of foreclosure awarding title to Wells Fargo shall remain unaltered, and appellant's claimed interest in the property remains extinguished.
I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION